The Comprehensive Spending Review- key points

22nd October 2010

What follows is a brief summary of the headline cuts announced by George Osbourne in the CSR. You can read my views on the cuts here. A fair health warning- experts are still picking through the fine print of the CSR in order to work out what Osbourne didn't want to tell the Commons in his speech. Therefore this list is by necessity incomplete. We'll continue to learn more about the specific nature of cuts inside departments and councils over the coming weeks.

The Economic Impact

  1. Both Treasury and independent forecasts project the cuts will result in 1 million job losses- half from the public sector as a direct result of government cuts, and half from the private sector as a result of reduced demand
  2. £700 million more projected to be spent on unemployment and related benefits over the next 4 years

Education & Young People

  1. ‘Sports specialist status’ for secondary schools and colleges is likely to be abolished next week.  This will mean Redbridge & St George’s lose £130,000 from their school budgets.
  2. Overall universities will lose 40% of their funding.  In practice this amounts to a 75% cut in funding for teaching.  Students and parents are expected to make up this shortfall via higher fees.
  3. Education & Maintenance Allowances have been axed completely.
  4. The amount of help you can claim for your childcare costs will be cut by 10%.  This equates to a cut of up to £1560 a year.
  5. No action was taken to ameliorate the unfairness in child benefit cuts, where child benefit will still go to some £80,000 households but not to households with half that income

Health

  1. The roll-out of free prescriptions for all people with long-term health conditions has been scrapped
  2. The offer of one-to-one nursing care for people with cancer has been scrapped
  3. The one week guarantee for cancer tests has been scrapped (the Conservatives promised they would not scrap this guarantee before the election)
  4. It has been confirmed that 600 nursing posts will be cut by the Southampton University Hospital Trust.

Crime

  1. Front-line police funds will be cut by 20%.  The Police Federation estimates this could result in 20,000 fewer police officers.
  2. There will be 10,000 additional redundancies amongst probation workers, prison officers and others responsible for reducing re-offending

Transport

  1. Grants to bus operators will be cut by 20%, and funding for local transport projects cut by 28%.
  2. The cap on regulated rail fares will be raised by 3% above inflation.  In practice, that means most fares will rise by 31% and annual season tickets will cost £1000 more by 2015.

Councils

  1. Behind the headline DCLG cut of 25%, single tier authorities like Southampton face a 50% cut in their central grant, while county councils like Hampshire face a 44% cut.
  2. Southampton to lose £2 million in housing funding to wealthier towns under the Coalition’s housing incentives scheme.

Housing

  1. The fund for building new homes has been cut by 60%.  Social landlords are expected to make up this difference through higher rents.
  2. Social landlords will now be allowed to charge up to 80% of market rents for new tenants.  That’s on average 3 times higher than the previous social rent cap.  For some homes this would mean a rent increase from £85 per week to £250 per week, or £9000 more a year annually.
  3. Anyone receiving housing benefit aged between 25-35 will now be paid a reduced rate and expected to live in a shared HMO (which the government has just removed many of the regulations for).
  4. Housing benefit will be cut by a further 10% for anyone who is out of work for more than a year- including people who are actively looking for work.
  5. Secure tenancies for council tenants are to be abolished and replaced with 5 or 10 year fixed agreements.  If your circumstances change in that period- for example if you get a new job or your children leave home, you could face eviction.
  6. [pre-announced] ]Support for mortgage interest payments- to help families who have seen a sudden drop in income (i.e. a job loss) stay in their home- has been cut in half.  SMI was paid at a fixed rate of 6.08%- it will now be paid at 3.6%.
  7. [pre-announced] from October 2011, Local Housing Allowance payments will be cut from being set at the median (50% mark) private sector rent in an area, to being set at the 30% mark of market rent in an area. This works out at cut of between £8-£29 per week for most renters in Southampton.
  8. Instead of increasing LHA payments in line with rents, LHA will now be increased at the lower measure of inflation (CPI) which has consistently risen below rents.

Pensions

  1. There will be a real terms cut in the saving credit. Age UK projects that the average pensioner will miss out on an extra £100.
  2. The savings credit freeze comes in to force before the re-linking of state pensions to earnings- increasing the impact on the poorest
  3. Age UK also confirms that the £2 billion in “additional funding” for social care in fact replaces a near identical cut made in local government budgets for the same purpose.

Climate change

  1. Funding for the new ‘Green Investment Bank has now been cut by 75%, which will drastically limit government investment in green jobs, technologies and anti-fuel poverty measures.
  2. The Carbon Reduction Commitment, which incentivised companies to reduce their carbon emissions, has effectively been abolished.  Companies paid into a central CRC pot and were given a rebate related to how much they reduced their carbon emissions by.  Now, they will pay into a CRC pot... but not get any rebate.  Companies are already dubbing this as a ‘stealth carbon tax.’

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