Spending Review 2010 Background

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.

Useful links:

Contact us - Book Callback - Free Consultation - Newsletter - Money MOT - Discounts

Back to News Summary