Although the Spending Review announced yesterday (June 26) by Chancellor George Osborne provoked anger from public sector workers and other critics, business leaders and groups generally welcomed the plans but said they would have liked to have seen further cuts to public spending and a greater emphasis on infrastructure investment.
Amongst measures announced in the Review, which will cut £11.5bn from Whitehall departments, the Chancellor revealed he will apply a ‘temperature test’ to ex-pat pensioners, depriving many of their winter fuel allowance, and has reduced the local government department budget by 60 per cent.
However, Mr Osborne also announced £100bn of spending on the UK’s energy and transport infrastructure between 2015 and 2020, seeing it as the most effective engine for economic growth, which was welcomed by business leaders.
Director General of the CBI, John Cridland said that the Chancellor has “carefully walked a tightrope of protecting growth, while making sizeable savings to pay down the debt.”
Details of the infrastructure boost will be announced later today by Chief Secretary to the Treasury Danny Alexander, but the focus is expected to be on energy, although there will almost certainly be plans to build schools and affordable housing and more will be spent on scientific research.
Meanwhile, although the budget for HM Revenue & Customs (HMRC) has been cut by 5 per cent, the department has been instructed to raise an extra £1bn in revenue by targeting tax avoidance and evasion, fraud and debt.
HMRC’s target for extra tax revenue has increased from £23.5bn in 2014-15 to £24.5bn in 2015-16. According to Treasury estimates, the department should be able to deliver £130m of efficiency savings by 2015-16 through “improved productivity and further digital transformation, reducing inefficient manual processing and dealing with error”.
