Spending Review: 'Huge sigh of relief' as elderly shielded from pain

Spending review in full

The Chancellor announced that winter fuel payments would remain at their current level and revealed that a temporary increase in cold weather payments made last year would be made permanent.

Mr Osborne again defended his decision to axe the previously-universal child benefit for high earners – a move which provoked widespread criticism earlier this month – and resisted the temptation to scrap the scheme for all children over 16.

The Chancellor stressed that, despite speculation to the contrary, child benefit would remain payable until youngsters left education "at the age of 18 or even 19".

But last night it emerged withdrawing child benefit from higher-rate taxpayers would hit 300,000 more families than the Government previously claimed.

The controversial move will also raise more than double the 1bn David Cameron and George Osborne said it would earlier this month.

The figures were revised as Treasury officials admitted the earlier projections assumed the age limit was to be reduced at the same time from 19 to 16.

But Mr Osborne only decided on that last week, and until then the savings to be made from reducing the age limit had been calculated separately.

He was said to have had a change of heart when he realised that, with the savings made elsewhere in the comprehensive spending review, the further child benefit cut was unnecessary.

The benefit change, which will hit all families with a parent who earns more than 44,000 a year, will come into effect in 2013.

For pensioners the Government also confirmed that the basic state pension would rise each year in line with earnings, prices or 2.5 per cent, whichever is greater.

On the downside, the pension credit will be frozen from April next year for the coming four years at 20.52 a week for a single pensioner and 27.09 for a couple.

Pensions Minister Steve Webb said: "For months there has been speculation that we won't keep our promises on benefits for pensioners, but today you can see that we have protected winter fuel payments, free TV licences and concessionary bus passes. This comes on top of restoring the earnings link to pensions."

Paul Russell, secretary of the Yorkshire and Humber Pensioners' Convention, said: "I think the Government recognised that they would lose the votes of everybody over 60 if they started withdrawing the bus pass, free prescriptions and winter fuel allowances.

"But I am very worried about the cuts that have not appeared. Council budgets are being cut in such a way that it is difficult to see how they are going to maintain even the current level of adult social care provision."

Age UK's charity director, Michelle Mitchell, said: "We are delighted that universal entitlements for older people have been protected.

"Benefits such as the winter fuel payment and free bus pass are a lifeline for millions of the poorest older people, who will breathe a huge sigh of relief at this news.

"Only two per cent of pensioners are higher-rate tax payers, so this is a cost-effective way of targeting help to low and mid-income groups."

Damian Dewhirst, public sector finance specialist at Grant Thornton, said there was good and bad news and the good news included provision of child benefit for 16 to 19-year-olds, or until they left education.

As the controversy of child benefit raged the TUC claimed 830,000 of the families to be affected by the child benefit axe had only one breadwinner.

The benefit is worth 1,055 for the first child and reaches almost 2,500 for families with three children.

Elderly spending more on basic items

The amount older people spend on essential items such as food and fuel has "increased significantly" during the past five years, a study suggests.

A quarter of households aged over 50 in England saw a jump of 10 per cent or more in the amount they spent on basic items between 2004/05 and 2008/09, with spending on domestic fuel soaring by a third in real terms.

Unsurprisingly, the poorest have been most affected by the rising cost of living, says the English Longitudinal Study of Ageing.

Professor Sir Michael Marmot, of University College London, said: "Food and fuel make up a considerable proportion of elderly people's budgets so any price increases tend to have a significant effect on those households."

Region in vanguard for superfast broadband tests

COMMUNICATIONS

Mark Casci

TRIALS to bring superfast broadband to rural areas are to be carried out in Yorkshire.

North Yorkshire has been selected as one of four pilot areas to form part of a 550m scheme aimed at improving the poor quality of internet access in Britain's countryside.

Chancellor George Osborne said he wanted to allocate public money to help the private sector to close the gap that exists in internet access between urban areas and the countryside.

Mr Osborne said that the move "will help encourage the growth of our creative industries as a key part of the new economy we are seeking to build".

An estimated 11,400 businesses and 220,000 people in North Yorkshire currently lack adequate internet access.

The North Yorkshire pilot could be worth as much as 10m and is to be contracted out to a private company, with the tendering to begin early next year.

The region was selected alongside Cumbria, Herefordshire and the Scottish Highlands after successful lobbying by both North Yorkshire County Council and NyNet, a public and private sector commercial venture which aims to improve internet access in the region.

County Councillor Carl Les, county council executive member for corporate services, said the arrival of high-speed broadband would be as significant in the 21st century as the railways and canals were in the 19th century in terms of economic growth and security.

The news also delighted the Country Land and Business Association which has long campaigned on the issue.

Dorothy Fairburn, its regional director for Yorkshire, said: "Broadband is the key to unlocking the potential of the rural economy and I am delighted that North Yorkshire has been chosen to receive part of the 530m funding.

"With savings of some 1bn a year expected through greater online Government services, it is critical that everyone has access to an adequate broadband service."

The scheme will be funded by 300m from the BBC television licence fee and 230m from money set aside for the digital switch over.

However, the budget for flood defences is being cut to the tune of more than 170m.

The Environment Department (Defra) and its agencies are also set to lose between 5,000 and 8,000 jobs from their 30,000-strong workforce as the department seeks to make budget cuts of 29 per cent across the board.

