Spending review sees civil service bear cost of public spending rise

In yesterday's spending review, the Chancellor set out government plans for putting extra money into frontline public services - investment that would be freed up from downsizing the civil service.

Gordon Brown said that there will be a real terms rise in funding of 4.2% for each of the next three years. This will include:
  • a 10% rise in spending on security between now and 2007/08 and 1.4% for defence
  • a 7.1% rise each year for the NHS
  • a 4.5% rise each year for transport - more than was allocated in the government's 10-year plan
  • a 4.1% annual rise in spending on housing, including a 50% increase in social housing
  • funding rises of between three and four per cent for Wales, Scotland and Northern Ireland
  • and extra money to create at least 120,000 more childcare places.
The Chancellor also confirmed that spending on education will rise from £63 billion this year to £77 billion by 2007/08 to support the five-year strategy announced last week.

A further £140 million will help pensioners and poor families to insulate and heat their homes, working towards the aim of eliminating fuel poverty by 2016.

Reforms to help focus funding on frontline public services include plans to cut 84,150 civil service posts and relocate 20,000 jobs out of London and the South East. A further 20,000 posts will be cut in Wales, Scotland and Northern Ireland. The merger of the Inland Revenue and HM Customs and Excise will cut 16,000 posts.

Other departments have set out plans to relocate further civil service jobs out of the South East. These include: 5,000 posts from the Treasury's Departments; 4,000 from the Department for Work and Pensions; 3,900 from Defence; and just under 1,000 each from the Departments of Health, Education and Industry.

The government also plans to save £30 billion by selling land and other assets. Government funding for science will rise from £3.9 billion this year to £5 billion by 2008 with the aim of making Britain the "best and most attractive location for science and innovation in the world".

Gordon Brown's public spending plans were denounced by Tories as "a manifesto for fat government and fake savings".

Tory Shadow Chancellor Oliver Letwin warned that Mr Brown's proposals were good for headline writers but failed to include any reform – meaning that any efficiency drive would fail, "leaving taxpayers picking up the additional expenditure bill".

He added: "What we have just heard is a manifesto for fat government and fake savings. The only thing that the Chancellor's fat government has delivered is fat taxes. When will Mr Brown accept that what's needed if government is really going to cut the flab is a complete change of lifestyle. The fact is that fat government is not fit enough to deliver."

Dubbing Mr Brown "the great waste-finder general", Mr Letwin promised that an incoming Conservative administration would "cut Labour's fat government down to size".

Liberal Democrat Shadow Chancellor Vince Cable warned that Gordon Brown’s "slash and burn" approach to cutting civil service numbers could be "highly damaging to Britain’s public services".

"Cutting waste is all very well, and I am not against that, but simply cutting jobs without setting priorities is akin to putting the cart before the horse," he said.

"Gordon Brown has been Chancellor for the last seven years. If there is so much waste why wasn’t it tackled earlier? Maybe if he had tackled waste much earlier, today we would have decent pensions and no student tuition fees."

Dr Cable said that the Lib Dems would scrap industrial and other subsidies, cut the Home Secretary’s £3 billion ID card scheme and remove the "wasteful" Baby Bond scheme to pay for fairer pensions and better police services.

"But simply getting into a competition with the Conservatives to see who can sack the most civil servants is not the answer," he added.


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