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What is the 2010 Spending Review?

  • Published: Monday, 18 October 2010

On Wednesday at 12.30pm the Chancellor will present the government’s Spending Review to Parliament. This will set out the spending plans for each government department over the next four years.

Spending Review - full details

Read more about the Spending Review.

Spending reviews

Where does the money get spent? Where does it come from?

Spending Reviews are the way that government sets spending plans for each department over a period of several years. Departmental spending covers the full range of government activities. It includes defence and welfare payments, business support and environmental protection, as well as the funding of schools and hospitals.

The Budget in June set out the overall level of public spending across the whole government for the four years from 2011/12 to 2014/15. The Spending Review will allocate that overall spending level to individual departments.

Before the start of the next financial year in April 2011, each department will publish details of how its new budget will change the activities and services that it delivers.

Bridging the deficit

The yearly gap between the government’s income and its spending is known as the 'deficit'. The deficit has grown in size over the last few years. This is because government spending increased but income from taxation, National Insurance and excise duties remained level - or even dropped - due to the recession. The deficit last year was £155 billion. So this is the amount of money the government had to borrow to be able to pay for its spending last year.

In June the government said the deficit will be paid back by 2014/15.

Increases in taxation – like the increase in VAT to 20 per cent in January – will help reduce the deficit. However, spending will have to be brought down as well.

The June Budget announced some specific cost reduction measures. These include £11 billion of savings from welfare reforms and a two-year pay freeze for most public servants.

Consulting about spending - the Spending Challenge

Over 100,000 suggestions were received from public sector workers and members of the public

Earlier this year the government launched the Spending Challenge website to give everyone the chance to shape the way government works and to provide ideas on tackling the deficit.

The website is now closed but over 100,000 suggestions were received from public sector workers and members of the public. Alongside this, ministers visited people across the country to hear ideas and opinions first hand. The Spending Review will set out clearly where the public’s ideas have been taken into account.

The Chancellor has already announced that three of the suggestions submitted through the Spending Challenge will be taken forward. These are:

  • a new approach to Criminal Record Bureau checks for junior doctors, reducing the costs incurred by the NHS when a junior doctor moves jobs
  • piloting an online auction site for surplus and second hand government equipment, with the money made reinvested in public services
  • replacing the plastic National Insurance number card with a letter, reducing costs

More information on the Spending Review

The Chancellor set out the government's approach to the Spending Review in June 2010. The Spending Review Framework has been published and is available on the HM Treasury website.

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