Spending Review announcements

Wednesday, 20 October 2010

The Government has announced (20 October 2010) its intention to cut public spending in the UK by £81 billion a year by 2014/2015 in order to eliminate the structural budget deficit.

Key measures to achieve this will include:

  • A cut to Government Departmental budgets of around 19% on average, with a loss of around half a million public sector jobs
  • Cuts to the welfare budget  
  • A rise in the State Pension Age to 66 for both men and women from 2020.

The biggest savings on welfare will come from abolishing child benefit for higher rate taxpayers, time-limiting Employment Support Allowance and freezing Working Tax Credit. The Government will also be going ahead with its previously announced plans to replace all existing working age benefits with a single welfare benefit.

Around one million people who are disabled or who have health conditions will be affected by the changes to Employment and Support Allowance (ESA), the benefit which is replacing Incapacity Benefit.

The Government has increased the pace at which State Pension Age will rise to 66 and is also planning to review how quickly and how far future rises in SPA should take place.  Other changes to pensions will see public sector employees contributing more to their pensions and the forthcoming launch of the National Employment Savings Trust (NEST).

Other measures announced included:

  • Universal benefits which apply to pensioners – including the winter fuel payment, free bus travel, eye tests and free television licenses for the over 75s – will stay.
  • An additional £2 billion has allocated to social care services.
  • A 7.1 per cent annual cut in central government funding for local government over each of the next four years and an end to the ring-fencing of much of the money.  (Local councils currently receive ¾ of their income from central government).
  • The health budget will be protected but the NHS has been told to find £20 billion in ‘efficiency savings’ to help pay for increased drug costs.
  • The Department for Work and Pensions will have to make resource savings of 26 per cent on their core budget in real terms over the next four years. The savings are to be made by centralising support services and streamlining strategy and policy functions.
  • The Department for Business, Innovation and Skills (BIS) will reduce its resource budget by 25 per cent. The Department’s administration budget will be reduced by 40 per cent, including savings from abolition of the RDAs.
  • The Train to Gain skills scheme is being abolished, although an additional £250 million will be used to fund 75,000 adult apprenticeships a year by 2014.
  • University funding will be cut and student fees will rise.
  • There will also be a rise in bus and rail fares.

Carers UK's briefing on the Spending Review, "What the Comprehensive Spending Review means for carers", can be viewed here http://www.carersuk.org/Professionals/ResourcesandBriefings/Policybriefings