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Budget March 2010 - public sector and public spending

  • Published: Friday, 25 June 2010

The government has confirmed it will stick to planned levels of overall departmental spending in 2010-11 to help support the economy as it recovers.

Budget 22 June 2010

What is the Budget?

Find out what the Budget does and what takes place on the day

The March 2010 Budget was the final Budget for the last Labour government. George Osborne, Chancellor of the new coalition government, delivered his first Budget on Tuesday 22 June 2010. The new Budget may affect some of the information below. To read about the June Budget, click the orange button.

Public services

From 2011-12 onwards, spending growth will be slower to help halve the level of public borrowing as a proportion of the economy over the next four years. However, Budget 2010 confirms that the government will protect frontline services in:

  • schools
  • 16 to 19 education and Sure Start
  • frontline NHS
  • police numbers

in the years to 2012-13.

In December, the Chancellor set out how the government would protect spending on frontline public services and guarantee:

  • NHS healthchecks every five years for the over 40s
  • referral to a cancer specialist within two weeks
  • extra maths and English tuition for all 7-11 year olds who fall behind
  • a place in education or training for every 16- and 17-year-old
  • the maintaining of funding for police officer numbers

Budget 2010 confirms that the government will honour these guarantees and, additionally, allocate over £4 billion from next year's Reserve to fund operations in Afghanistan.

Spending on education - University Modernisation Fund

Universities will be provided with extra one-off funding of £270 million in 2010-11, through a University Modernisation Fund. This will enable them to create 20,000 more university places - largely in key subjects like science, technology, engineering and maths - starting in September.

Public spending

The Budget also sets out further details for other areas of public spending, including:

  • public sector expenditure will grow at a slower annual rate between 2011-12 and 2014-15, alongside reduced levels of public sector net investment
  • a new Code of Practice on setting pay for senior public sector workers, following the pay freeze for these workers in 2010-11; the government will also seek a one per cent cap on public sector base pay uplifts across the public sector for 2011-12 and 2012-13, generating savings of £3.4 billion a year by 2012-13
  • department-by-department identification of efficiency savings, underpinning the £11 billion total saving through 'smarter government' - halving spending on consultants, reducing the number of quangos and using online systems to provide information and advice to the public
  • details of £5 billion of savings by 2012 through better targeting and prioritising of spending, better procurement and cutting lower-priority programmes
  • reforms to the welfare system and reducing social security spending by a further £300 million by 2013-14 on top of existing forecast savings of £1.2 billion

Public finances

Public borrowing in the UK has risen in the short term, due, for example, to the impact of the recession on tax receipts. This borrowing has also helped finance the government's action to help the economy through the downturn.

The government will continue to provide targeted support to businesses and households during the early stages of the economic recovery. However, in the medium term, the government must live within its means.

In Autumn 2008, the government set out that it would reduce the level of public borrowing. The plan is to halve the level of public borrowing as a share of the economy over four years. This plan is based on:

  • savings from reducing spending growth - taking tough decisions on public spending
  • more detail (set out in Budget 2010) on cuts and efficiencies for public spending
  • tax increases - with the biggest burden falling to those with the highest incomes, and
  • a return to sustainable growth in the economy

The government has underpinned its commitment to sound public finances in new laws that place binding duty on the government to meet this plan.

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