Guide to the spending review


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Guide to the spending review

  1. 1. A Guide to theSpendingReview 2010
  2. 2. Spending Review 2010SpendingReview 2010The Chancellor sets out his cost savings for the next four years The Chancellor of the Exchequer, George Osborne, delivered the ‘Spending Review 2010’ on 20 October, using his speech to announce the key headlines of the Spending Review – with one of the stand-out figures being a further £7bn cut in welfare spending.The Chancellor says the main Whitehall departments will makecost savings of £6bn in how they are run over the next four Key pointS at-a-glanceyears and the Office for Budget Responsibility forecasts that490,000 public sector jobs will go over the four years of theSpending Review period. Most will be through natural turnover, the key points from the chancellor of thealthough there will be ‘some redundancies’. exchequer, george osborne’s ‘Spending Review 2010’:The Spending Review is a Treasury-led process to allocateresources across all government departments, according to n About 490,000 public sector jobs likelythe government’s priorities. Spending Reviews set firm and to be lostfixed spending budgets and it is then up to each department to n Average 19 per cent four-year cut indecide how best to manage and distribute this spending within departmental budgetstheir areas of responsibility. n Structural deficit to be eliminated by 2015In addition to setting departmental budgets, ‘Spending n £7bn in additional welfare budget cutsReview 2010’ also examines non-departmental spending n Police funding cut by 4 per cent a yearthat cannot be firmly fixed over a period of several years, n Retirement age to rise from 65 to 66including social security, tax credits, some elements of local by 2020authority spending and spending financed from the proceeds n English schools budget protected; £2bnof the National Lottery. extra for social care n NHS budget in England to rise everySpending Reviews have been an integral part of governmental year until 2015planning since the late 1990s. Prior to their introduction, n Regulated rail fares to rise 3 per centdepartmental budgets were set on a year-by-year basis, which above inflationmade multi-year planning more difficult. n Bank levy to be made permanent‘Spending Review 2010’ covers the four years from 2011/12 to2014/15.02
  3. 3. Spending Review 2010 The Spending Review is a Treasury-ledprocess to allocate resourcesacross all governmentdepartments, accordingto the government’spriorities. Spending Reviewsset firm and fixed spendingbudgets and it is then up toeach department to decidehow best to manage anddistribute this spendingwithin their areasof responsibility. 03
  4. 4. Spending Review 2010Department spendingFinances set between 2011 and 2015 based on government figuresCurrent spending includes items such as salaries, hospital frozen for next six years. Corporation will also fund Worldmedicines, and school text books. Capital spending Service and BBC Monitoring. Adds up to equivalent ofincludes assets such as school buildings, roads and bridges. 16 per cent savings over the period.Business, innovation and Skills defenceAnnual budget: £21.2bn Annual budget: £46.1bnSending Review 2010 cut: Current spending down Sending Review 2010 cut: Current spending down25 per cent; capital spending down 52 per cent 7.5 per cent; capital spending down 7.5 per centAdministration costs to be cut by £400m with The Royal Air Force and Royal Navy will lose 5,00024 quangos being disbanded. Train to Gain programme jobs each, the Army 7,000 and the Ministry of Defenceto cease. University teaching budget to be cut by 40 per 25,000 civilian staff. The Harrier jump jets and the Arkcent and further education budget to fall by 25 per cent. Royal aircraft carrier are being taken out of service whileThe science budget to be frozen - in cash terms - rather the planned Nimrod spy planes will be cancelled. Keythan cut as had been feared. Funding for 75,000 adult spending decision on Trident to be delayed until 2016.apprenticeships a year. educationcabinet office Annual budget: £57.6bnAnnual budget: £2.6bn Sending Review 2010 cut: Current spending downSending Review 2010 cut: Current spending up 3.4 per cent; capital spending down 60 per cent28 per cent; capital spending down 28 per cent. Five quangos to be abolished. But direct funding toSupport for citizenship and “big society” projects. Cabinet schools in England is to be protected. Their budget willOffice officials to move into Treasury. Civil List cash funding rise 0.1 per cent in real terms each year, taking fundingfor Royal Household to be frozen next year. New system of from £35bn to £39bn. But spending on school buildingsfunding for Royal Household from 2013. to fall 60 per cent. Confirmed £2.5bn “pupil premium” for teaching for disadvantaged pupils. Educationalcommunities and local government Maintenance Allowances to be replaced. Sure Start budgetAnnual budget: £33.6bn to be protected in cash terms.Sending Review 2010 cut: Local Government - currentspending down 27 per cent; capital spending down 100 energy and climate changeper cent: Communities - current spending down 51 per Annual budget: £3.1bncent; capital spending down 74 per cent Sending Review 2010 cut: Current spending down 18 per cent; capital spending up 41 per centCouncils will see a 7.1 per cent annual fall in their budgets. Butring-fencing of local authority revenue grants will end and Plan for tidal barrage on the Severn estuary cancelled. Butcouncils will have freedom to borrow against their assets. £200m funding for wind power development and £1bn forFunding for social housing to be cut by more than 60 per green investment bank.cent, with new tenants having to pay higher rents. But thegovernment hopes these changes will free up funds to build environment, Food and Rural affairs150,000 new affordable homes over the next four years. Annual budget: £2.9bn Sending Review 2010 cut: Current spending down 29 perculture, Media and Sport cent; capital spending down 34 per cent. Investment toAnnual budget: £2bn continue in flood defences - £2bn over period to 2015.Sending Review 2010 cut: Current spending down24 per cent; capital spending down 32 per cent Foreign office Annual budget: £2.2bnAdministration costs to be cut 41 per cent while core arts Sending Review 2010 cut: Current spending downprogrammes will see a 15 per cent fall in funding. Free 24 per cent; Capital spending down 55 per cent. Numbermuseum entry to remain in place. BBC licence fee to be of Whitehall-based diplomats reduced.04
  5. 5. Spending Review 2010Health transportAnnual budget: £106.4bn Annual budget: £13.6bnSending Review 2010 cut: Current spending up 1.3 per Sending Review 2010 cut: Current spending down 21 percent; capital spending down 17 per cent cent; capital spending down 11 per centThe NHS in England budget to increase by 0.4 per cent £30bn set aside for capital spending, including £500mover the next four years. New cancer drug fund to be for Tyne and Wear Metro and Tees Valley bus network.provided. But £20bn in efficiency and productivity Crossrail project to go ahead in London. Rise insavings sought in NHS by the end of the parliament. An regulated cap on rail fares to 3 per cent above inflationextra £2bn for social care by 2014/15. for three years from 2012.Home office treasuryAnnual budget: £10.2bn Annual budget: £4.4bnSending Review 2010 cut: Current spending down 23 per Sending Review 2010 cut: Current spending to be cut bycent; capital spending down 49 per cent 33 per cent, capital spending to be cut by 30 per cent.Police budget cut by 4 per cent a year, focused on Bank levy to be made permanent. £900m to targetbureaucracy rather than manpower. Aim to maintain tax evasion. £1.5bn in compensation to Equitable Life“visibility and availability” of officers on beat. UK Border policyholders after it’s near collapse. 15 per cent cut inAgency budget to fall 20 per cent. Counter-intelligence funding for Revenue and Customs.budget to fall 10 per cent. work and pensionsinternational development Annual budget: £9bn in departmental spendingAnnual budget: £7.7bn Separate welfare and pensions budget: £192bnSending Review 2010 cut: Current spending up 36 percent; capital spending up 20 per cent The State pension age for men is to start rising from 65 in 2018 - six years earlier than planned - andThe overseas aid budget is to be protected from cuts reaching 66 by 2020. Rise in retirement age for womenbut not the department’s other costs. Budget to rise to to accelerate, also reaching 66 by 2020. The measures£11.6bn over four years to meet UN aid commitment. combined will save £5bn a year. Reform of public sectorBut aid to China and Russia is to stop and there will be a pensions to save £1.8bn by 2015, with employees likelyreduction in administration costs. to contribute more. Winter fuel allowance, free bus passes and TV licences for 75-year-olds protected. CutsJustice to child benefit for higher rate taxpayers to generateAnnual budget: £9.7bn £2.5bn. £2bn investment in new universal credit. WeeklySending Review 2010 cut: Current spending down 23 per child element on child tax credit to rise by £30 in 2012cent; capital spending down 50 per cent and £50 by 2012.Plan for new 1,500-place prison to be cancelled. 3,000 Sending Review 2010 cut: A further £7bn in welfarefewer prison places expected by 2015. £1.3bn capital savings planned on top of £11bn already announced.investment in prison estate. A new 12-month time limit on the employment and support allowance could see an estimated 200,000northern ireland/Scotland/wales claimants moved onto jobseekers allowance and seeAnnual budget: £55.5bn their support reduced. Proposed 10 per cent cut inSending Review 2010 cut: Scotland’s block grant to fall council tax benefit budget. Under-35s only able to claimby 6.8 per cent by 2014/5. Central funding for Wales is to housing benefit for a room rather than a whole cut by 7.5 per cent - the Welsh Assembly Government Maximum savings award in pension credit to be frozensays its budget will be cut by £1.8bn in real terms over four for four years. Increased working hours threshold foryears. Northern Ireland funding to be reduced by 6.9 per working tax credits for couples with children. New totalcent over four years. benefits cap per family. 05
