Spending Review 2010 - Background
The Comprehensive Spending Review (CSR) was much anticipated as the second – and more painful – part of the Chancellor's emergency Budget. Back in June, Mr Osborne set out plans to fill a £149bn budget deficit by 2014/15 through a combination of tax increases and spending cuts.
The bias was firmly towards cuts: tax was meant only to fill 23% of the financial black hole, with the other 77% to come from wielding the axe on Government expenditure.
This was widely interpreted as implying across-the-board cuts of 25% for those 'unprotected' departments. In the event, the departmental cuts averaged 19%, thanks mainly to the substantial reductions of £7bn made to welfare benefits and tax credits.
There were a number of other surprises, some with a definite tinge of smoke and mirrors. For example, there was a subtle £1bn tax increase on businesses from a decision not to recycle revenue raised by the new Carbon Reduction Commitment Energy Efficiency Scheme (effectively a version of the carbon credits scheme for non-energy intensive organisations).
The CSR's end result is what all the economic and political commentators had anticipated: we will all be worse off, in one way or another. The next stage of the budgetary process – translating the planned cuts into genuine reductions in expenditure over the coming four years – will be the most difficult. Whereas tax increases are easy to implement, expenditure savings have, in the past, proved far less easy to achieve.
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