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Key announcements - Spending Review

  • Published: Wednesday, 20 October 2010

The Chancellor, George Osborne, has published the government's Spending Review, outlining public spending from 2011-12 to 2014-15. Read on for a summary of the key announcements in the Spending Review 2010.

Government spending

At the moment, the UK is spending £43 billion a year on debt interest payments - that's nearly £120 million every day.

The Spending Review aims to eliminate the structural current deficit (when government spending is more than the tax it takes in) over the next five years to get national debt falling as a proportion of national income.

One of the main ways this is being done is by reducing public spending. Departmental budgets will be cut by an average of 19 per cent over four years.

Read on for details of how the Spending Review will affect areas such as education, employment, health and the environment.

Welfare and benefits

  • working age benefits and tax credits to be replaced with a single Universal Credit
  • a cap on benefits so that families out of work don’t get more in benefits than the average family in work
  • universal benefits for pensioners, like free bus passes and TV licences for the over 75s, will be maintained


  • state pension age for men and women will rise to 66 by 2020 - sooner than was previously announced
  • the government will accept the findings of the interim Hutton Report on public service pensions
  • around £1.5 billion will be paid in compensation to Equitable Life policyholders

Business and employment

  • 490,000 public sector jobs will be cut
  • £250 million for new adult apprenticeships
  • a new Work Programme to help those looking for work
  • support for private businesses to deliver some public services


  • £6.5 billion to be invested in housing over the next four years
  • social landlords will be allowed to charge new tenants a weekly rent at between social and market rates - existing tenants will not be affected


  • the schools budget will increase from £35 billion to £39 billion
  • a new pupil premium worth £2.5 billion a year will be introduced
  • Sure Start services will be protected
  • all three and four-year-olds will continue to be entitled to 15 hours a week of education – this will also be extended to disadvantaged two-year-olds


  • health spending will rise at a rate above inflation, with spending reaching £114 billion by 2014/15
  • the health service will carry out a series of reforms designed to tackle waste and inefficiency and increase productivity
  • a new cancer drug fund will be created

Defence, diplomacy and international development

  • defence budget will be reduced by 8 per cent
  • Foreign Office budget will be cut by 25 per cent, by reducing the number of Whitehall-based diplomats and back office functions
  • spending on international development will rise to £11.5 billion, with an independent commission created to assess the impact of UK government funds

Energy, climate change and the environment

  • setting up the Green Investment Bank, which will provide incentives for investment in low-carbon projects
  • up to £1 billion for one of the world’s first commercial-scale carbon capture and storage demonstration projects
  • £200 million to develop offshore wind technology and manufacturing at port sites
  • the Green Deal to improve energy efficiency of households and businesses at no upfront cost


  • £14 billion for rail improvements including station upgrades in Birmingham, in towns around Manchester, in Yorkshire and to the Barry-to-Cardiff corridor
  • the cap on increases in regulated rail fares will increase in 2012 for three years from the equivalent of the Retail Price Index plus 1 per cent to the RPI plus 3 per cent
  • over £10 billion for new roads and to maintain existing roads
  • full funding for Crossrail
  • subsidies to bus companies to be reduced by 20 per cent
  • free bus travel for disabled and older people to be maintained

Justice and policing

  • changing criminal sentencing to stop the rise in the UK prison population – this includes paying private and voluntary sector providers by results for reducing reoffending
  • bringing together the Courts and Tribunals system in a single agency
  • using different ways than courts and legal aid to resolve disputes
  • introducing directly elected Police and Crime Commissioners
  • using new technologies to secure UK borders at a lower cost

Culture, media and sport

  • 19 quangos to be abolished or reformed
  • BBC licence fee frozen for next six years
  • free entry to museums and galleries will continue
  • funding for London 2012 Olympics and Paralympics secured

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