UK Chancellor George Osborne announced Wednesday details of the British Government’s four-year public spending plans or Spending Review. The Spending Review allocates resources across all government departments according to the Government’s priorities and sets firm and fixed spending budgets for each department from 2011-12 to 2014-15. Its aim is to driving out waste while promoting reform and fairness. It also seeks to prioritize capital spending that supports sustainable economic growth.
The Chancellor told the House of Commons yesterday that it was essential to deal with the deficit now to ensure prosperity in the future. He said: “To back down now and abandon our plans would be the road to economic ruin. We will stick to the course. We will secure our country’s stability. We will not take Britain back to the brink of bankruptcy.”
The Spending Review comes at a time when the State is spending significantly more money than it raises in taxation, and is having to meet the gap – called the deficit – by borrowing at record levels.
Last year, the Government borrowed one pound in every four that it spent; and the interest payments on the nation’s public debt each year are more than the Government spends on schools in England.
The Chancellor said:
“Mr. Speaker.
Today’s the day when Britain steps back from the brink. When we confront the bills from a decade of debt. A day of rebuilding when we set out a four-year plan to put our public services and welfare state on a sustainable footing – for the long term.
So that they can do their job – providing for families, protecting the vulnerable and underpinning a competitive economy. It is a hard road, but it leads to a better future. We are going to bring the years of ever-rising borrowing to an end.
We are going to ensure, like every solvent household in the country:
• that what we buy, we can afford;
• that the bills we incur, we have the income to meet;
• and that we do not saddle our children with the interest on the interest on the interest of the debts we were not ourselves prepared to pay.
Tackling this budget deficit is unavoidable. The decisions about how we do it are not. There are choices. And today we make them. Investment in the future rather than the bills of past failure. That is our choice.
We have chosen to spend on the country’s most important priorities – the health care of our people, the education of our young, our nation’s security and the infrastructure that supports our economic growth.
We have chosen to cut the waste and reform the welfare system that our country can no longer afford.
For this is the context of this Spending Review.
We have, at £109 billion pounds, the largest structural budget deficit in Europe.
This at a time when the whole world is concerned about high deficits, and our economic stability depends on allaying those concerns.
We are paying, at a rate of £120 million a day, £43 billion a year in debt interest.
This at a time when we all know that that money would far better serve the needs of own citizens than those of the foreign creditors we borrow from.
And we have inherited from the previous Government plans – if you can call them that – that envisaged our national debt ratio still rising in the year 2014.
Not a single penny of savings had been identified. “
Read Chancellor Osborne’s Parliamentary Speech in full here and find the complete Spending Review in pdf format here: Spending Review
Reception in the UK to the austerity package was mixed. “Experts deem cuts regressive without higher tax rate increase and says child benefit changes were crudely implemented,” says the Guardian. And “Labour is being reckless in turning the debate over spending cuts into a new front in the class war,” argues commentators at the Telegraph.
In the United States, the Spending Review got a cool reception. The Spending Review is “[a] harbinger of things to come,” says the Christian Broadcasting Network of the austerity plan.
“Just screw the poor,” the Moderate Voice retorts.
And internationally, Reuters is reporting that the “respected Institute for Fiscal Studies (IFS)” sees the measure as adding to union anger. “The austerity drive will hit the poor harder than the better off,… opposing point blank the government’s claims that its measures were ‘progressive,'” the IFS is reported as saying.