Local governments will be hardest hit with funding slashed by £2.6 billion, which is 10%, in 2015-16.
Richard Crouch, director of HR, OD and communications at Somerset County Council and president of the Public Sector People Managers' Association, said the cuts were "not a surprise".
"The 10% has been allocated for in most council budgets," he said. "But the cuts are going to have a significant impact on the operating models of local governments."
Osborne also announced an end to automatic pay rises for public sector workers, signalling a move towards performance related pay. Public sector pay rises will be capped at 1% in 2015-16.
In response to the pay reform, NHS Employers chief executive Dean Royles said the biggest priority for the NHS is to ensure quality of patient care and staff job security.
“Both depend on sustainable pay bills and a focus on performance,” he said. "We need to engage with our staff and unions to explore how we can come out of a period of pay restraint in a sustainable way, recognising the significant contribution of our staff to delivering high quality patient care.”
Saving through ‘efficiency’
Osborne claimed it would be possible for the public sector to save £5 billion through ‘efficiencies’, which inevitably means job losses.
Defending another year of his austerity policy, Osborne said: “If we abandoned our deficit plan, Britain would be back in intensive care.”
He said the Government will continue to invest in apprenticeships, and will consult on major reform of apprenticeships funding this summer.
Ann Pickering, the HR director at O2, said she welcomed the news that Government was recognising the important role of apprenticeships for businesses.
“To enable the UK to compete on a global level, businesses of all sizes need to recognise the importance of having people with the skills and experience to make the most of this potential,” she added.
The Government has also protected the science and innovation budget, and will be increasing spending on science and technology.
