The new Chancellor, George Osborne, delivered his emergency Budget on Wednesday 22 June which sets out a five-year plan to rebuild the British economy based on the Government’s values of responsibility, freedom and fairness.

In his speech the Chancellor details the cuts that departments will experience over the next 4 years. On top of the previous Government’s plans to cut departmental budgets by £44 billion a year by 2014-15, the Budget sets out further cuts in departmental spending of £17 billion by 2014-15. We will have to wait to see exactly what this means for departments such as DEFRA. Final departmental settlements will be specified in the spending review that will be presented on Wednesday 20th October.

Spending Review
  • An engagement programme for the Spending Review will be launched on 24 June 2010, giving public sector workers and members of the public an opportunity to feed in their ideas for how to reduce spending while protecting the quality of public services
  • The Spending Review will set Departmental Expenditure Limits for every department and for the devolved administrations
  • Information about the Spending Review Framework can be found by clicking here.

Low carbon economy
  • Climate change is one of the most serious threats that the world faces. The Prime Minister has pledged to make this the greenest Government ever
  • The Government is committed to playing its part in moving to a low carbon economy. The transition will change the shape of industry, growth and jobs. As part of this, the UK needs £200 billion of investment to 2020 to provide secure low-carbon energy. This will require reform of the energy market and action to attract additional private sector funding
  • In the autumn, the Government will publish proposals to reform the climate change levy in order to provide more certainty and support to the carbon price. Subject to consultation, the Government intends to bring forward relevant legislation in the Finance Bill 2011.

Green Investment Bank
  • Following the Spending Review, the Government will put forward detailed proposals on the creation of a Green Investment Bank to help the UK to meet the low-carbon investment challenge
  • The Government is considering a wide range of options for the scope and structure of the Green Investment Bank. The options will be evaluated for effectiveness, fiscal affordability and transparency.

Infrastructure
  • This Budget confirms the establishment of Infrastructure UK (IUK) to lead work within HM Treasury to enable greater private sector investment in infrastructure, and improve the Government’s long-term planning and delivery
  • In the autumn, the Government will publish a national infrastructure plan that will set out goals for UK infrastructure. This will include priority public and private sector investments and proposals for delivering and supporting investment on a cross-sector basis.

Remote rural areas
  • Reflecting the Coalition commitment to investigate measures to help with fuel costs in remote rural areas, the Government is considering the case for introducing a fuel duty discount in remote rural areas

Charities
  • The Government will continue to explore with voluntary sector representatives ways to improve the Gift Aid system and encourage charitable giving.

Value Added Tax
  • The VAT rate will increase to 20%

You can read the Chancellor's full speech by clicking here.

Other spending cuts

The Government has also announced a second round of spending cuts, following a reassessment of commitments made by the previous Government. These cuts include the loss of funding for free swimming, and the withdrawal of a £6 million investment in County Sports Partnerships by the Department of Health, intended to drive broader physical activity interventions. Other projects to be cut include;

  • Active Challenge Routes - Walk England: £2m (Department of Health project to map walking routes and promote them on an interactive website so people can record their fitness).

  • Search and Rescue Helicopters: £4.6bn (Private Finance Initiative (PFI) funded deal for a new generation of search and rescue helicopters to be jointly operated by the Ministry of Defence and the Ministry of Transport. They will be reviewed "as a matter of urgency").

The suspension of the helicopter contract is the biggest cut in a list of projects. A total of 217 projects that had been given the go-ahead by the previous Government were resubmitted to Mr Alexander for approval.  24 of these have been either cancelled or suspended, saving, the Treasury says, £10.8bn.

National Parks

England’s national parks have been told their cash is to be cut by 5 % this year as part of the wider DEFRA cuts. It will be up to each national park authority to revise their plans to reflect this reduced funding, but it is expected that they will protect frontline services as much as possible by first looking for efficiency savings or reducing back office costs. The Peak District National Park however, announced just this week that it would have almost £½m less to spend on its services in the present financial year; staff numbers would be cut and a pay freeze was likely. Visitor centres, car park maintenance and spending on other facilities would see a reduction. The actual savings from environmental cuts will be small, but the impact on people and places may be much wider reaching.

Commission for Rural Communities to be abolished

Today, the Environment Secretary, Caroline Spelman also announced that, as part of the review of DEFRA’s arms length bodies, the Commission for Rural Communities will be abolished, with a strengthened Rural Communities Policy Unit being created within DEFRA. It is intended that the forthcoming Public Bodies (Reform) Bill announced in the Queen’s Speech will provide the legislative vehicle under which the Commission for Rural Communities (CRC) will stop operating. Government also announced that “there may be opportunities for some key existing CRC staff to join the Rural Communities Policy Unit in order to minimise the loss of experience”.
 

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