Main points from the Comprehensive Spending Review

Sunday 23 October 2011 06:01

Here are the main points from Chancellor George Osborne's statement on the Comprehensive Spending Review:

* Total public expenditure will be £702 billion next year, then £713 billion, £724 billion and £740 billion in 2014/15.

* Debt interest payments will be lower by £1 billion in 2012, £1.8 billion in 2013 and £3 billion in 2014, a total of £5 billion over the course of the spending review.

* Average saving in departmental budgets will be lower than the Labour government implied, with cuts of 19% over four years instead of 20%.

* The Ministry of Defence budget will reach £33.5 billion in 2014/15, a saving of 8%, the Chancellor confirmed.

* The Foreign Office budget will see savings of 24% through a sharp reduction in the number of Whitehall-based diplomats and back office functions.

* The Home Office budget will find savings of an average of 6% a year, as will the Ministry of Justice's budget. Police spending will fall by 4% each year of the spending settlement, with the aim of avoiding any reduction in the visibility and availability of police in our streets.

* The Law Officers Department will reduce its budget by a total of 24% over the review period, with the Crown Prosecution Service greatly reducing its cost base.

* The core Cabinet Office budget will be reduced by £55 million by 2014/15.

* The Treasury will see its overall budget reduced by 33% and the department's building will be shared with part of the Cabinet Office.

* HM Revenue and Customs's budget will be expected to find resource savings of 15% through the better use of new technology and greater efficiency, while spending £900 million more on targeting tax evasion and fraud to help collect a missing £7 billion in tax revenues.

* There will be overall savings in funding to local councils of 7.1%, but ring-fencing of all local government revenue grants will end from April next year, except for simplified schools grants and a public health grant.

* Local government grant funding for social care will increase by an additional £1 billion by the fourth year of the review and a further £1 billion for social care will come through the NHS to support joint working with councils.

* Average annual savings of 7.1% will be found from the Department for Business budget but the science budget will be protected with no cash cut, leaving it at £4.6 billion a year.

* Settlement for the Department for Energy and Climate Change will fall by an average 5% a year. Defra will deliver resource savings of an average 8% a year.

* Department of Culture, Media and Sport budget will come down to £1.1 billion by 2014/15, with administrative costs reduced by 41%. Free entry to museums and galleries will remain.

* Total health spending to rise each year over and above inflation from £104 billion this year to £114 billion by the end of the next four years.

* Scotland, Wales and Northern Ireland will see cash rises in their devolved budgets, although below the rate of inflation. Scotland's budget will rise to £25.4 billion in 2014/15, Wales to £13.5 billion and Northern Ireland to £9.5 billion.

* BBC to fund BBC World Service and BBC Monitor as well as part-funding S4C, saving the Treasury £340 million a year, with the licence fee frozen for the next six years - equivalent to a 16% saving in the BBC budget over the period.

* The Department for Education will be required to find resource savings of only 1% a year. There will be a real increase in money for schools for each of the next four years. The schools budget will rise from £35 billion to £39 billion.

* The Department for International Development's budget will rise to £11.5 billion over the next four years, reaching 0.7% of national income in 2013.

* Total Royal Household spending will fall by 14% in 2012/13, while grants to the Household will be frozen in cash terms with a temporary additional facility of £1 million to support the costs of the Diamond Jubilee. After that, the Royal Household will receive a new sovereign support grant linked to a portion of the revenue of the Crown Estate.

* The best estimate of the reduction in total public sector jobs is the Office for Budget Responsibility forecast of 490,000 over the four years of the spending review period. There will be some redundancies in the public sector, which is unavoidable when the country has run out of money, said Mr Osborne.

* Terms for existing social housing tenants and their rent will be unchanged, with new tenants offered intermediate rents at around 80% of the market rent. The Chancellor forecast this would allow the building of up to 150,000 new affordable homes over the next four years.

* Government to consult on changes to contribution discount rates to public pensions, with the aim of saving £1.8 billion per year in the cost of public service pensions by 2014/15.

* The state pension age for men and women will reach 66 by the year 2020, saving over £5 billion a year by the end of the next Parliament.

* Proposals will be set out to replace all working-age benefits and tax credits with a single, simple Universal Credit.

* Government will freeze the maximum savings credit award in Pension Credit for four years and further control the cost of tax credits by freezing the basic and 30-hour elements for three years and change the Working Tax Credit rules so couples with children must work 24 hours per week between them.

Together with a benefits cap, welfare measures will save £7 billion a year

* The child element of the Child Tax Credit will be increased by £30 in 2011/12 and £50 in 2012/13 above indexation, meaning annual increases of £180 and then £110 above the level promised by Labour.

* Child Benefit to be removed from families with a higher-rate taxpayer. The Office for Budget Responsibility has upgraded estimates of savings from the measure to £2.5 billion a year, from around £1 billion. Child Benefit will now continue to be paid until a child leaves full-time education at the age of 18 or even 19.

* Universal benefits for pensioners will be retained exactly as budgeted for by the previous government and the temporary increase in the Cold Weather Payment will be made permanent.

* £30 billion to be invested in transport projects over the next four years, including £14 billion to fund maintenance and investment in railways.

* The cap on regulated rail fares will rise to RPI plus 3% for the three years from 2012, to help pay for new rolling stock and improve passenger conditions.

* A new £2.5 billion pupil premium to support the education of disadvantaged children will be introduced.

* Sure Start services will be protected in cash terms and 15 free hours of early education and care for all disadvantaged two-year-olds will be introduced.

* Those on the highest incomes will contribute more towards the fiscal consolidation, not just in cash terms but also as a proportion of their income and consumption of public services combined.

* Legislation to introduce a permanent tax levy on banks will be published tomorrow.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

View comments