20/10/2010

UK Spending Review Hits Hard

While one of the guiding principles of today's UK Spending Review was said to have been "fairness", under the terms of the new Government review, some of the poorest people across Britain could end up being hit the hardest.

Chancellor George Osborne has said: "We are all in this together and all must make a contribution.

"Fairness means creating a welfare system that helps the vulnerable, supports people into work, and is also affordable for the working families who pay for it from their taxes."

However, the bottom 10% of earners will lose the most money from the cuts, the official House of Commons announcement revealed.

It was confirmed that half a million public sector jobs will go, as the welfare budget gets slashed and retirement age rises.

Funding for Britain's £193.1bn benefits system will drop by £7bn a year, however the government will spend £2bn launching a universal credit which is designed to replace all working age benefits and tax credits.

Mr Osborne said the review "represents the greatest reform to our welfare state for a generation".

He added: "Free eye tests; free prescription charges; free bus passes; free TV licenses for the over 75s; and Winter Fuel Payments will remain exactly as budgeted for by the previous government - as promised."

But, he also confirmed Government expectations for the number of public sector jobs to fall by 490,000.

He told MPs: "Much of it will be achieved through natural turnover, by leaving posts unfilled as they become vacant. Estimates suggest a turnover rate of over 8% in the public sector.

"But yes, there will be some redundancies ... that is unavoidable when the country has run out of money."

He also announced the pension age for men and women rising to 66 by 2020.

Until 2012-13, spending on police will fall by 4% with spending by the Home Office and Ministry of Justice dropping by 6% per year over the same period.

The Royal Family is also expected to cut spending by 14% from 2012-13.

Until 2014-15, the Department for Energy and Climate Change will lose 5% of its funding each year while the Department for Environment, Food and Rural Affairs' budget will fall by 8% per year.

From £2bn, funding for the Department of Culture, Media and Sport will drop to £1.1bn by 2014-15.

Meanwhile rail commuters will face increases in fares from 2012 after Mr Osborne said the cap on prices would rise from 1% above the retail price index (RPI) inflation level to 3%.

Spending on health will be ring-fenced and overseas aid will also be protected.

Mr Osbourne said: "Today's the day when Britain steps back from the brink, when we confront the bills from a decade of debt.

"To back down now and abandon our plans would be the road to economic ruin. We will stick to the course. We will secure our country's stability. We will not take Britain back to the brink of bankruptcy."

(BMcN/BMcC)

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