Chancellor George Osborne has announced £6.2bn of savings the government wants this financial year, including £170m savings from property.

Osborne and David Laws, chief secretary to the Treasury, set out plans to start reducing the £156bn public sector budget deficit this morning. They said the Treasury would need to give approval for any large spending by government departments.

Within the £6.2bn figure there were targets for saving £170m by reducing property costs, £1.15bn by cutting government consultancy services, and £1.7bn by renegotiating contracts with the government’s largest 70 contractors.

Other cuts to be made in the current financial year include those from regional development agencies, which will be expected to cut projects that do not represent good value for money.

While it did not announce any more on its plan to cuts to RDAs, more detail could emerge as the government department Communities and Local Government tries to meet its own target for savings. Government departments are expected to make significant savings.

For example, Communities and Local Government is expected to save £780m over the next financial year, while Business, Innovation and Skills is expected to save £836m. Other departments were given their own targets.

The government also plans to increase investment in social housing development by £170m.

Osborne said the government was able to protect schools by allowing them to reinvest the savings that they make, and said it would protect the Sure Start programme. It did not make any specific mention of protection for Building Schools of Future.

The departments of health, defence and international development will also be able to reinvest the savings they make in the current financial year.

“The great majority will go towards cutting the deficit this year so we can avoid the jobs tax this year,” said Osborne. He added that the changes needed to be made because there is a danger, if the deficit is not cut, that the UK could end up spending more servicing the public deficit than it does on education.

“We have worked incredibly hard over the last week and we have delivered,” he said. “The more we do now, the more we can spend on the things that really matter in the coming years.”

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