Spending Review

Osborne swings the welfare axe

The most savage public sector spending cuts in 50 years were today outlined by the Chancellor George Osborne.

Welfare, the Home Office and local councils took the brunt of the pain as Mr Osborne detailed how he planned to take around £80 billion out of the public sector budget over the next four years. However in a surprise announcement the schools budget will not be cut and will rise in real terms over the next four years.

Around one in 12 civil service jobs are expected disappear while even the Queen does not escape the new austerity measures – total Royal Household spending will be reduced by 14 per cent while civil list payments will be frozen. MPs are also expected to lose their right to a final salary pension.

Overall government departments which have not been specifically protected will lose, on average, will have budgets reduced by 19 per cent over the next four years.

This is less than the 25 per cent that had been predicted in the run up to the Comprehensive Spending Review (CSR).

Among the biggest cutbacks announced were:

* Councils will suffer budget cuts of 7.1 per cent every year for the next four years - a 28 per cent cut overall. But they will have new freedom to decide where their money is spent and £2 billion extra will be provided to pay for nursing homes and other social care services.

* Spending on police will fall by 4 per cent a year (18 per cent over four years) and the Home Office budget will be reduced by six per cent a year. The Justice Department, which funds prisons and the courts, will lose almost a quarter of its funding over the four year period of the CSR. Terrorism will be prioritised and not suffer the same levels of cuts.

* Welfare savings are to be found of £7 billion a year with a big clamp down on housing benefit. No family on benefits to receive more than the amount of income of a family on a working wage. Child benefit payments to continue for 16-19 year-olds. Free eye tests, winter fuel payment, TV licences and free bus passes for pensioners to remain. All working age benefits will replaced by a single welfare payment. Mr Osborne claimed the Government would save £5 billion by cutting welfare fraud.

* Business department spending to be cut by 25 per cent over four years but the £4.6 billion a year science budget will be protected.

* The Department of Climate Change is to have its budget reduced by 20 per cent over the CSR period while the Department for the Environment, Food and Rural Affairs will have its budget cut by nearly half. The Culture budget will also be cut by up to 40 per cent but free access to museums will remain.

* Big rises in bus and rail fares announced but £30 billion will spend on capital transport projects. These include the widening of the M25 and the go-ahead for Cross Rail. There was no announcement on the future of the electrification of the west coast mainline.

* The state pension age will rise from 65 to 66 by 2020 saving £5 billion which Mr Osborne claimed would go into increasing the basic state pension.

In better news Mr Osborne announced that the schools budget would rise from £35 billion to £39 billion over four years. He also announced a £2.5 billion premium to encourage schools to take on pupil from poorer backgrounds. However capital spending on schools will be severely reduced.

“The money that goes to schools will go up in real terms every year. It is a real investment in the future of our children and the economy as a whole,” he said.

The health budget will also be protected but NHS has been told to find £20 billion in “efficiency savings”. This will help pay for increased drugs costs and an ageing population. Overall there will be a marginal increase in funding.

Mr Osborne also announced a permanent levy on banks which would be introduced next year. £900 billion would be spent on combating tax evasion which Mr Osborne claimed would raise an extra £7 billion a year.

Mr Osborne said: “Today is the day that Britain steps back from the brink and confront the bills from a decade of debt.”

He said he was not prepared to: "saddle our children with the interest on the interest on the interest" on the debts the government was not willing to pay.

Mr Osborne said that the Government was spending £120 million a day in debt interest which he insisted had to be cut. At £109 billion, he said, Britain had the largest structural deficit in Europe.

Mr Osborne said he had used three principles in deciding which areas to cut: Fairness, growth and reform.

He said the public sector needed to reform and ministers had managed to find £6 billion worth of savings from administration costs. He said there would be some redundancies in the public sector although they hoped many job losses would come through natural wastage.

“(Redundancies are) unavoidable when the Government has run out of money,” he said.

But Shadow chancellor Alan Johnson accused the Government of taking a “reckless gamble with people's livelihoods” which could wreck the economic recovery.

Amid noisy scenes in the Commons he declared: “We've seen people cheering the deepest cuts to public spending in living memory.

“For some members opposite this is their ideological objective ... this is what they came into politics for.”

Deputy Prime Minister Nick Clegg, who already faces a battle to keep some of his own Liberal Democrat MPs on-side, appealed to activists to supported the CSR.

In a letter to Lib Dem activists, he insisted that the coalition's plans reflected their party's priorities.

He said the CSR was a "thoroughly coalition product", adding: "Liberal Democrat ministers have been involved every step of the way. Our values and priorities are written through the review, like the message in a stick of rock."

