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Budget June 2010 - public sector and public spending

  • Published: Thursday, 20 January 2011

The Budget set out a plan intended to get the public finances back under control. It also aims to assist a recovery led by the private sector, with balanced growth across all sectors and regions. The new Office for Budget Responsibility will hold the government to account against this fiscal mandate.

The government's plans for the public sector and public spending

The Budget announced that a long-lasting economic recovery must have its foundations in the private sector, not the public sector, and that businesses across all regions need the right conditions to be able to grow.

Public sector borrowing

As a result of the measures announced, public sector net borrowing will be:

  • £149 billion this year, falling to
  • £116 billion next year, then
  • £89 billion in 2012-13, then
  • £60 billion in 2013-14 and
  • £37 billion in 2014-15, falling further to
  • £20 billion in 2015-16

As a share of the economy, borrowing will fall from 10.1 per cent of GDP this year to 1.1 per cent in 2015-16.

Public sector spending

Within the public sector, actions announced to tackle the deficit included:

Reductions in current spending of over £30 billion a year by 2014-15

Spending reductions of £32 billion per year by 2014-15 were announced. The details of these reductions will be published in the Spending Review on 20 October 2010. The final departmental spending settlements will be set then.

A two-year public sector pay freeze

A two year pay freeze will be introduced from 2011-12 for public sector workforces, except for those earning £21,000 or less. In detail:

  • those earning £21,000 a year or less (1.7 million people or 28 per cent of the public sector workforce) will receive an increase of at least £250 in these years
  • pay will also be frozen in 2010-11 for civil servants who are yet to agree a legally binding pay deal, except for those earning £21,000 or less (who will receive at least £250 a year). These civil servants will then exit the freeze ahead of other groups.
  • there will be an investigation into public service pension provision to inform October's Spending Review and report in full in time for next year's Budget
  • for the armed services, the operational allowance will be doubled, to £4,800
  • plans to be drawn up for fairer pay across the public sector, without increasing the overall pay bill, so that those at the top of organisations are paid no more than 20 times the salaries of those at the bottom

Waste and efficiency

The government will deliver £6.2 billion of savings in 2010-11 to start to tackle the budget deficit and to bear down on waste and inefficiency across the public sector.

The Efficiency and Reform Group has been set up to support departments in renegotiating contracts. It will oversee an immediate freeze on unnecessary spending on consultancy, advertising and new ICT spend over £1 million.

Asset sales

This week the government launched the sale of the High Speed 1 rail link. This will be the first of a wider programme of asset sales. Over the next 12 months the government will:

  • assist a capital injection into the Royal Mail Group
  • resolve the future of the Tote
  • announce its decision on selling part of the student loan portfolio
  • release the 800MHz and 2.6GHz spectrum to support super-fast mobile services
  • explore the options for a potential sale process in the national air traffic control service (NATS)

Sources of government revenue 2010-11

Chart of government receipts 2010-11

Government receipts 2010-11. This chart shows the different sources of government revenue. Public sector current receipts are expected to be around £548 billion in 2010-11. The source of this graph is data from the Office for Budget Responsibility.

More detailed sets of figures can be found in the full Budget documents.

Public spending by main function 2010-11

Chart of government spending 2010-11

This chart presents public spending by main function. Total managed expenditure in 2010-11 is expected to be around £697 billion. The source for this graph is data from HM Treasury. 

More detailed figures on planned spending can be found in the full Budget documents.

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Budget 2011 on Directgov

Budget June 2010

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