Chancellor George Osborne has outlined a new series of cuts and measures he hopes will reduce the deficit and get the UK economy growing again.
Chancellor George Osborne was forced to return to Parliament to deliver a second round of spending cuts following the Government’s failure to reduce the deficit by its 2010 target.
In a far more bombastic speech, with one eye on the 2015 General Election, the Chancellor revived the Government’s mantra of “We’re all in it together”. And while his lengthy list of savings and cuts to Government departments may not be of much interest to those outside the political world, some of his other announcements have implications for many of us.
In the run-up the Spending Review announcement, Labour had pledged to honour the general spending limits of the speech.
Here’s what George Osborne announced and what it might mean, bearing in mind we are still two years away from this becoming reality.
Government departmental spending
The Government says it will deliver £11.5 billion in departmental cuts in 2015/16. We already knew that the budgets for international aid, the NHS in England and schools are now ‘ring-fenced’ until 2016.
Welfare
A welfare system cap is to be introduced and set every year at the Budget from 2015. This will mean a cap on the amount of housing benefit, pensioner benefits, Tax Credits and disability benefit paid out, but does not affect the Basic State Pension.
This can be seen as a challenge to Labour, as any move to break this will need to be explained in public.
Council Tax
Continuing a trend under this Government, funding will be made available to local authorities that choose to freeze Council Tax in 2014/15 and 2015/16. The Chancellor said this will mean the average family will have saved £600 over the Parliament.
Social care
An extra £3 billion will be made available to local NHS and local councils to work together on social care and create a ‘joined-up’ service.
Tax evasion
There will be extra resource available to HMRC for tackling tax evasion and its target for 2015/16 will be £1 billion more in tax revenues than in 2014/15.
If you’re a public sector worker
As announced in Budget 2013, public sector pay rises will be limited to an average of 1% in 2015/16.
Automatic progression pay, where workers have a pay rise and move up a pay grade each year, will also be abolished, except for the armed forces.
If you have young children
There will be a consultation from July on the proposed tax-free childcare that was first mentioned at this year’s Budget. This is designed to help working families with childcare costs and is currently pencilled to begin in autumn 2015.
[SPOTLIGHT]A cap on Tax Credits could affect better-off families in the future though.
If you’re a pensioner
From autumn 2015, winter fuel payments for people living abroad to be linked to a ‘temperature test’. If the average temperature is higher than in the warmest part of the UK, then the payments will be stopped.
And while the Basic State Pension is protected, pensioner benefits may be capped in future, although there were no further details of this in the speech or the review document.
If you’re on unemployment benefits
From 2015/16, half of all people receiving unemployment benefits will be required to go to Job Centre every week. There will also be a seven-day wait before benefits are paid. Single parents will be required to prepare to return to work when their children reach the age of three.
If you live in the south-west of England
The funding to pay for a £50-a-year water bill reduction for people in the south west who get their water from South West Water will be extended by a year to 2016.
If you or your children are future students
The student maintenance grant, paid out to students from lower-income backgrounds, will be frozen in cash terms in 2015/16.
What did you think of the Spending Review? Too much, too little or about right? Let us know in the Comments box below.