"He needed to understand that Daddy might not always be very popular, and that there might be people who don't like Daddy, or the things he has to say. He might even hear it at school, but he's not to worry about it." ~ George Osborne, Chancellor of the Exchequer.
Oh! The terrible pain when a Father has to tell his eight year old son that he is about to make 490,000 public sector workers redundant...
I will admit that because of the three reasons stated in the title above, I was considering trying to attempt to blissfully ignore the announcement of the spending review within my blog. However, I then realised that although it may be easier to ignore the spending review; it would be a political disgrace on my behalf.
I therefore attempt to analyse aspects of the Spending Review; in the words of the Right Honourable Danny Alexander MP "not because it is easy, but because it is right". A phrase he used to defend his involvement in implementing the many cuts contained within the review at the Liberal Democrat Conference.
George Osborne began by reminding us, that as a country, we have the largest structural deficit in Europe at £109bn. Whether you blame Labour or not, this means each year, the country is paying £43bn in debt interest. Each day that is more than £100m spent on servicing our debt; enough to build a Primary School every hour.
To carry on like this would simply be unsustainable.
The predominantly Labour-pro media were always going to exaggerate the apparent 'horrors' of this Spending Review but undoubtedly the loss of 490,000 jobs over 4 years will have a damaging, catastrophic, social and economic impact. However, we have to think about the long term.
Would it really be fair to leave the growing debt, we are responsible for, for future generations to solve?
I am sure the majority would agree that no, it is not. The cuts need to happen. It is the speed and the extent of these cuts which is to be debated.
A 19% average cut (which was considerably lower than the 25% cut expected) will be made across the 4 year length of the budget. He has also sensibly decided to exclude certain departments from the 'brutal' cuts; most noticeably Education, Health and International Development.
The Education Department has been allocated an annual budget of £57.6bn, this is the second largest budget. The Review will see a 3.4% real term fall over 4 years and the abolition of 5 Quangos but direct funding to schools will be protected with budgets rising from £35bn to £39bn.
As a Lib Dem, it was particularly pleasing to see that a Pupil Premium of £2.5bn will be implemented for teaching disadvantaged pupils; a key Lib Dem manifesto pledge. Osborne also announced that 15hrs of free early education and care for 2 year olds, would also be offered to those from poorer households.
Clearly, education on the whole has thrived from this Spending Review.
However, I still fail to understand why we are wasting £1.3bn on the Academies Scheme which simply makes the elite schools the uber elite... But I have ranted sufficiently over this on a previous post...
Health care will also be protected from cuts and has been allocated a budget of £106.4bn - the largest budget of all the departments. The NHS will receive a 1.3% real term rise in funding by 2015 and an extra £2bn will be provided for social care by 2014-2015. A new cancer drug fund will be provided and the budget will rise above inflation each year from £104bn this year to £114bn over the next 4 years.
This year's International Development budget has been set at £7.7bn, this is due to rise to £11.5bn over the next 4 years to meet UN aid commitments. All overseas aid budgets have been protected from cuts except for aid to China and Russia which has been stopped entirely.
However, other departments haven't been so lucky...
The Business, Innovation and Skills department has been allocated a budget of £21.2bn with an annual cut of 7.1%. For me, this is perhaps one of the cuts I find most worrying, partly through personal interest but also in terms of the public interest. The department is key in providing the facilities, skills and research which help boost our economy through employment and education.
However, Osborne has promised that there will be funding for 75,000 adult apprenticeships and thankfully the Science Budget has been frozen; instead of cut as feared.
There is of course The Browne report taking place into reforming tuition fees.
Much of this report I can agree with e.g. making students pay according to their income following University. If you go on to a high income job as a result of University, of course you should contribute more to the cost than someone who received a low income job. The calamity is of course taking the cap off tuition fees. It would be completely unfair to remove the cap as naturally the more prestigious Universities e.g. Oxford or Cambridge will take advantage of their excellent reputation by making students pay higher fees to attend the University meaning students from relatively poorer backgrounds would be disadvantaged.
The Cabinet Office faces a £55m cut in budget.
The Queen will also be practicing her patriotic duty; the Civil List funding will be frozen next year and the total Royal Household Spending will fall by 14% from 2012-2013. This would suggest we really are all in this together! However, she is temporarily taking £1m to fund her Diamond Jubilee - is this really necessary, would a trip to the cinema to celebrate not suffice?