Campaigning pays off as science budget escapes major cuts

RESEARCH

THE science budget was one of the few areas spared swingeing cuts.

Months of campaigning by academics appeared to have paid off when it was revealed the science budget would be frozen over the next four years. Taking inflation into account, this amounts to a real-term reduction of less than 10 per cent.

The research community had been bracing itself for cuts of up to 20 per cent or more in Chancellor George Osborne's Comprehensive Spending Review.

Leading scientists warned that the results of such action would be catastrophic for British science and the UK economy.

Yesterday they breathed a collective sigh of relief, while acknowledging that Britain still lagged behind its major competitors when it came to science funding.

In his speech, Mr Osborne announced that science cash funding would be protected at 4.6bn.

He said: "Britain is a world leader in scientific research, and that is vital to our economic success."

The decision was warmly welcomed by leading members of the scientific community.

Leading neurobiologist Prof Colin Blakemore, from Oxford University, former head of the Medical Research Council, said: "It is wonderful to learn that Government has listened to the scientific community.

"Collectively we have made the case that funding science is not a cost but a way to invest in creating a stronger economy which is the best way to guarantee the recovery that will benefit everyone. It will now be important to maintain the dialogue with Government as it reviews budgetary commitments for the future"

Tough decisions remain to be taken on how the available funds will be allocated.

The Government distributes science money among the seven research councils, which in turn hand out grants to deserving scientists and institutions.

One casualty could be "Big Science" which is overseen by the Science and Technology Facilities Council.

It funds large facilities such as the Diamond Light Source synchrotron facility in Oxfordshire and astronomy programmes.

Universities take a 2.9bn blow

Universities felt the full force of the spending cuts as it was announced their teaching budgets would be slashed by 2.9bn.

Many institutions fear they may have to close.

The Treasury said the overall teaching budget for higher education, which excluded research funding, would be cut to 4.2bn from 7.1bn over the next four years – a cut of 2.9bn.

A 150m National Scholarship Fund for poorer students will be established.

Mr Osborne said: "Better-off graduates will have to pay more."2.5bn fund aimed at helping to educate children from poorest families

SCHOOLS

John Roberts

Education Correspondent

SCHOOLS funding is set to increase over the next four years allowing the Government to provide a new 2.5bn pupil premium for poor children.

Chancellor George Osborne announced that the schools budget will increase from 35bn to 39bn over the spending review period – a 0.1 per cent increase in real terms every year.

He told the Commons other government departments had faced larger cuts in order to be able secure the increase which will mean that funding per pupil does not need to fall as the school age population rises.

The pupil premium, an election commitment of both coalition parties, will mean schools receive additional funding for poorer pupils. Mr Osborne said it provided a "real incentive" for good schools to recruit children from deprived backgrounds.

It was announced last week by Deputy Prime Minister Nick Clegg as part of a "7bn Fairness Premium" which also includes free nursery places for disadvantaged two-year-olds and a university fund for poor teenagers.

A Department for Education spokesman said: "Schools budgets have not been cut to pay for the premium.

"The spending review grows the school budget at 0.1 per cent in real terms in each year of the spending review. Underlying per pupil funding will be maintained in cash terms.

"Tough decisions have been taken within the spending review to support a 7.2 billion fairness premium over the period, including the pupil premium."

However, the Department for Education is being forced to make cuts in other areas.

Capital spending on schools is to be slashed by 60 per cent following Education Secretary Michael Gove's decision to axe the Building Schools for the Future programme. The department must also make a three per cent reduction in its "resource spending" by 2014/15.

The Government has also announced that it has abolished the specialist school grant with the money instead going into the mainstream grant funding all schools receive.

At-a-glance

Total public expenditure will be 702bn next year, then 713bn, 724bn and 740bn in 2014/15.

Debt interest payments will be lower by 1bn in 2012, 1.8bn in 2013 and 3bn in 2014.

Average saving in Departmental budgets of 19 per cent over four years.

Forecast loss of 490,000 public sector jobs over four years.

Foreign Office budget savings of 24 per cent.

Home Office and Ministry of Justice budget savings averaging six per cent a year.

Police spending will fall by four per cent each year.

HM Revenue and Customs's budget savings of 15 per cent, while spending 900m more on targeting tax evasion and fraud to collect 7bn in tax revenues.

Overall savings in local council funding of 7.1 per cent.

Department for Business budget cut by annual average of 7.1 per cent but science budget protected.

Department of Culture, Media and Sport budget down to 1.1bn by 2014-15. Free entry to museums and galleries remains.

Total health spending to rise each year over and above inflation from 104bn to 114bn over four years.

Increase in devolved budgets for Scotland, Wales and Northern Ireland, although below the rate of inflation.

BBC licence fee frozen for six years – equivalent to 16 per cent cut.

Department for Education to make savings of only one per cent a year. Schools budget up from 35bn to 39bn.

Department for International Development's budget rises to 11.5bn over next four years, reaching 0.7 per cent of national income.

Total Royal Household spending down by 14 per cent in 2012-13.

Child element of the Child Tax Credit increased by 30 in 2011/12 and 50 in 2012/13 above indexation, meaning annual increases of 180 and then 110.

Child Benefit removed from families with higher-rate taxpayer.

Universal benefits for pensioners retained. Temporary increase in Cold Weather Payment made permanent.

30bn to be invested in transport projects over next four years, including 14bn on railways.