  6. 6. Spending Review 2010Your questionsansweredFinances set between 2011 and 2015 based on government figures06
  7. 7. Spending Review 2010How could the announcements made by From 2013, child benefit will be cash terms, but means less than £200mthe Chancellor of the Exchequer, George withdrawn from families in which on top of inflation by 2015, even thoughOsborne, during the ‘Spending Review one or both parents are higher rate the new budget will include a yearly2010’ affect your finances over the next taxpayers – earning more than £44,000 £2.5bn pupil premium for schools withfour years? We answer your questions. a year. If both parents earn less than disadvantaged pupils. £44,000, they will continue to receive Schools will still be expected toQ: Why are the ‘Spending Review 2010’ child benefit. But families with one main make £1bn of ‘procurement andcuts necessary? earner on, for example, £45,000, will see back office’ savings, and teachersA: The government says the cuts are their benefit stopped. This is estimated will face a pay freeze. And evennecessary to reduce the record deficit. to save £2.5bn. though the overall budget willThe Chancellor of the Exchequer, George Other changes include making couples increase, some schools may stillOsborne, says the UK’s public debt with children work at least 24 hours face budget cuts, depending oninterest repayments now total £120m a a week between them in order to be the way the pupil premium and theday, or £43bn a year. The government eligible for working tax credit. And the reallocated pots of national fundingsays the cuts will allow it to reduce the percentage of childcare claimable under are distributed.public debt and reduce debt interest the family element of working tax credit In addition, schools will be subject topayments by £5bn a year by 2014. will be reduced from 80 per cent to a 60 per cent cut in capital spending 70 per cent, saving a further £400m. across the DfE, and there will be aQ: What is the total cost saving Universal benefits for pensioners, 7 per cent cut each year for localannounced across government such as free eye tests, free authorities, which provide peripheraldepartments? prescription charges, free bus passes, services, such as transport for childrenA: The Chancellor of the Exchequer, and free TV licences for the over 75s, with special educational needs orGeorge Osborne, announced that the will remain. Winter Fuel Payments after-school clubs.main Whitehall departments will make will remain as budgeted for by thecost savings of £6bn in how they are previous government. Q: What are the effects on socialrun over the next four years. He says In the longer term, the government housing?the Office for Budget Responsibility plans to introduce ‘universal benefit’, A: New tenants will face higher rents atforecasts that 490,000 public sector which would replace the current system 80 per cent of the market rate, thoughjobs will be shed over the four years of of Jobseeker’s Allowance, income current tenants will see no change. Rentsthe Spending Review period. Most will be support and employment support are also expected to rise for new tenantsthrough natural turnover, although there allowance with a single benefit in an of council housing.will be ‘some redundancies’. attempt to simplify the system. The Chancellor stated that setting this up Q: How will banks be targeted?Q: How will individual budgets be would initially cost about £2bn. A: Lenders will face a permanentreduced across departments? bank levy, the purpose of which is toA: Over the next four years, departments Q: Will the state pension age be encourage the banks to take fewerwill have their budgets cut by 19 per cent changed? risks in how they fund themselves andon average. The Foreign Office will see A: The state pension age for both men which will be placed on that part of aits budget reduced by 24 per cent. The and women will rise to 66 by 2020. The bank’s balance sheet that regulatorsHome Office will be subject to cuts of Chancellor says this will save more than and HM Revenue and Customs believe6 per cent, with police spending falling £5bn a year. The government argues that poses a systemic risk. This levy differsby 4 per cent each year. The budget the change is vital because of the UK’s from the previous announcement of aat HM Revenue and Customs will also ageing population. ‘one-off bonus tax’.reduce by 15 per cent. Q: Is the NHS budget being increased? Q: What was the impact on transport?Q: What are the potential impacts on A: The health budget in England will A: £30bn will be invested in newwelfare payments? rise by £10bn to £114bn by 2014, but transport projects over the next fourA: The government says it will save that only amounts to 0.1 per cent years. Schemes that will go aheadan extra £7bn from the figures set annual rises once inflation is taken include a new suspension bridgeout in the June budget. A big saving into account. The rises will be more over the River Mersey at Runcorn, anfor the government is a time limit on than off-set by increasing demands upgrade to the Tyne & Wear Metro andEmployment and Support Allowance. from factors such as obesity, the confirmation that the Crossrail projectThis is a payment to people whose ageing population and the cost of will continue in London.ability to work is limited by disability or new drugs. Many rail passengers will see aillness. Payment will be limited to one rise in ticket prices following theyear for those who are able to do some Q: Will school spending really be announcement that caps on regulatedwork and whose payment is based on protected? rail fares, essentially those within peaktheir National Insurance contributions. A: The Treasury has said that the schools hours, will rise to 3 per cent above theThis allowance has been replacing budget will go up by 0.1 per cent in real RPI rate of inflation for three yearsincapacity benefit. terms each year. This is a rise of £3.6bn in from 2012. 07
  8. 8. Spending Review 2010The business guideBusinesses will receive at least £150m in government funding to help themaccess loans and equity investments over the next four years. The additionalfunding will ensure that the small firm’s loan guarantee scheme, called the‘Enterprise Finance Guarantee’, will continue for four years.Further monies will be made available to ‘small businesses Up to £200m a year available by 2014 to fund an ‘elitewith growth potential’, the Treasury said. This may signal network of research and development intensive technologyfurther funding for the Enterprise Capital Funds scheme or and innovation centres’.even possible public involvement in the high street banks’ Closure of the £1bn Train to Gain workplace trainingproposed £1.5bn Business Growth Fund. scheme – to be replaced by an alternative small and Planned Regional Growth Fund (RGF) increased from medium-sized business scheme.£1bn to £1.4bn but it will be invested over three years rather £4.6bn science budget ring-fenced so that, if efficiencythan two. The money will be available for bids from the savings are made, spending will remain flat before inflation.soon-to-be-established Local Enterprise Partnerships to £150m Higher Education Innovation Fund – designed tofund local economic development projects. It replaces, in stimulate knowledge transfer between universities and businesspart, the £1.4bn annual funding of the nine English regional – to be overhauled.development agencies. Eight of these will cease from 2012. The Business Department overall has to cut its budget by Reform of the way European Regional Development 25 per cent, made up of 40 per cent savings from changesFunding is developed in England, linking it wherever possible to university teaching funding and an average 16 per centwith the Regional Growth Fund to maximise impact. savings from other areas, such as business support.impact of spending review by income group - 2012 - 201308
  9. 9. Spending Review 2010 Further monies will be made availableto ‘small businesses withgrowth potential’, theTreasury said. This maysignal further funding forthe Enterprise CapitalFunds scheme or evenpossible publicinvolvement in the highstreet banks’ proposed£1.5bn BusinessGrowth Fund. 09