Within my household, the big worry has been the Communities and Local Government Budget.
The Budget has been set at £33.6bn with a fall per annum of 7.1% which may naturally lead to the unemployment of council staff. However, changed rental agreements and the aim to build 150,000 new affordable homes add a brighter tone to this budget.
The Army will lose 7000 jobs.
The RAF and Navy will lose 5000 jobs each.
And the MOD will lose 25,000 civilian staff.
Yet still we seem to be fighting a seemingly 'checkmate' war in Afghanistan which is costing us billions to run each year...
The Defence Department will face cuts of 8% over the next 4 years and has been allocated a budget of £46.1bn. The Harrier Jump Jets and Ark Royal Aircraft are to be axed alongside the planned Nimrod spy planes, whilst the spending decision on Trident is to be delayed until 2016.
In amongst the 'doom and gloom' there is some good news, especially for fellow Lib Dems...
£1bn in funding has been set aside to start a Green Investment Bank; this is a key idea straight from the manifesto of the Lib Dems. Also, within the Energy and Climate Change Department, £200m in funding has been set aside for Wind Power development. However, the 5% annual budget cut means that the Tidal Barrage on the Severn Estuary has been scrapped.
During this year's election, do you remember the vital word?
FRONTLINE SERVICES.
So, we've had the health care and education, now time to look at policing...
The Home Office budget has been set at £10.2bn with a cut of 6% per annum. This has resulted in a 4% cut to the Police Budget however, it has been stressed that these cuts are focused on the bureaucracy rather than front line services - let's hope they are right...
And the criminals?
The plan for a new 1500 place prison to be built has been scrapped and it has been estimated that 3000 fewer prison places are to be expected by 2015.
However, there will be a £1.3bn capital investment in prison estate helping ensure we have a more efficient juridical system with fewer re-offenders.
The Transport Budget is due to fall by 21% over 4 years, which is perhaps amongst the highest cuts in budgets. However, the department will receive £30bn for capital spending, including £500m for Tyne Wear Metro and Tees Valley bus network. The cross rail project is to go ahead in London and £14bn is to be spent on improving railways.
The Treasury has the highest budget cut, aiming to cut its budget by 33% over the next 4 years.
The Banking Levy will be made permanent, £900m will be put towards targeting tax evasion and £1.5bn will be given in compensation to the Equitable Life Policyholders who were hit by near collapse. There will also be a 15% cut in funding for revenue and customs.
The streets today were filled with middle aged grumbles, as it was announced the state pension age would reach 66 by 2020 and that there would be a reform of public pensions to save £1.8bn by 2015, with employees likely to contribute more. However, for the lucky few already there; the Winter fuel allowance, free bus passes and TV licenses for the 75+ will all be kept.
Cuts will be made to child benefits for higher rate tax payers to generate £2.5bn (hooray!) and couples on working tax credits must work 24hrs between them. It was also announced that a further £7bn in welfare savings have been planned, on top of the £11bn already announced.
And finally, a 12 month time limit has been implemented for the one million people on employment and support allowance; find work... or face a benefit cut.
Nick Clegg has described the review as being "thoroughly a coalition product" whilst the IFS have described its as being "more regressive than progressive". Clearly, there is some debate as to the success of the Spending Review. Only one thing can be for sure; only time will tell...
P.S. I would briefly like to apologise that this post is rather factual.
I personally don't feel informed enough to fully understand the impact of the Spending Review and so have refrained from voicing my opinion as much as possible, as I would not want to base it on inadequate or false reason. I would appreciate any comments or debate as to whether the Spending Review has been a success or not and am always willing to listen and analyse other people's viewpoints.
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A few points- it's only lower than the 25% cuts expected because he shunted so much onto non-departmental spending- like by taking the disabled off of ESA after a year and putting them on JSA, and so on.
ReplyDeleteThe Pupil Premium is a bit of a con, it hasn't come from outside of the schools budget as Clegg promised. It isn't extra money, it's money redirected from other social mobility measures.
And as for the deficit- the NIESR today said that cutting so deep could harm deficit reduction by reducing tax receipts drastically. The metaphor isn't of the person who is in debt and therefore has to cut back on their consumption, the metaphor is of the person who is in debt so they cut back too much and find they can't afford the bus fare to get to work.