Spending Review - how departments are affected

Which Government departments will be hit most by spending cuts?.

Today's Spending Review details exactly how the various Government departments will be affected by the Government's proposed spending plans over the next 4 years.

Types of spending

The Government separates spending into two categories: resource and capital.

Resource spending is money spent on providing day to day services, such as teachers, nurses, police, army and benefits.

Capital spending is money invested in improving equipment and infrastructure, for example new/improved buildings, transport, technology systems and defence equipment.

As you'll see from the figures below capital expenditure has generally borne the brunt of the cuts (as a percentage of current levels). But as resource spending is by the far the bigger of the two overall, it's arguably the more important top look at.

Spending change projections for the major Government departments

The table below shows the projected change in spending, after inflation, over the next 4 years for the main Government departments:

Department	2010-11 Total Spend (billion)*	Resources Spending Change	Capital Spending Change
Work & Pensions	£158.5	+2.3%	-5.5%
NHS	£101.8	+1.3%	-17%
Education	£60.6	-3.4%	-60%
HMRC	£39.7	-15%	-44%
Defence	£35.6	-7.5%	-7.5%
Local Government	£29.0	-27%	-100%
Scotland	£28.2	-6.8%	-38%
Business, Innovation & Skills	£19.4	-25%	-52%
Northern Ireland	£15.7	-6.9%	-37%
Wales	£14.9	-7.5%	-41%
Transport	£12.8	-21%	-11%
Home Office	£10.8	-23%	-49%
Justice	£8.9	-23%	-50%
International Development	£8.0	+37%	+20%
Culture, Media & Sport	£6.2	24%	-32%
Energy & Climate Change	£3.0	-18%	+41%
Environment, Food & Rural Affairs	£3.0	-29%	-34%
Source: Spending Review 2010. * includes baseline resources, capital and annually managed expenditure.

Should we be worried?

Of course. Even a modest 3.4% fall in education resource spending over the next 4 years (after assumed inflation) is a concern. Yes, the Government insists it will drive efficiency and save money to reduce the strain on services that are experiencing cuts (in actual or real terms) - but all Governments make a lot of noise about cutting waste and improving efficiency only to make little difference in practice.

How will Government departments cope with less money?

In many cases by shedding jobs - the Government estimates around 490,000 public sector jobs will be lost over the next 4 years. And there's an argument that the private sector could be hit similarly as Government outsourcing and contracts are cut back.

There's little doubt the cuts will place a greater strain on the public sector and some services will suffer. There may currently be some fat on the bone, but culling jobs, freezing pay and reducing pension benefits will decimate public sector morale, so I fear lots of unrest, industrial action and a general decline in quality of service before things maybe pick up in a few years time.

How will the cuts affect me?

I'll be posting an article covering this very shortly.

Read this article at http://www.candidmoney.com/articles/article161.aspx