  10. 10. Spending Review 2010Spending Review2010 statementWhat the Chancellor of the Exchequer had to say…the full speech Mr Speaker. Spending Review. Chote, have audited all of the annually Today’s the day when Britain steps We have, at £109 billion pounds, managed expenditure savings inback from the brink. the largest structural budget deficit today’s statements. When we confront the bills from a in Europe. The emergency Budget in June wasdecade of debt. This at a time when the whole world the moment when fiscal credibility A day of rebuilding when we set is concerned about high deficits was restored. Our market interest ratesout a four-year plan to put our public and our economic stability depends fell to near record lows. Our country’sservices and welfare state on a on allaying those concerns. We are credit rating was affirmed.sustainable footing – for the long term. paying, at a rate of £120 million a day, The IMF went from issuing warnings So that they can do their job – £43 billion a year in debt interest. to calling our Budget “essential”.providing for families, protecting This at a time when we all know that Now we must implement somethe vulnerable and underpinning a that money would far better serve the of the key decisions required bycompetitive economy. needs of own citizens than those of that Budget. It is a hard road, but it leads to a the foreign creditors we borrow from. To back down now and abandonbetter future. And we have inherited from the our plans would be the road to We are going to bring the years of previous government plans – if you economic ruin.ever-rising borrowing to an end. can call them that – that envisaged We will stick to the course. We are going to ensure, like every our national debt ratio still rising in We will secure our country’s stability.solvent household in the country: the year 2014. We will not take Britain back to the that what we buy, we can afford; Not a single penny of savings had brink of bankruptcy. that the bills we incur, we have the been identified. Mr Speaker, in the Budget I set outincome to meet; Indeed, they were plans that the tax increases we were prepared and that we do not saddle our envisaged the Chancellor of the to make, including on capital gains atchildren with the interest on the Exchequer standing here in 2014 the higher rate, pension relief on theinterest on the interest of the debts we presenting a spending review that still largest contributions and, for the firstwere not ourselves prepared to pay. had years of cutting public spending time, a permanent levy on banks. Tackling this budget deficit ahead of it. We also had to increase VAT, whereis unavoidable. And that is why last year the IMF fortunately we were able to benefit The decisions about how we do warned this country to accelerate the from the preparatory work of theit are not. reduction in the deficit. previous Government. There are choices. And today That is why the OECD, the Governor But I made it clear that spendingwe make them. of the Bank of England, the CBI all reductions rather than tax rises Investment in the future rather than the agreed with them. needed to make up the bulk ofbills of past failure. That is our choice. The action we have taken since May the consolidation. We have chosen to spend on the has taken Britain out of the financial That is what the leading internationalcountry’s most important priorities danger zone: evidence suggested worked best.– the health care of our people, the The immediate reductions to in-year So I set out spending totals for theeducation of our young, our nation’s spending to buy us a breathing space coming years, and announced somesecurity and the infrastructure that in the sovereign debt storm; £11 billion of welfare savings thatsupports our economic growth. The creation of an independent would help achieve them. We have chosen to cut the waste Office for Budget Responsibility to I also set out a new fiscal mandateand reform the welfare system that our bring honesty back to official forecasts.  for the public can no longer afford. And I can confirm to the House that To eliminate the structural deficit For this is the context of this the OBR, and its new chair Robert by balancing the cyclically-adjusted10
  11. 11. Spending Review 2010current budget over five years, by doing anything else would have meant expectations of today’s population,2015/16. cutting projects which would clearly rather than the aspirations and And we set a target of national debt enhance the economic infrastructure expectations of the 1950s.falling as a proportion of national of this country. So the Spending Review isincome by that same year. And this has no direct impact on underpinned by a far-reaching We explained how, for reasons of whether we meet the fiscal mandate programme of public service reform.caution, we will achieve both these or the year in which the debt ratio We saw over the last decade thatobjectives a year earlier in 2014/15. starts falling. more money without reform was a I can confirm that the spending plans So total public expenditure – capital recipe for failure.I set out today achieve a balanced and current – over the coming years Less money without reform wouldstructural current budget and falling will be £702 billion next year, then be worse.national debt on that same timetable. £713 billion, £724 billion and £740 And we are not prepared to I can further confirm that the current billion in 2014/15. accept that.spending totals I set out in the Budget In real terms, public spending will be So we have begun by squeezingfor each of the next four years are the at the same level as in 2008. every last penny we can find out ofsame as the current spending totals I Our public services and our welfare waste and administration costs.set out today. system will be put on a sustainable, Our ambition in this review was to They have not changed. long term footing. find £3 billion of savings from the Next year, current expenditure will And we will make sure that the administrative budgets of centralbe £651 billion, then £665 billion the financial catastrophe that happened government departments.year after, £679 billion the year after under the previous government never With the help of the Green Review,that, before reaching £693 billion in ever happens again. and the work done by my RHF the2014/15. Mr Speaker, let me turn now to the Minister for the Cabinet Office, I can The House will note that current spending decisions and the three tell the House that we have gonespending is rising not falling principles I propose to apply to the further than we thought possible inover this period. choices we have to make. cutting back-office costs. This is partly because, even with First, reform – that in every area Quangos will be abolished.the measures we take today, debt where we make savings, we must leave Services will be integrated.interest payments continue to grow no stone unturned in our search for Assets will be these years. waste and we must deliver changes And the administrative budgets of Debt interest payments will reach necessary to make our public services every main government department£63 billion in 2014/15. fit for the modern age. cut by a third. For it takes time to turn around the Second, fairness – that we are all in The result is this.debt supertanker. this together and all must make We promised £3 billion of Whitehall But I can now report to the House a contribution. savings, we will deliver £6 billion.that against the plans we inherited, Fairness means creating a welfare Of course, there is understandableone of the departments which suffers system that helps the vulnerable, concern about the reduction in thethe greatest cut today and at the supports people into work, and is also total public sector headcount thatsteepest rate is the Department for affordable for the working families will result from the measures in theDebt Interest. who pay for it from their taxes.  Spending Review. Debt interest payments will be lower Fairness also means that across the We believe the best estimateby £1 billion in 2012, then £1.8 billion entire deficit reduction plan, those remains the one set out by thein 2013 and £3 billion in 2014 – a total with the broadest shoulders should independent Office for Budgetof £5 billion over the course of this bear the greatest burden.  Those Responsibility.Spending Review. with the most should pay the most, They have forecast a reduction That is the equivalent to 16 new including our banks. in headcount of 490,000 over thehospitals or the annual salaries of Third, growth – that when money is Spending Review Period.100,000 teachers. short we should ruthlessly prioritise Let’s be clear. That’s over four years, At the Budget I also set out my those areas of public spending which not overnight.plans for capital spending over the are most likely to support economic Much of it will be achieved throughnext four years. growth, including investments in natural turnover, by leaving posts I can now tell the House that capital our transport and green energy unfilled as they become vacant.spending will be £51 billion next year, infrastructure, our science base and Estimates suggest a turnover rate ofthen £49 billion, then £46 billion, and the skills and education of citizens. over 8% in the public sector.£47 billion in 2014/15. Let me explain now how principles But yes, there will be some This is about £2 billion a year higher have guided our specific decisions. redundancies – up to the decisionsthan I set out in the Budget. First, Mr Speaker, reform. of individual employers in the public Given the contractual obligations we I believe the public sector needs to sector – that is unavoidable when theinherited from the last government, change to support the aspirations and country has run out of money. 11
