UK to cut government department spending by 12 billion pounds by 2020

LONDON (Reuters) - Britain will make 12 billion pounds of savings annually from government departments' day-to-day spending by the end of the decade as it seeks to return to a budget surplus, Chancellor George Osborne said on Wednesday. Osborne said the cuts would be less steep than over the last five years, which saw funding for many government departments fall sharply. They were also less steep than Osborne had flagged earlier this year. Day-to-day spending will fall by an average of 0.8 percent a year in real terms, compared to 2 percent between 2010 and 2015, he said. With defence and health spending set to rise, and education largely protected, other departments face much bigger cuts than the overall average. The Department for Transport will be among the hardest hit, according to the government's spending review document, with a real terms cut of 37 percent in its day-to-day spending. Britain's tax office will have its budget cut by 18 percent. The Department of Business, Innovation and Skills, which seeks to improve British competitiveness, will see its budget reduced by 17 percent. The interior ministry will see a cut of 4.8 percent, with police spending protected in real terms and a boost to counter-terrorism funding. Police officers had expressed concern that big cuts to their budget could make it harder the security forces to respond to a Paris-style attack. (Reporting by Kylie MacLellan; editing by William Schomberg)