Member News
There is nothing fair about running huge budget deficits, and burdening future generations with the debts we ourselves are not prepared to pay
George Osborne
Unveiling a programme of cuts that included slashing £7bn from the welfare budget, George Osborne told MPs today that he sought to bring "sanity" to public finances.
In an hour long statement to the House of Commons this afternoon the chancellor revealed many of the details of the long awaited spending review, which the coalition say is necessary to cut the deficit.
He told MPs that the spending review was based on the principles of "reform, fairness and growth" and would bring stability to the economy.
"We have chosen to spend on the country’s most important priorities – the health care of our people, the education of our young, our nation’s security and the infrastructure that supports our economic growth," he said.
"We have chosen to cut the waste and reform the welfare system that our country can no longer afford."
Osborne added: "There is nothing fair about running huge budget deficits, and burdening future generations with the debts we ourselves are not prepared to pay."
Under the plans, Whitehall departments will see their budgets cut by an average of 19 per cent, although some departments have seen their budget's cut by more than others.
In line with the Conservative Party's election campaign pledges, Osborne said the NHS budget would be protected and total health spending will rise each year over and above inflation.
The Department for International Development will also see its budget rise to £11.5bn over the next four years in order to honour the United Nations commitment on international aid.
But Osborne brought cheers from the coalition benches when he told MPs this was less than the 20 per cent anticipated by Labour in its last Budget.
"During the process of this Spending Review I have received many submissions," he said, "including one from the party opposite that the average cut for unprotected departments should be set at 20 per cent over the coming four years rather than the 25 per cent that I anticipated in my June Budget."
He said the "tough but fair decisions" on reform welfare and savings made on debt interest enabled him to better Labour's recommendation.
Osborne confirmed his plan to axe child benefit for higher earners, a controversial proposal first made during the Conservative Party conference.
But he said the great majority of the population would receive the benefit from when their child was born until they left full time education at 18 or 19.
"I have taken the difficult decision to remove child benefit from families with a higher rate taxpayer," he said.
"I wish it were otherwise – but I simply cannot ask those watching this earning just £15,000 or £30,000 to go on paying the child benefit of those earning £50,000 or £100,000."
He also confirmed that there will be a new cap on the total amount of benefits a family can receive.
"No family that doesn't work will receive more in benefits than the average family that does go out to work," he said.
"That is a tough, but fair deal. Taken together, all these welfare measures I have outlined will save the country £7bn a year."
The government also hopes to save £5bn a year by raising the retirement age for men and women to 66 by 2020.
The chancellor told the Commons that to back down from his plans would "be the road to economic ruin".
He said: "We will stick to the course. We will secure our country's stability. We will not take Britain back to the brink of bankruptcy."
Article Comments
Worryingly our recent research shows that the public sector cuts, announced in today's spending review, are likely to have a knock on effect on the private sector. 30 per cent of small businesses say they are 'very reliant'; or 'fairly reliant'; on public sector contracts and 10 per cent of all small businesses say they would become insolvent if they no longer had supply contracts to the public sector. We calculate that 148,000 small businesses are at risk of failure. Of course not all businesses will lose all of their public sector work but the effect on the current levels of corporate insolvency is likely to be pronounced in any case.
Steven Law, President, R3, insolvency trade body
20th Oct 2010 at 5:27 pm
ALP is pleased that private and third sector providers have been earmarked to play a major role in helping people back to work.
It is important though that ministers recognise the importance of skills training in enabling individuals to hold on to new jobs and progress within them.
Graham Hoyle, Association of Learning Providers
20th Oct 2010 at 4:18 pm
Have your say...
Please enter your comments below.