  12. 12. Spending Review 2010 We feel responsible for every receive a new sovereign support grant We are also introducing Taxindividual who works for the linked to a portion of the revenue Increment Finance powers, allowinggovernment, and we will always do of the Crown Estate, so that my councils to fund key projects byeverything we can to help them find successors do not have to return to borrowing against future increases inalternative work. the issue so often. locally collected business rates. In fact, in the last three months alone Mr Speaker, central to this review is Some in local government havethe economy created 178,000 jobs. reshaping our public services. concerns about the financing of So we should remember that unless First, there needs to be a dramatic social care.we deal with this record budget deficit shift in the balance of power from the I can announce that grant fundingdecisively many more jobs will be in central to the local.  for social care will be increased by andanger – in both the private and the A policy of rising burdens, additional £1 billion by the fourth yearpublic sector. regulations, targets, assessments of the Spending Review. The Cabinet Office and the Treasury and guidance has undermined local And a further £1 billion for socialwill oversee the programme of democracy and stifled innovation. care will be provided through theWhitehall savings. We will completely reverse this. NHS to support joint working with Both departments will lead We will give GPs power to buy councils – so that elderly people doby example. local services, schools the freedom not continue to fall through the crack The core Cabinet Office budget will to reward good teachers, and between two reduced by £55 million by 2014/15. communities the right to elect their That’s a total of £2 billion additional Additional allocations will be police and crime commissioners. funding for social care to protect theprovided to fund electoral reform, Second, we should understand most the Big Society, establish that all the services paid for by Mr Speaker, we will also reform ourcommunity organisers and launch government do not have to be social housing system.the pilots for the National Citizen delivered by government. For it is currently failing to addressService – which will give young people We will expand the use of personal the needs of the country.for the first time a right of passage budgets for special education needs, Over ten years, more than half a millionto citizenship. children with disabilities and long term social rented properties were lost. In recognition of the challenges health conditions. Waiting lists have shot up. faced by the voluntary and community We will use new payment Families have been unable to move.sector, I am establishing a one year mechanisms for prisons, probation, And while a generation ago only one£100 million transition fund to help and community health services. in ten families in social housing hadthose facing real hardship. And we will encourage new no-one working, this had risen to one The Treasury will see its overall providers in adult social care, early in three by 2008/09.budget reduced by 33 per cent – years and road management. We will ensure that, in future, socialand we will share the department’s For local government, the deficit we housing is more flexible. enormously expensive PFI building, have inherited means an unavoidably The terms for existing social tenantsthat my predecessor-but-one signed challenging settlement. and their rent levels will remainup to, by moving part of the Cabinet There will be overall savings in unchanged, new tenants will beOffice into the same premises. funding to councils of 7.1 per cent a offered intermediate rents at around The Chancellor is also a Royal year for four years. 80 per cent of the market rent.Trustee and I want to say something But to help councils, we propose a Alongside £4.4 billion of capitalbriefly about the Civil List. massive devolution of financial control. resources, this will enable us to build As I outlined at the Budget, the ten Today I can confirm that ring-fencing up to 150,000 new affordable homesyear settlement expired this year and of all local government revenue grants over the next four provision for a new settlement had will end from April next year.  We will continue to improve thebeen made when we entered office. The only exception will be simplified existing housing stock through the Her Majesty graciously agreed to a schools grants and a public health grant. Decent Homes year cash freeze in the Civil List Outside of schools, police and the And we will reform the planningfor next year. fire service, the number of separate system so we put local people in Going forward, she has also agreed core grants that go to local authorities charge, reduce burdens on builders andthat total Royal Household spending will be reduced from over 90 to fewer encourage more homes to be built, withwill fall by 14 per cent in 2012/13 while than 10. a New Homes Bonus scheme.grants to the Household will be frozen Councils and their leaders will Within an overall resource budgetin cash terms. remain accountable – but they will no for the Department for Communities In order to support the costs of the longer have to report on 4,700 local and Local Government that is beinghistoric Diamond Jubilee, which the area agreement targets. reduced to £1.1 billion over the period,whole country is looking forward to The Local Government settlement priority will be given to protecting thecelebrating, there will be a temporary includes funding for next year’s council Disabled Facilities Grants.additional facility of £1 million. tax freeze, to help families when their This will go alongside a £6 billion After that the Royal Household will budgets too are tight. commitment over four years to the12
  13. 13. Spending Review 2010Supporting People programme, which Overseas development will reach in the Home Office Budget and theprovides help with housing costs for 0.7 per cent of national income in 2013.  Single Intelligence Account.thousands of the most vulnerable This will halve the number of deaths We have been assured this willpeople in our communities. caused by malaria. maintain our operational capabilities And, in recognition of the important It will save the lives of 50,000 against both Al Qaida and itsservice provided by the Fire and women in pregnancy and 250,000 affiliates and against Northern IrishRescue Service, we have decided to newborn babies. terrorist threats.limit their budget reductions in return Whether working behind the counter This will enable us to meet thefor substantial operational reform. of a charity shop, or volunteering terrorist threat and protect the Mr Speaker, let me turn now to abroad, or contributing taxes to our Olympic Games in 2012.reforms in our security and defence. aid budget, Britons can hold their Overall, the Home Office budget will Yesterday my RHF the Prime heads up high and say – even in these find savings of an average of 6 perMinister set out the conclusions of the difficult times, we will honour the cent a year.Strategic and Defence Review. promise we make to the very poorest The Ministry of Justice’s budget will He explained in detail how we will in our world. reach £7 billion by the end of the fourprotect the British people, deliver on Our aid budget allows Britain to lead year period – with average savings ofour international obligations and secure in the world. It may be protected from 6 per cent a year.British influence around the world. cuts but not from scrutiny. A Green Paper will set out proposals This Spending Review provides the I have agreed with my RHF the to reform sentencing, interveneresources to do just that. Development Secretary a plan of earlier to give treatment to mentally The budget for the Ministry of reform that reduces administration ill offenders, and use voluntaryDefence will reach £33.5 billion in costs to half the global donor average, and private providers to reduce2014/15, a saving of 8 per cent over ends the aid programmes we inherited reoffending.the period. in China and Russia, focuses on £1.3 billion of capital will also be On top of this settlement, we will conflict resolution, and creates an provided over the period to maintaincontinue to provide out of the Reserve independent commission to assess the the existing prison estate and fundthe resources that our forces in impact of the money we commit. essential new-build projects – butAfghanistan require. Mr Speaker, let me now turn to plans for a new fifteen hundred place As a Chancellor I believe strongly security at home. prison will be deferred.that if we ask our brave service men Protecting the citizen is a primary The Law Officers Department willand women to risk their lives on our duty of government. reduce