News
Waitrose will be bringing in more manned tills
newsOverheard in Waitrose: documenting the chatter in 'Britain's poshest supermarket'
Life & Style
life
Arts & Entertainment
Jack Gleeson as Joffrey Baratheon in Game of Thrones
tv
Arts & Entertainment
Ken Loach (left) and Mike Leigh who will be going head to head for one of cinema's most coveted prizes at this year's Cannes Film Festival
filmKen Loach and Mike Leigh to fight it out for the Palme d'Or
VIDEO
Have you tried new the Independent Digital Edition iPad app?
Arts & Entertainment
Ian Anderson, the leader of British rock band Jethro Tull, (right) and British guitar player Martin Barre (left) perform on stage
musicJethro Tull frontman leads ‘prog rock’ revival
Sport
Gareth Bale dribbled from inside his own half and finished calmly late in the final to hand Real a 2-1 win at the Mestalla in Valencia
sport
Arts & Entertainment
Who laughs lass: Jenny Collier on stage
comedy... writes Jenny Collier, the comedian whose recent show was cancelled because there were 'too many women' on the bill
News
House proud: keeping up with the Joneses now extends to children's playhouses
newsLuxury playhouses now on the market for as much as £800
News
news
Extras
indybest
News
The academic, Annamaria Testa, has set out on her website a list of 300 English words that she says Italians ought to stop using
newsAcademic speaks out against 'Italianglo' - the use of English words in Italian language
Life & Style
tech
Arts & Entertainment
Ricky Gervais at a screening of 'Muppets Most Wanted' in London last month
tvRicky Gervais on the return of 'Derek' – and why he still ignores his critics
Sport
Luis Suarez of Liverpool celebrates his goal
sport
Arts & Entertainment
James Franco and Chris O'Dowd in Of Mice and Men on Broadway
theatreReview: Of Mice and Men, Longacre Theatre
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Apprentice IT Technician

£150.00 per week: QA Apprenticeships: This company is a company that specializ...

1st Line Technical Service Desk Analyst IT Apprentice

£153.75 per week: QA Apprenticeships: This company is an innovative outsourcin...

1st Line Helpdesk Engineer Apprentice

£150.00 per week: QA Apprenticeships: This company has been providing on site ...

Sales Associate Apprentice

£150.00 per week: QA Apprenticeships: We've been supplying best of breed peopl...

Day In a Page

Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

Ricky Gervais: 'People are waiting for me to fail'

As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

Mad Men returns for a final fling

The suits are still sharp, but Don Draper has lost his edge
Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

Google finds a lift into space will never get off the ground

Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit
Westminster is awash with tales of young men being sexually harassed - but it's far from being just a problem in politics

Is sexual harassment a fact of gay life?

Westminster is awash with tales of young men being sexually harassed - but it's far from being just a problem in politics
Moshi Monster creator Michael Acton Smith: The man behind a British success story

Moshi Monster creator Michael Acton Smith

Acton Smith launched a world of virtual creatures who took the real world by storm
Kim Jong-un's haircut: The Independent heads to Ealing to try out the dictator's do

Our journalist tries out Kim Jong-un's haircut

The North Korean embassy in London complained when M&M Hair Academy used Kim Jong-un's image in the window. Curious, Guy Pewsey heads to the hair salon and surrenders to the clippers
A History of the First World War in 100 moments: A forgotten naval victory in which even Nature played a part

A History of the First World War in 100 moments

A forgotten naval victory in which even Nature played a part
Vespa rides on with launch of Primavera: Iconic Italian scooter still revving up millions of sales

Vespa rides on with launch of the Primavera

The Vespa has been a style icon since the 1950s and the release this month of its latest model confirms it has lost little of its lustre
Record Store Day: Independent music shops can offer a tempting alternative to downloads

Record Store Day celebrates independent music shops

This Saturday sees a host of events around the country to champion the sellers of well-grooved wax
Taunton's policy of putting philosophy at heart of its curriculum is one of secrets of its success

Education: Secret of Taunton's success

Taunton School, in Somerset, is one of the country's leading independent schools, says Richard Garner
10 best smartphones

10 best smartphones

With a number of new smartphones on the market, we round up the best around, including some more established models
Mickey Arthur: Aussie tells ECB to stick with Ashley Giles

Mickey Arthur: Aussie tells ECB to stick with Ashley Giles

The former Australia coach on why England must keep to Plan A, about his shock at their collapse Down Under, why he sent players home from India and the agonies of losing his job
Homelessness: Why is the supported lodgings lifeline under threat?

Why is the supported lodgings lifeline under threat?

Zubairi Sentongo swapped poverty in Uganda for homelessness in Britain. But a YMCA scheme connected him with a couple offering warmth and shelter
A History of the First World War in 100 Moments: When the world’s biggest shed took over Regent’s Park

A History of the First World War in 100 Moments

When the world’s biggest shed took over Regent’s Park
The pain of IVF

The pain of IVF

As an Italian woman vows to keep the babies from someone else’s eggs, Julian Baggini ponders how the reality of childbirth is often messier than the natural ideal