Spending Review & Autumn Statement 2015

25 November 2015

A combined Spending Review and Autumn Statement speech was delivered today at 12.30pm by the Chancellor of the Exchequer, George Osborne.

Background

Spending Review

The Spending Review is a process that determines how the government will spend public money over the course of the Parliament. The speech set out how £4 trillion of taxpayers’ money will be spent on government departments and public services such as the NHS and schools. In the Spending Review the government decides budgets for each department, called departmental settlements. The departmental settlements are the amount the government has allocated to each department to spend over the Parliament. Things that departmental budgets can be spent on include the running of the services that they oversee such as schools or hospital, and the everyday cost of resources such as staff. Find out more about HM Treasury’s role in public spending, and different types of budgets in the how to understand government spending guide.

Autumn Statement

The government updates their plans for the economy twice a year (in the Budget and Autumn Statement) and we have highlighted below the key points arising from the Chancellor’s speech. PLEASE NOTE: This snapshot is not intended as an in-depth analysis of the Chancellor’s speech (we will leave that to the industry commentators and experts) but we hope this brief summary helps you gain a quick grasp on the key points delivered by the Chancellor from the dispatch box. For full details of the following headlines (and more) you may wish to visit the HM Treasury website.

Spending Review

Based on the principles of strengthening economic and national security
  • Government pledges that £12bn of welfare savings mentioned in the summer 2015 Budget will be delivered in full
  • Public spending to be £756bn in 2015, £773bn in 2016, £787bn in 2017, £801bn in 2018 and £821bn in 2019
  • NHS – 25% cut in Whitehall budget at Department of Health
  • NHS - £101bn budget today to rise to £120bn by 2020/21 – enabling NHS availability 7 days a week
  • Police – No cuts in budget
  • Defence – Defence budget to rise to £40bn.
  • Foreign & Commonwealth Office – Budget maintained
  • Department of Transport – Department’s operational budget to fall by 37% but spending on UK transport infrastructure will increase by 50% to £61bn (London will get £11bn of investment in transport infrastructure)
  • Department of Work & Pensions – 14% savings to be made on resource budget
  • Department of Energy & Climate Change – Budget to fall by 22%
  • Culture, Media & Sport –budget to fall by 22% but greater commitment to museums and 29% increase in budget for UK sport
  • Overseas Development – Budget to be increased

Forecasts

  • The Chancellor announced adjustments to previous growth forecasts from those previously announced in the summer 2015 Budget.
    • Growth forecast for 2015 – revised upwards to 2.4%
    • Growth forecast for 2016 – revised upwards to 2.4%
    • Growth forecast for 2017 – revised upwards to 2.5%
    • Growth forecast for 2018 – revised upwards to 2.4%
    • Growth forecast for 2019 – revised upwards to 2.3%
    • OBR borrowing forecast revised down to £73.5 billion for 2015/16 (taking account of new statistical data) – Government will borrow less than forecast over subsequent years, reaching a surplus of £10.1bn in 2019/20
    • OBR states national debt now decreased to 82.5% of GDP (taking account of new statistical data)

Taxation/Welfare

  • Tax credit taper rate and thresholds to remain unchanged
  • State pension will rise by £3.35 to £119.30 per week
  • Savings credit to be frozen at current levels
  • Small business rate relief scheme extended for a further year

Devolution

  • More devolution to be introduced, giving more responsibility to a greater number of local councils.
  • 26 new or extended enterprise zones to be created, 15 in towns and rural areas
  • Councils to keep 100% of receipts from asset sales
  • Welsh block grant to reach £15bn in 2019/20
  • Scottish block grant to be over £30bn in 2019/20

Housing

  • Housing budget to be doubled
  • Help to buy shared ownership introduced
  • Housing supply to be increased via easier planning rules and making more land available for building new homes
  • ‘London help to buy’ to be introduced
  • New rates of stamp duty (3% higher from April 2016) for buy to lets and second homes

Education

  • £23bn to be invested in school building s and new school places
  • Current national base rate for 16-19 year olds maintained
  • Apprenticeship funding to increase
  • Financial support for education, including higher education loans, to increase by £10bn