Richard Exell
In his statement on the Spending Review George Osborne said that he wasn’t going to tolerate social security fraud any more. He said
We estimate that £5 billion is being lost this way each year.
This is a huge increase from the level of fraud the Department for Work and Pensions was estimating just three months ago.
Nicola Smith
Today the Chancellor stated that the welfare bill is £200 billion. The cost of Child Benefit (around £12 billion), Tax Credits (around £27 billion) and DWP administered benefits and pensions (£151 billion) comes to £190 billion. There may be something that I am missing. Or there may have been a slight inflation of the figures. But either way my gripe with the Chancellor is not over a missing £10 billion – I am more concerned about his conflation of every single social protection payment into an ill-defined ‘benefits bill’.
The reality is that that majority of the welfare bill is spent on payments to pensioners or to children – for example our Economic Report shows that 60 per cent of DWP’s social security bill is accounted for by payments made to people of state pension age, 13 per cent by payments to disabled people, and a paltry 2 per cent for those who are unemployed.
Richard Exell
The Spending Review confirms the decision to remove Child Benefit from families with a higher rate taxpayer. This is the biggest single welfare cut, coming to £2.5 billion of the £7 billion total by 2015 – over a third. This change either means that we will have a bizarre tax on children or a reduction in women’s independent incomes
Philip Pearson
With no CO2 impact assessment, and no jobs estimates, how to judge the Spending Review against climate change targets and green growth? We have to wait until next year for the CO2 figures, in a “government-wide carbon plan in 2011” (page 63).
DECC’s budget was cut by 30%, with nothing on projects foregone. News on the Renewable Heat Incentive is very positive. The Feed-in tariff looks safe, as is Labour’s £60m scheme to promote investment in North Sea port facilities for offshore wind turbines. We can welcome the single carbon capture project for coal, but the Coalition promised 4, and there’s still no decision on the CCS levy. Four CCS projects could generate 100,000 jobs. One won’t. As for the “Green Investment Bank”, it isn’t a bank, yet, and its got no money until 2013.
Alice Hood
In today’s spending review, George Osborne sent mixed messages on public service pensions. The government will wait until Lord Hutton’s final report as the Independent Public Service Pensions Commission in March 2011 before making changes to schemes. But at the same time the Chancellor set a precise figure of £1.8bn a year for the savings they aim to be making from reforms to public service pensions by 2014/15.
The Chancellor clearly indicated that contribution rates would rise, although he accepted Lord Hutton’s recommendation that increases should be staggered and “progressive” – of course the devil will be in the detail as to whether this is borne out when reforms are proposed and negotiated. According to the CSR papers (page 38) the savings figure of £1.8bn per year by 2014/15 is equivalent to 3 per cent on average, to be phased in from 2012.
Coming at a time of pay freezes, rising inflation and redundancies, increasing contribution rates means a further cut in take home pay. Contribution increases could also come on top of those already in the pipeline in some schemesdue to revaluations under the existing “cap and share” arrangements. And there is also a real risk that people feeling the squeeze could decide to leave pension schemes if contributions rise, leaving them without savings for retirement.
Matt Dykes
The Regional Growth Fund has become a flagship initiative for the Coalition Government. Not only does it signify a departure from Labour’s regional agenda, thereby tickling the fancy of Tory councillors up and down the country, but it’s one of the few measures outlined in today’s CSR that is actually focussed on investing in jobs and growth.
It was therefore significant to see the RGF increased by £400m and extended by another year in today’s CSR announcements. We welcome the increase in funding and the extension to three years, the Government clearly recognising the concerns raised about the short term scope of the RGF in its original inception back in June. However, on closer inspection the RGF looks particularly underwhelming.
Paul Nowak
In a skilful piece of political manoeuvring George Osborne has passed a large part of the CSR buck to local government.
Underpinning the sugar-coated language about ‘localising power and funding’, the Chancellor announced a 26% cut in central government funding for local councils – with a cut in capital funding to councils of around 45%.
On top of the headline figures, the CSR also flagged:
Richard Exell
The Chancellor’s Spending Review makes benefit and tax credit claimants responsible for paying off the deficit. In June the emergency budget introduced £11 billion of benefit cuts, today’s Review adds another £7 billion – by 2015, people who rely on benefits will be £18 billion worse off.
Disabled people will be especially hard hit. The Chancellor announced a one-year time limit for people who receive contributory Employment and Support Allowance and are in the Work-Related Activity Group. This is one of those cuts that politicians love, because they aren’t easy to explain, but the significance can be seen from the fact that, by 2015 this measure is going to save £2,010 million a year – 28 per cent of the total benefits savings.
Tim Page
The small print of today’s CSR contains this nugget:
“The Government will provide £200 million a year by 2014-15 to support manufacturing and business development, with a focus on supporting potential high growth companies and the commercialisation of technologies, including funding for an elite network of Research and Development intensive technology and innovation centres.”
This is interesting. We need more details, of course. If they are providing £200m a year by 2014-15, when does this funding start and by what increments will it increase to take it up to this figure in four years?
Nicola Smith
The technical wording of one of today’s Tax Credit changes is as follows: “increase working hours requirement for couples with children to 24 hours”. No further detail is yet available on who is affected by this change, but is appears that the change will mean that couple households (not lone parent households) with one partner working 16 hours, and one not working or working less than 8 hours, will now lose their Tax Credit entitlements unless the household can increase its working time.
This is a significant cut for affected families. Working Tax Credit is made up of various elements which include (for those on maximum entitlements – the lowest income working families) £1,920 basic element (annual), £1,890 couple and lone parent element (annual) and childcare costs currently worth (although soon to be cut) up to 80 per cent of £300 (£240) a week (although it is important to note that entitlement to the childcare element requires both members of a couple to be working 16 hours, so any couples already claiming this element will not be affected by the change in the hours rule as they will already be working in excess of 24 hours between them).