its budget by a total of 24 perbehalf in active combat, then we will Our police put themselves in harm’s cent over the period, with the Crowngive them all the tools they need to way to make the rest of us safe – and Prosecution Service greatly reducingfinish the job. we owe them our gratitude. its inflated cost base. But Mr Speaker, our international But no public service can be immune Reforms will also be required toinfluence and our commitment to the from reform. streamline the criminal justice system,world are not only determined by our Her Majesty’s Inspector of close under-used courts and reducemilitary capabilities. Constabulary found in his recent report the legal aid bill. Our diplomacy and development that significant savings could be made We need fair access to justice, butpolicy matter too. to police budgets without affecting the provided at a fair cost for the taxpayer. Savings of 24% in the Foreign and quality of front line policing. Mr Speaker, all the reforms I haveCommonwealth Office budget will be And Tom Winsor is leading a review spoken of – to Whitehall and theachieved over the review period by of terms and conditions which will way services are provided, to locala sharp reduction in the number of report on how the police service can government, to our defence andWhitehall-based diplomats and back manage its resources to serve the security and justice system – willoffice functions. public even more cost-effectively. improve both the value for money for There will be a focus on helping Using independent forecasts for the taxpayers and the service provided toBritish companies win exports and precept, the settlement I am proposing the jobs at home, and with the help today will see police spending falling Next month, each governmentof the UKTI we will attract significant by 4 per cent each year. department will publish a businessoverseas investment to our shores.  By cutting costs and scrapping plan setting out its reform plans for I can also confirm that this Coalition bureaucracy we are saving hundreds the next four years – so their prioritiesGovernment will be the first British of thousands of man hours – our aim is are clear and the public can hold themgovernment in history, and the first to avoid any reduction in the visibility to account.major country in the world, to honour and availability of police in our streets. Reform is one of the guidingthe United Nations commitment on Our new National Security Strategy principles of this Spending aid. judges terrorism to be one of the So too is fairness. The Department for International highest risks facing this country. Let’s be clear.Development’s budget will rise to £11.5 Therefore I am prioritising counter There is nothing fair about runningbillion over the next four years. terrorism over the review period, both huge budget deficits, and burdening 13
  14. 14. Spending Review 2010future generations with the debts we The legislation will be published supports those in retirement.ourselves are not prepared to pay. tomorrow. That is why one of the first acts How ironic that it was the last Once fully effective, the permanent of this coalition government wasLabour Prime Minister himself who levy will raise more net each year and to re-link the basic state pension toonce observed that the “public every year for the Exchequer than the earnings, and guarantee a rise eachfinances must be sustainable over the one-year bonus tax did last year – and year by earnings, inflation or 2.5% –long term. If they are not then it is the I note that the previous Chancellor whichever was higher.poor ... that will suffer most. now admits that it failed to curb Never again will those who worked That’s why we are restoring order behaviour and was not sustainable. hard all their lives be insulted withto our public finances before that is However, that is not enough. a state pension increase of just 75allowed to happen. We want the banks to pay not just pence. A fair government deals with the by the letter of the tax law, but by But this guarantee of a decentdeficit decisively. its spirit. income in retirement has to be paid for That is what we are doing today. A year ago, the previous government at a time when people are living much And a fair government makes sure announced in a fanfare that it would longer than anyone predicted.that those with the broadest shoulders require banks to sign up by the Code We should celebrate that fact, butbear the greatest burden. of Practice on Taxation. also confront it. The distributional analysis published Mr Speaker, I have asked the Lord Turner’s Report on pensions,today shows that those on the highest Revenue how many of our leading commissioned by the last government,incomes will contribute more towards 15 banks actually signed up. acknowledged that a more generousthis entire fiscal consolidation, not just The answer is four.  Four out of fifteen. state pension had to be funded by anin cash terms, but also as a proportion That’s what happened when they increase in the pension age.of their income and consumption of were in office. All talk and no action. Even since its publication,public services combined. So I have instructed the Revenue life expectancy has risen further Mr Speaker, I completely understand to work with the banking sector to than it predicted.the public’s anger that the banks ensure the remaining banks have Before the summer we launched athat were so appalling regulated implemented the Code of Practice by review on increasing the state pensionover the last decade, and whose the end of next month. age, and that has now concluded. near collapse wrought such damage We will also need to address the As a result, I can today announceon the economy, should now be situation under the last government that the state pension age for men andcontemplating paying high bonuses. where the gap between the taxes women will reach 66 by the year 2020. We are overhauling the system of owed and the taxes paid grew This will involve a gradual increase inregulation we inherited so that the considerably. the State Pension Age from 65 to 66,Bank of England, with its clout and So in this Spending Review, while starting in 2018. reputation, is put in charge. the HM Revenue and Customs budget And it will mean an acceleration of We have set up the Independent will be expected to find resource the increase in the female pension ageCommission on Banking to look at the savings of 15 per cent through the already underway since this April.structure of the industry – and next better use of new technology, greater From 2016 the rate of increase willyear we will receive its report. efficiency and better IT contracts – we be three months in every four rather And today we set out very clearly, for will be spending £900 million more on than the current plan of one month inall to take note of, our objective in taxing targeting tax evasion and fraud. every two.the banking industry going forward. This additional £900 million is Raising the State Pension Age is We neither want to let banks off expected to help us collect a missing what many countries are now doing,making their fair contribution, nor do £7 billion in tax revenues. and will by the end of the nextwe want to drive them abroad.  Nor will fraud in the welfare system Parliament save over £5 billion a year – Many hundreds of thousands of jobs be tolerated anymore. money which will be used to provide aacross the whole United Kingdom We estimate that £5 billion is being more generous basic state pension asdepend on Britain being a competitive lost this way each year.  we manage demographic for financial services. £5 billion that others have to work Earlier this month, we also received Our aim will be to extract the long hours to pay in their taxes. the interim report from John Hutton’smaximum sustainable tax revenues This week we published our plans Public Service Pension Commission.from financial services. to step up the fight to catch benefit I am sure the whole House will want We will assess what those maximum cheats, and to deploy uncompromising to thank John for this excellent andrevenues could be – not just in one penalties when they are. independent piece of work.year, but over a period of years. That brings me to the wider I welcome his findings – and I hope it We have already decided – in welfare budget. will form the basis of a new deal, thatthe face of opposition from the A civilised country provides for balances the legitimate expectationsprevious government – to introduce a families, protects the most vulnerable, of hard working public servants for apermanent levy on banks. helps those who look for work, and decent income in retirement with the14
