Transport secretary Philip Hammond confirmed this weekend that government departments had been ordered to plan for severe spending cuts reaching up to 40%.
Health and overseas aid spending will be ring fenced, while defence and education will face cuts of between 10% and 20%. However, the remaining departments - including transport and energy - have been told to go through their budgets “line by line” for savings of between 25% and 40%, Hammond said.
The demand is likely to force these departments to prioritise projects and policies and Hammond said the exercise would help the government determine its overall spending.
“I don’t expect any departments will see a 40% cut but some departments may see cuts a bit higher than 25%…some departments may then see cuts a bit lower than 25%,” he told the BBC.
In his own department he said the cuts would effectively halt new road building - but he said big infrastructure projects that helped the economy would still be prioritised. “We will have to focus first and foremost on maintaining the roads we have got,” he said.
Tranport union RMT warned that the scale of cuts being threatened would mean mass redundancies and cause a crisis for rail maintenance and upgrade programmes.
“With cuts of up to 40% in the transport budget we are looking at thousands of job losses amongst the staff who operate and maintain services with dire consequences for passenger safety as corners are cut,” said RMT general secretary Bob Crow.
“It is crystal clear that modernisation and upgrade works will be axed with high speed [rail], [line] electrification and Crossrail all on the butchers block.”