UK Spending Cuts
Upon forming a government, David Cameron announced that a Comprehensive Spending Review would be performed over the coming months and in October 2010, the Chancellor of the Exchequer, George Osbourne announced the biggest spending cuts to the United Kingdom's government spending since the end of World War Two.
The Labour Party, a centre-left party, were in power when the Global Financial Crisis struck. Gordon Brown's government massively expanded government debt in response to this, leaving a budget deficit of £170bn ($273bn). Massive bailouts were given to banks and stimulus spending was inefficiently thrown at large companies. Over thirteen years, the Labour Party had massively expanded the public sector and created lots of jobs. The public sector is notoriously inefficient in the United Kingdom. When the Conservative Party was elected, they made it clear that they didn't want to damage public services, but that it was absolutely necessary to clean up the mess left by the political left over the last thirteen years. If the deficit wasn't reduced, then Britain faced a double-dip recession.
The Conservative party wish to end the structural deficit within five years (the length of a parliament), even if it means a period of serious austerity and cuts. 192 government bodies will be abolished, with their functions either ended or transferred elsewhere. This includes stopping bodies which spend public money on arts and films (e.g. British Film Council) and also includes transferring powers back to the government (e.g. Human Fertilisation and Embryology Authority) to stop appointed (un-elected) officials from making important decisions. Approximately 500,000 public sector jobs will be terminated with measures in place to encourage the private sector to increase employment. David Cameron has shown an understanding that only the private sector can drive economic growth and seems to be a clear adherent of Thatcherism. The budget of each government department will be reduced by up to 35.61% by 2014.
Spending on Health, Energy and International Development will not be reduced, though all may have a real-terms reduction due to inflation. The Cabinet Office, which runs government in a sense, will have cuts, but will have a spending increase due to taking on lots of duties from the abolished government bodies. The National Health Service to be massively reorganised, with bureaucracy to be cut down on by the abolition of Primary Care Trusts - the bloated government bodies which run hospitals in a certain area. Instead, committees of doctors will prioritise spending in their areas. The International Development department will be expected not to increase the amount spent on aid, but to still make efficiency cuts, spend less on hospitality and to make redundancies.
The BBC, the public broadcasting service in the United Kingdom, is often accused of being left-wing. Meanwhile, conservatives in the United Kingdom are often accused of wanting to 'cut up' or privatise the BBC. In reality, the conservatives have frozen the BBC budget for 6 years (a large real-term cut, due to inflation) and have given it more responsibilities, ending extra funding for Welsh language television, for example.
Devolved Government Spending
Since Wales, Scotland and Northern Ireland have control of their own budgets in some areas, while the United Kingdom government makes spending decisions for England, the budgets for all three will be cut by between six and twelve percent. It will be, ultimately, the decisions of the devolved governments to decide which services should be cut, within their new budgets. The leaders of these three devolved governments have spoken out against the cuts, however they are all more left-wing and anti-Thatcherism than the majority of the United Kingdom, England.
The Shadow Chancellor of the Exchequer, Alan Johnson, said that the government is taking a "reckless gamble with people's livelihoods" and claimed the cuts were too quick, too deep and would cause a second recession. The Shadow Chancellor's speech made it clear that he did not believe that economic growth must come from the private sector, but instead believed that employing people in the public sector, adding to the national debt, was good for the economy. Stewart Hosie, on behalf of the Scottish National Party said, "George Osborne has pulled the rug from under recovery with these reckless cuts, and risks plunging the country back into recession." The Green Party of England and Wales, The Labour Party and Plaid Cymru all criticised the spending cuts. However, business groups showed clear support of the cuts, with the Director General of the CBI saying, "The chancellor has got the strategic direction." The Taxpayers' alliance said it was 'great news'.
Government welfare and benefits will either be reduced or frozen (leading to real-term cuts, due to inflation) in all cases. Housing benefit will be capped and social housing rent will be increased. Job-seeker's allowance and disability benefits will be frozen and not rise with inflation. Child tax credit (a decrease in taxes for people with children) will be cut for higher-rate taxpayers.
- Footnote: Currently, unemployed families with multiple children can live in a house, paid for by government, which is nicer than a house that a working family could ever hope to rent.