  15. 15. Spending Review 2010equally legitimate demands of hard- they lose their job, have a disability, We will also be seeking substantialworking taxpayers that they do not start a family and need help with savings from the rest of the £200pay unfairly for it. low pay. billion benefit bill, on top of those The elements of this new pension But the truth – as everyone knows already identified in the are clear. – is that the welfare system is failing As I said in June, the more we could We should accept that public service many millions of our fellow citizens. save on welfare costs – the more wepensions continue to provide a form People find themselves trapped can continue other, more productiveof defined benefit, and that there is no in an incomprehensible out-of- areas of government spending.race to bottom of pension provision. work benefit system for their entire And in the massive public We want public service pensions to lifetimes, because it simply does not consultation we conducted over thebe a gold standard. pay to work. summer, the overwhelming message At the same time, we should accept This robs them of their aspirations we received was that the Britishthat they must be affordable.  and opportunities. people think it is fair to reform welfare When these public service pension And it costs the rest of the bills in order to protect importantschemes were established in country a fortune. public services.the 1950s, taxpayers made half Welfare spending now accounts for So today I announce these furtherthe contributions.  one third of all public spending. welfare savings. Today they make up two-thirds of Benefit bills have soared by 45 per We will time limit contributorycontributions, and the unfunded bill is cent under the previous government. Employment and Support Allowanceset to rise to £33 billion by 2015/16. In some cases, the benefit bill of for those in the Work Related Activity So I think we should accept, as John a single out-of-work family have Group to one year.Hutton does, that there has to be an amounted to the tax bills of 16 working This is double the length of timeincrease in employee contributions, families put together. than for contributory Jobseeker’salthough I also agree with John that This is totally unsustainable and unfair. Allowance.this should be staggered The last government promised We will increase the age thresholdand progressive. reform and flunked it. for the shared room rate in housing That means the lower paid – and We will deliver. benefit from 25 to 35, so that housingthose in the armed forces – are My RHF the Work and Pensions benefit rules reflect the housingprotected and the highest paid public Secretary is setting out proposals, with expectations of people of a similar ageservants, who get the largest benefits, my support, to replace all working age not on the highest contributions. benefits and tax credits with a single, We will give local authorities We will await the full Commission simple Universal Credit. greater flexibility to manage councilReport next spring before coming to The guiding rule will be this: it will tax together with direct control overany conclusions on the exact nature always pay to work. Council Tax benefit, within an overallof the defined benefit and progressive Those who get work will be better budget that will be reduced by 10%contribution rise. off than those who don’t. from April 2013. We will also launch a consultation on It represents the greatest reform to We will align the rules for thethe Fair Deal policy. our welfare state for a generation  mobility and care elements of But we will carry out, as the It will be introduced over the next Disability Living Allowance paid tointerim report suggests, a full public two Parliaments, at a pace that people in residential care, generatingconsultation now on the appropriate ensures we get this right. savings but enabling us to continuediscount rate used to set contributions I have set aside more than £2 billion with this important these pensions. over this spending review of resources We will freeze the maximum Savings From the perspective of filling the to make this happen. Credit award in Pension Credit for fourhole in the public finances, we will And it will go alongside our new years, thereby limiting the spread ofseek changes that deliver an additional Work Programme, which we are also means-testing up the income distribution.£1.8 billion of savings per year in the funding today. On tax credits:cost of public service pensions by Drawing on the skills of the We will further control the cost of2014/15 – over and above the plans left voluntary sector and private providers, tax credits by freezing the basic andto us by the last government. the Work Programme will provide 30 hour elements for three years; It is also clear that the current final- intensive help to those looking for We will change the Working Taxsalary pension terms for MPs are not work – and support for those who Credit eligibility rules so that couplessustainable and we anticipate that the could look for work but currently lack with children must work 24 hours percurrent scheme will have to end. the confidence or skills to try. week between them; We will make a further statement The Department for Work and And we will return the childcarefollowing the publication of Lord Pensions will make savings to help element of the Working Tax Credit toHuttons’ findings. deliver these schemes, by increasing its previous 70 per cent level. The welfare system is also there to the use of digital applications and We will also introduce a new caphelp people of a working age when reducing overheads. on benefits. 15
  16. 16. Spending Review 2010 No family that doesn’t work will from higher rate taxpayers saves to make these savings to deal with ourreceive more in benefits than the Britain £2.5 billion a year. ageing population and the rising costsaverage family that does go out to work. We also keep the universal benefits of new medical treatments. That is a tough, but fair deal. for pensioners, in recognition of the But there are also new services we Of course, those in receipt of fact many have worked hard and can offer.Disability Living Allowance, Working saved all their lives. A new cancer drug fund will beTax Credit or the War Widows Pension Free eye tests; provided.will be excluded. free prescription charges; Spending on health research will be Taken together, all these welfare free bus passes; protected and we will prioritise workmeasures I have outlined will save the free TV licenses for the over 75s; on treatment for £7 billion a year. and Winter Fuel Payments will We will expand access to But Mr Speaker, we want to ensure remain exactly as budgeted for by the psychological therapies for the young,that low income families with children previous Government – as promised. elderly and those with mental illness.are protected from the adverse effect I am also turning the temporary We will fund new hospital schemes,from these essential savings. increase in the Cold Weather Payments including the St Helier, the Royal Because this Government is introduced by the last government into Oldham and the West Cumberland.committed to ending child poverty. a permanent increase. For health spending, as for other I can announce today that I am In my view higher Cold Weather spending announcements, thereincreasing the child element of the Payments should be for life, not just will be consequential allocations forChild Tax Credit by a further £30 for elections. Scotland, Wales and Northern 2011/12 and £50 in 2012/13 And so too are the promises we The Barnett formula will be appliedabove indexation. make on the National Health Service. in the usual way. This will mean annual increases of The NHS is an intrinsic part of the That means that the increase in£180 and then £110 above the level fabric of our country. health spending and the relativepromised by the last government. It is the embodiment of a fair society. protection of education spending will This will provide support to 4 million This Coalition Government made a feed through to the devolved resourcelower income families – and I can commitment to protect the NHS, and budgets.confirm that using the same model we increase health spending every year. It means that that all three nations willinherited, the Spending Review has no Today we honour that commitment actually see cash rises in their budget,measurable impact on child poverty in full. albeit rises below the rate of inflation.over the next two years. Total health spending will rise each For Scotland, the resource budget While we await the conclusions from year over and above inflation. will rise to £25.4 billion in 2014/15.the report by the RHM for Birkenhead. This year we are spending £104 For Wales, it will rise to £13.5 billion. Let me turn now to the billion on health care, capital and And for Northern Ireland, it will riseuniversal benefits. current combined.  to £9.5 billion. Mr Speaker, I have taken the difficult By the end of four years, we will be In Scotland, we are proceeding withdecision to remove child benefit from spending £114 billion. the implementation of the Calmanfamilies with a higher rate taxpayer. We can afford this in part because reforms. I wish it were otherwise – but I of the decisions on welfare I have just In Wales, we will consider with thesimply cannot ask those watching this announced. Assembly Government the proposalsearning just £15,000 or £30,000 to go And also because we have made in the final Holtham report, consistenton paying the child benefit of those tough decisions in other parts of the with the Calman work being takenearning £50,000 or £100,000. government budget. forward in Scotland.  The debts of the last Labour But to govern is to choose.  And we In Northern Ireland, the collapse ofGovernment, and the need to make have chosen the NHS. the Presbyterian Mutual Society hassure the better off in society also make That does not mean we are letting caused great hardship.  