Spending review: where the axe fell
Chancellor George Osborne today announced details of the most severe public spending cuts since the Second World War.
As part of the comprehensive spending review, departments face cuts of an average of 19% (although this had been expected to be 25%). The government hopes these cuts will save £83 billion over the next four years.
As had been widely anticipated, spending cuts will result in massive job losses in the public sector – estimated at 490,000. Mr Osborne said: ‘There will be some redundancies – up to the decisions of individual employers in the public sector – that is unavoidable when the country has run out of money.’
The most headline-grabbing cuts include a further £7 billion from the welfare bill with Mr Osborne saying welfare costs had risen by 45% under Labour. The police budget will also fall 4% per year.
In other major news, the state pension age will rise to 66 by 2020, which is six years earlier than previously thought. The Chancellor said this move would save over £5 billion per year.
Despite the cuts, spending in the NHS is set to increase by 0.4% over the next four years and will be £114.4bn by the end of 2015. Likewise the schools budget will increase each year of the parliament.
The international aid budget will increase to £11.5 billion and a further £1 billion will be put into the Green Bank.
Not surprisingly, the cuts sparked furious opposition from Labour. Shadow Chancellor Alan Johnson said: ‘I don't believe that the Prime Minister or the Chancellor sufficiently understand the worries and concerns of families up and down this country and I think those worries will have multiplied considerably as a result of his statement today.’
The Chancellor also announced plans for a permanent levy on banks and said the details would be unveiled later in the week.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
Compare pensions
Fill in our quick form to get a quote
