Spending Review round up

Money

The Chancellor’s long awaited Spending Review was announced yesterday (Wednesday 21 October 2010).

George Osborne has revealed the biggest spending cuts in the UK for decades. The cuts will affect councils, police budgets and welfare. The review also highlights changes to tax credits and housing benefits.

The government is confident that this Spending Review promotes long-term economic growth, as well as wider reforms to enable a private sector led recovery, it improves fairness by supporting the most vulnerable, and gives people the freedom to better themselves and their families in the future.

Key points from the Spending Review include:

• About 490,000 public sector jobs likely to be lost

• £7bn additional cuts to welfare budget

• Retirement age to rise from 65 to 66

• Police funding cut by 4 % a year

Peter Donnelly, office managing director at RSM Tenon in Rochdale, said: “There were very few surprises, but then the government had seen to it that all of the headline grabbing cuts were leaked well in advance.

“While initiatives to develop incentives for international trade sound positive in theory, we will need to see the detail over the coming days and weeks to fully understand the level of support on offer.

“My concern with the banking levy is that it may reduce the UK’s competitiveness as a financial services hub. Whether the levy will remain viable in the long-term remains to be seen.”

Pam Smith, Executive Director, Rochdale Borough Council added: “Today’s announcement was broadly in line with our assumptions, and our plans take account of these. We now need to analyse the detail and find out exactly what this all means for Rochdale. We have been planning for large scale savings and efficiencies for some time and have a managed process in place. We have taken a realistic approach to our plans, but it is too early to know exactly what they could mean for residents. As the details emerge, we shall be looking closely over the coming days at what they mean in budgetary terms.”

Mike Creamer, Chief Executive of Contour Housing Group, one of the North West’s biggest housing and regeneration organisations said: “The leaked misinformation over the last few days has done nothing to soften the impact of these massive cuts, especially when combined with the housing benefit restrictions already announced.

“Limiting the security of tenure through intermediate tenancies will not improve the supply of affordable rented homes for those on lowest incomes in the short term. Far worse, in the long term insecure tenure will drive out the economically active from neighbourhoods, leaving residual communities on permanent benefit – a return to the early 1980`s.

“The prospect of more new homes at near market rents should also not be misunderstood. Something is needed for the millions of younger people who can’t afford to buy, but who are not poor enough to qualify for traditional rented homes. However, Government will not want housing benefit to be paid on these higher rents. It is unlikely therefore that these “150,000 new homes” will be made available to those in greatest need.

“Overall, all that has been produced is a crude safety valve which will allow the pent up pressure for more homes to be relieved a little. The underlying causes remain. Housing Associations now need to work out how we can make the most of the cobbled together machinery and turn it in to something that works for those needing our help.”

For the North West, this Spending Review confirms that the following capital programmes will be supported: 

• Mersey Gateway bridge – new suspension bridge over the River Mersey between Widnes and Runcorn;
• The development of a Women’s and Children’s Unit at the Royal Oldham Hospital, in Greater Manchester. This will provide the highest level of neonatal intensive care, at a cost of £42 million over 2010-11 to 2012-13;
• Manchester - Rail capacity improvements;
• 85 million redevelopment of West Cumberland hospital in Cumbria (£65 million over the period of the spending review);
• The creation of a UK-wide Green Investment Bank that will be capitalised with a £1 billion spending allocation and additional proceeds from the sale of Government-owned assets, to catalyse significant additional investment in green infrastructure. The North West has developed existing and planned offshore wind farms.

Commenting on the transport part of the spending review, Campaign for Better Transport said that the Government must not use funding for a few big transport projects as a smokescreen for massive fare increases and cuts to spending on existing roads and services in regions such as the North West.

Chief Executive of Campaign for Better Transport, Stephen Joseph, said: “The Chancellor’s statement focuses on large-scale transport projects but the reality is cuts in funding for everyday transport. These projects should not be used as a smokescreen to cover up service cuts and rocketing fares on our buses and trains. Understandably, this will enrage people across the country who rely on these essential services.

“We are concerned that cuts in bus funding will lead to worse services and higher fares in the North West . This will threaten the Government’s plan to get people off welfare and into work – if people don’t have access to affordable public transport they won’t be able to take up jobs or training.

“It is good news that upgrades to the rail network around Manchester are to go ahead. But the Government must seize the opportunity to reject out-of-date road schemes, like the Mottram Bypass and the Heysham M6 Link Road, and ensure that sustainable, affordable solutions are put forward instead.

“We are also appalled at the Government’s plan to allow rail fares to rise so far above the inflation rate. Hard-working commuters who depend on the train face paying over the odds for fares by the time of the next election. These eye-watering rises are unacceptable at a time when we should be growing the railways in order to tackle congestion on our roads and reduce carbon emissions in line with Government targets.”

It is expected that union members will be taking to the streets this weekend to protest at the spending cuts.

North West TUC Regional Secretary Alan Manning said: “There is an alternative to the Coalition’s cuts which now put tens of thousands of jobs at risk in our region.

“We can bring back the windfall tax on bankers’ bonuses – after all they caused this mess. We can crackdown on tax avoidance and tax evasion, raise billions through a tiny tax on financial deals, stop spending a fortune on privatising services and introduce a property tax on vacant properties. All of this would raise enough to start plugging the deficit.

“But we really need measures which will grow the economy and create jobs, not risk sending our economy into a double-dip recession.”

The Chief Secretary to the Treasury, Danny Alexander said: “The consequences of not acting now would be disastrous. We would be faced with higher interest rates, business failures, more job losses and even potentially the end of the recovery. So, we have to be brave and tackle it now. Delaying decisions would mean even more money wasted on debt interest, and so even bigger cuts in the end.

“Instead the choices we make will invest in the future - to give everyone the opportunity for a fair start in life regardless, of their background. By being tough on waste and welfare, we are able to find money for the services that really matter - giving children a good start in life, supporting the NHS, and caring for older people.”

Catherine Johnstone, chief executive of Samaritans, said: “The outcomes of the Comprehensive Spending Review indicate tough times ahead. We understand that many people will be worried about their jobs and the loss of public services. We would like to remind the nation that Samaritans is here for anyone feeling down, unhappy, anxious or stressed, and that we are available 24 hours a day, even when other frontline services are closed.

“Those who are unemployed are 2-3 times more likely to die by suicide than people in employment. The fear of unemployment can also be bad for mental health and increase the risk of suicide. Therefore it is vital that people know that they can contact our helpline if they need to.

“Samaritans volunteers have helped distressed people through the many challenges our society has faced since we were founded 57 years ago, so the concept of a big society is not new to us. We are confident we will be able to help many more people in need if demand increases because of the budget cuts.

“As we are almost entirely funded by voluntary donations and less than two per cent of our income comes from statutory sources, Samaritans’ own finances will not be affected by the budget cuts.”

To talk to the Samaritans call 08457 90 90 90 email jo@samaritans.org, or visit your local branch – see samaritans.org for details.