And peoplea fair contribution, make this choice the health department off the need to have been left without their money forunavoidable. drive forward real reform and savings too long. And it also means that no further from waste and inefficiency. I confirm today that we will providechanges to child benefit are required. Productivity in the health service fell the Northern Ireland Executive with Child benefit will continue to paid in steadily over the last ten years, and £25 million in cash, and a £175 millionthe normal way to the great majority that must not continue. loan, to help those who have lost theirof the population, from birth until a By 2014, we are aiming to save up to life savings.  child leaves full time education at the £20 billion a year by demanding better We will also help those across theage of 18 or even 19. value for money. United Kingdom who have lost money as We can afford to do this because, But the money we save will be a result of the collapse of Equitable Life.according to the latest independent reinvested in our nation’s health care. For ten years the Equitable Lifeestimates from the Office for Budget As the independent forecasts we policyholders have fought for justice.Responsibility, removing child benefit published in the Budget show, we need For ten years the last government16
  17. 17. Spending Review 2010dithered and delayed and denied them And today’s review builds on these Building on the Wakeham Review ofthat justice. steps – because even when money is science spending, we have found that It is time to right the wrong to many short we should prioritise those areas within the science budget significantmany thousands of people, who did of public spending which are most savings of £324 million can be foundthe right thing, who saved for their likely to support economic growth. through efficiency.future, tried not to depend on the That is what we are doing in the If these are implemented, then withstate – and then were innocent victims Department for Business, Innovation this relatively protected settlementof a terrible failure of regulation. and Skills. I am confident that our country’s So let me make it clear. Administration will be cut by £400 scientific output can increase over the I accept the findings of the million. 24 quangos will be cut. next four years.Parliamentary Ombudsman in full. Lower-priority programmes like Train We will also: I have read the advice of Sir John to Gain will be abolished. invest £220 million in the UK centreChadwick, and I thank him for it, Adult learners and employers will have for Medical Research and Innovation atbut I do not agree with the level of to contribute more to further education. St Pancras;compensation his analysis suggested. This means that today I can fund the molecular biology lab in I agree with the Ombudsman that the announce the largest ever financial Cambridge;relative loss suffered is the difference investment in adult apprenticeships. the Animal Health Institute inbetween what policyholders actually An increase of over 50 per cent on Pilbright;received from their policies, and what the previous government, helping and the Diamond synchrotron inthey would have received elsewhere. 75,000 new apprentices a year by the Oxford. The Parliamentary Ombudsman end of the Spending Review period. Research and technologicalherself recognised that a balance had We will maintain and invest in the innovation will also help us with oneto be struck between being fair to Post Office Network, and protect of the greatest scientific challengespolicyholders and fair to taxpayers, community post offices.  of our times – climate change – and itparticularly when many budgets and We will come forward with our will support new jobs in low-carbonbenefits are being cut. detailed response to Lord Browne’s industries. But money we pay out has to come report on higher education funding So today, even in these straightenedfrom general public expenditure. and student finance, including our times, we commit public capital funding I have decided that the fair amount plans to provide financial support to of up to £1 billion to one of the world’sto pay out in total is in the region of encourage those from the poorest first commercial scale carbon capture£1.5 billion, two thirds of which will be households stay in education. and storage demonstration projects.found in this Spending Review period. Our universities are jewels in our We will also invest over £200 million Those who had With Profits economic crown, and it is clear that in the development of off-shore windAnnuities are particularly hard hit, as if we want to keep our place near the technology and manufacturing at portthey were retired and were unable to top of the world league tables then we sites.move their savings elsewhere.  As a need to reform our system of funding Yesterday, protestors scaled theresult, the Government will cover the and reject – as, to be fair, many Treasury urging us to proceed with ourcost of the total relative loss suffered opposite do – the unworkable idea of idea for a Green Investment these deserving people. a pure graduate tax. Mr Speaker, it’s the first time anyone The scheme will start making Clearly better-off graduates will have has protested in favour of a bank.payments next year. to pay more – and this will enable us to We will go ahead. Mr Speaker, these measures and our reduce considerably the contribution I have set aside in this Spendingwelfare reforms mean: that general taxpayers have to make to Review £1 billion of funding for the Bank, It will always pay to work; the education of those who will probably but I hope much more will be raised from Benefit savings will help us protect end up earning much more them. the private sector and the proceeds ofkey public services like the NHS; Overall, average annual savings of future government asset sales. There is help for those who have 7.1 per cent will be found from the The aim of all these investment is forsaved and lost everything. Department for Business budget – the Britain to be a leader of the new green These are fair decisions, consistent minimum it was asked to find. economy. Creating jobs, saving energywith the second principle of this Within those savings, however, the costs, reducing carbon emissions.Spending Review. Secretary of State and I have decided We will also introduce incentives to The third and final principle centres to protect the science budget. help families reduce their bills.on growth [and promoting a private Britain is a world leader in scientific We will introduce a fundedsector recovery. research.  And that is vital to our Renewable Heat Incentive. By restoring macroeconomic stability future economic success. Our Green Deal will encourage homewe have brought certainty to businesses. That is why I am proposing that energy efficiency at no upfront cost By cutting business taxes we we do not cut the cash going to the to homeowners and allow us to phaseare giving business the freedom science budget.  It will be protected at out the Warm Front compete. £4.6 billion a year. Overall, the total resource 17
  18. 18. Spending Review 2010settlement for the Department for of savings a year for the Exchequer by these tough spending settlements theEnergy and Climate Change will 2014/15. country is still going to be spendingfall by an average 5 per cent a year To ensure that the cost of these new over £700 billion a year.– but there will be a large increase obligations is not passed on to the So in Yorkshire and Humber,in capital spending, partly to meet license fee payer, the BBC has agreed capacity on the M62 will be expanded,unavoidable commitments on nuclear a funding deal for the full duration of £90 million will be spent to improvedecommissioning. its Charter Review. rail platforms across various towns DEFRA will deliver resource savings The licence fee will be frozen for the and cities and we will also improve lineof an average 8 per cent a year – but next six years. speeds across the Pennines.we will fund a major improvement in This deal helps almost every family In the North East, £500 million willour flood defences and coastal erosion and is equivalent to a 16 per cent be spent refurbishing the Tyne & Wearmanagement, that will provide better saving in the BBC budget over the metro and Tees Valley bus for 145,000 homes. period, similar to the savings in other In the North West, we will invest in Britain’s arts, heritage and sport all major cultural institutions. rail electrification between Manchester,have enormous value in their The BBC also agreed to reduce its Liverpool, Preston and Blackpool andown right. on-line spend and make no further we will provide funding for a new But our rich and varied cultural life encroachments into local media suspension bridge over the Merseyis also one of our country’s greatest markets, to protect local newspapers at Runcorn.economic assets. and independent local radio and TV. Rail and roads are devolved to the The resource budget for the And they will contribute to the Scottish executive, as are roads inDepartment of Culture, Media and £530 million we will spend over Wales – but I can tell the House thatSport will come down to £1.1 billion by the next four years to bring super- major rail investments around Cardiff,2014/15. fast broadband to rural parts of our Barry and Newport will go ahead. Administrative costs are being country that the private sector will In the East Midlands the M1 and A46reduced by 41 per cent. 19 quangos take longer to reach.  