Welfare, workers, housing and local services hit most by cuts

By staff writers
October 20, 2010

The government's Comprehensive Spending Review has cynically targeted the most vulnerable in its attack on spending, say commentators.

Chancellor George Osborne outlined the most savage public expenditure cuts since the 1920s and 30s in his lengthy statement to parliament at lunchtime on 20 October 2010.

Jobs, welfare, social housing, public transport users, pensioners, and local council services took the brunt of the pain of the CSR - contradicting repeated promises by the government that the poorest in society would be protected.

The Chief Secretary to the Treasury, Danny Alexander, a Liberal Democrat, repeatedly declined to say directly whether the poor would lose out, when closely questioned on BBC television after the chancellor's statement in the House of Commons.

Cuts and reductions announced today include:

* Welfare cuts of £7 billion, on top of £11 billion already declared, plus a massive clamp on housing benefit.

* Rents for new tenants in the social housing sector are set to be increased dramatically, which will lead to thousands of low income families having to pay up to £9,000 a year more.

* Councils to face budget cuts of 7.1 per cent every year for the next four years; a 28 per cent cut overall.

* The Justice Department, responsible for prisons, the courts and legal aid, to lose almost a quarter of it funding over four years.

* Up to 30 per cent fare increases over four years for public transport users.

* The state pension age to rise from 65 to 66 by 2020, clawing £5 billion from those who would have been recipients.

* Pensioners to receive £600 million less in winter fuel payments next year.

* Spending on police to fall 18 per cent over four years.

* The Home Office's budget to be reduced by 24 per cent over four years.

* The Department of Climate Change to have its budget reduced by 20 per cent over four years.

* Department for the Environment, Food and Rural Affairs to be cut by around 45 per cent.

* Department for Culture Media and Sport's budget to be cut by 24 per cent.

* Money to pay for nursing homes and other social care services to be taken from other portions of local authority expenditure.

* Childcare cuts of up to £30 a week.

* Health spending to rise over and above inflation, but key NHS promises have been abandoned - including free prescriptions for people with long-term conditions.

* The NHS is simultaneously expected to find "efficiency savings" of £15 billion to £20 billion over four years.

In better news, the education budget has been set at £57.6 billion, with an increase in funding for schools of £3.6 billion in cash terms by the end of the Spending Review period. Overseas aid has been preserved and £1 billion will also be spent on the launch of a green investment bank. There will be a new £2.5 billion a year permanent bank tax.

But these positive features of the government's plan were overwhelmed by negativity, said many concerned with those at the sharp end, including religious and civic leaders, trades unionists and specialist commentators.

The Rev Paul Nicolson, chair of the Zacchaeus 2000 Trust, which helps the poorest debtors tangled in the welfare system, said on the Touchstone weblog that "[t]he decision to cap housing benefit is a spectacular example of economic injustice."

He added: "It continues decades of the disintegration of economically mixed communities, and hits the poorest households below the belt – while protecting the speculators and landlords who profit from high rents and therefore high housing benefit."

The TUC General Secretary Brendan Barber commented: "Right across government the Chancellor has announced eye-watering cuts that will have a desperate impact on communities, business and hard-pressed families. But he has not had the guts to spell out the detail."

He continued: "Worst of all... he has loaded cuts on to benefits and welfare payments. Those who have not had a minister fighting their corner but who are most vulnerable to cuts have lost the most today.

"But the biggest tragedy of all is that the spending review is likely to fail on its own terms. These cuts will depress the economy by causing a million job losses and undermining business and consumer confidence. There will be plenty of pain, but little to gain," said the trade union leader.

Plans to increase child tax credit by £30 a year in 2011/12 will be dwarfed by childcare cuts of up to £30 a week - or £1,560 a year - adds the TUC.

The Treasury's own Equality Impact Assessment of the CSR says that this move will hit lone parents particularly hard.

Meanwhile, the Rev Jesse Jackson, the US human rights campaigner who is in Britain at the moment, said that poorer people should not be made to pay for a crisis caused by irresponsible financiers, and that the "fight for jobs and peace and justice in the UK and US" should go hand-in-hand with solidarity with the world's poorest, living on the edge of existence.

BBC economics correspondent Stephanie Flanders noted that the chancellor had not diluted his determination to cut benefits and welfare, but he had protected the middle classes from more of the pain.

Robert Peston, the business editor, said that private companies might well "struggle" in the face of cuts similar to those facing government departments, even ones that had been let off more lightly than they had feared.

Dave Prentis, from Unison, commenting on health, said: "Patients and staff will soon see through the facade that the NHS is being ring-fenced, when at the same time it has been told to make £20 billion worth of savings. The NHS is not safe. Some hospitals are already cutting back on vital life-improving operations such as cataract, hip and knee replacements."

In an impassioned response to the chancellor's CSR statement, the Shadow Chancellor Alan Johnson denounced government spending cuts as a "reckless gamble with people's livelihoods" and accused ministers of "throwing people out of work".

He said the review was "not about economic necessity, it's about political choices". Raising the estimate of 490,000 public sector job losses, he asked: "What will the total redundancy bill be?"

A projected 14,000 job cuts in the Ministry of Justice alone could cost £230 million in redundancy costs, he suggested, arguing that the failure to invest and the hidden costs of the CSR rendered it ineffective as well as unjust.

Guardian economics leader writer Aditya Chakrabortty suggested that the government was "picking victims" who would have less political impact on its fortunes, such as the disabled, who will suffer most from welfare cuts.

From now on, "Britain is going to be a bad country to be poor in," concluded associate editor Martin Kettle.


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