will be improved.will be abolished or reformed. Pilots will go ahead in the Highlands In the West Midlands, we will All of this is being done so we and Islands, North Yorkshire, Cumbria extend the Midland Metro andcan limit four year reductions to 15 and Herefordshire. completely redevelop Birminghamper cent in core programmes like All of this will help encourage the New Street station.our national museums, the frontline growth of our creative industries as a In the South West, we will fundfunding provided to our arts and Sport key part of the new economy we are improvements on the M5 and M4, andEngland’s Whole Sport plans. seeking to build. the new transport scheme We will complete the new world- Mr Speaker, after our defence for Weymouth.class building extensions for the Tate requirements are met, the Department In the East of England, colleaguesGallery and British Museum in London. for Transport will receive the largest will be delighted to know that the A11 The Secretary of State will provide capital settlement. to Norwich will be upgraded. details of further projects shortly. Over the next four years we will Around London, we will widen the I can also announce today that in invest over £30 billion in transport M25 between ten different junctionsorder that our nation’s culture and projects, more than was invested and complete the improvement to theheritage remains available to all, we during the past four years. A3 at Hindhead.will continue to fund free entry to £14 billion of that will fund And in London, on top of themuseums and galleries. maintenance and investment on Olympics, a major investment in our There is ongoing provision of the our railways.  capital city’s transport infrastructure£9.3 billion of public funding for a Direct bus subsidies will be reduced, will take and successful Olympic and but statutory concessionary fares Crossrail will go ahead and key TubeParalympic Games in London in 2012. will remain. lines will be upgraded for the twenty And we have also approached the The cap on regulated rail fares first century. BBC to ensure that they too make will rise to RPI +3 per cent for the This is nothing like the complete list. their contributions, as a publicly three years from 2012, but that will So yes, we are saving moneyfunded organisation, to savings during help this country afford new rolling and putting the state on a morethis Spending Review. stock as well and improve passenger sustainable footing, but even then I am pleased to confirm that this conditions.  we will still be spending tens ofweek we have struck a deal. The Secretary of State will set out billions of pounds on Britain’s future The BBC will take from the how more of the transport money will infrastructure.government the responsibility for be allocated next week. Next week we will also set out ourfunding the BBC World Service But I want to tell the House today national infrastructure plan – so thatand BBC Monitor, as well as part- about some of the projects that will private money is also put to work infunding S4C. go ahead. building for this country the economic This amounts to some £340 million For let’s remember that even after infrastructure our businesses need.18
  19. 19. Spending Review 2010 Our regional growth fund will also to good schools to take pupils from budget deficit this House of Commonshelp us do that. poorer backgrounds. has ever had to face outside of wartime. As promised, a billion pounds has This pupil premium is at the heart We have had to make choices.been found for the fund over the next of the Coalition Agreement and it is Choices about the things wetwo years.  at the heart of our commitment to support. Money designed to lever in private reform, fairness and economic growth. And today, I have announced realinvestment in areas of our country Parents, teachers and community increases in the NHS budget andwhere it has been too absent over groups will be supported if they wish the resources of schools, as well asthe last decade. And I can announce to establish free schools. new investments in the economictoday that I am providing close to half We will fund an increase in places infrastructure of our economy.a billion pounds extra in the third year for 16 to 19 year olds, and raise the I have also announced realfor the regional growth fund. participation age to 18 by the end of reductions in waste and reforms Long term investment in the the Parliament – and that enables us to welfare. And though this we willcapacity of our transport, our to replace education maintenance reshape public services to meet thescience, our green energy will all help allowances with more targeted support. challenges of our times.move Britain from its decade long And we will also provide support for Mr Speaker, during the process ofdependence on one sector of the the early years of our children. this Spending Review I have receivedeconomy in one part of the country – The increased entitlement to 15 many submissions...and the ruin that led to. hours a week free education for all ... including one from the party But the most important ingredient a three and four year olds – introduced opposite that the average cut fortwenty-first century economy needs under this government – will continue. unprotected departments should beis well educated children, who believe Sure Start services will be protected set at 20 per cent over the comingin themselves and aspire to a better in cash terms, and the programme will four whatever their background or be refocused on its original purpose. ...rather than the 25 per cent that Idisadvantages. And we will help them further by anticipated in my June Budget. In June, after the Budget, when introducing for the first time 15 free I have examined this proposalthe Chief Secretary and I turned our hours of early education and care for carefully and I have consultedattention to how to allocate spending all disadvantaged two year olds. the published documents of mybetween government departments, we So these children have a chance in predecessor the RHG for Edinburghset ourselves a goal. life and are ready, like the rest of their South West. We wanted to see if it was possible class mates, for school. And because of our tough but fair– even when spending was being cut – Overall, the Department for Education decisions to reform welfare, and theto find more resources for our schools will be required to find resource savings savings we’ve made on debt interest...and for the early years education of of only 1 per cent a year. ... I am pleased to tell the House itour children.  Central administration will be cut by has been possible – and the average I can tell the House that we have a third and five quangos will go. saving in departmental budgets will besucceeded. The capital budget will have to bear lower than the previous Government It has meant other departments its share of the reductions. implied in its March Budget.taking bigger cuts. As the House will know we’ve had Instead of cuts of 20 per cent But I believe strongly that this is the to phase out the hopelessly inefficient there will be cuts of 19 per cent overright choice for our country’s future. and overcommitted Building Schools four years. There will be a real increase in the for the Future programme. So I thank them for their input andmoney for schools, not just next But £15.8 billion will be spent to look forward to their support.year or the year after – as the last maintain the school estate and rebuild Mr Speaker, this Coalitiongovernment once promised – but for and refurbish 600 schools. Government faced the worst economiceach of the next four years. I repeat – the resource money for inheritance in modern history. The The schools budget will rise from schools, the money that goes to the debts we were left threatened every£35 billion to £39 billion. classroom – on the broadest definition, job and public service in the country. Even as pupil numbers greatly including all the main grants, will go But we have put the national interestincrease, we will ensure the cash up in real terms every year. first. Made the tough choices.funding per pupil does not fall. It is a real investment in the future of Protected health and schools and We will also sweep away all the our children and in the future growth investment in growth.different ways in which money is ring- in our economy too. Reformed welfare and cut waste.fenced so that schools can decide how Mr Speaker. Made sure that we are all in this spend their money as they see best. Let me conclude. And taken our country back from We will also introduce a new £2.5 The decisions we have taken today the brink of bankruptcy.billion pupil premium that supports the bring sanity to our public finances and A stronger Britain starts of disadvantaged children, stability to our economy. And I commend this statement toand which will provide a real incentive They deal decisively with the largest the House. 19
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