Spending review 2013 reaction


Today’s spending review announcement by chancellor George Osborne does not make happy reading – but there are signs of small movements in the right direction.


Public spending for 2015-16 will be £745bn, but the government needs £11.5bn of extra savings and this will not be achieved without significant hardship – especially in the public sector, with knock-on effects among private sector contractors.


Public sector pay rises will be capped at an average of one per cent for 2015-16 and there are plans to scrap automatic pay rises for time served in schools, NHS, prisons and the police – although not the armed forces.


The Office for Budget Responsibility predicts total number of people working for the government to fall by another 144,000 by 2015-16. In a county like Lancashire, with a substantial public sector workforce, this is especially unwelcome news.


On the broader economic scene, Mr Osborne’s assurance that ‘Britain is moving out of intensive care and from rescue to recovery’ reflects a faint light at the end of a long tunnel

– any recovery is going to be medium term or long term. According to the chancellor, government expenditure will continue to fall in real terms at the same average rate as today until 2017-18.


On a more positive note, the chancellor has announced a £3bn capital investment in affordable housing, which is a positive development for our region’s large construction and property sector.


Mr Osborne has also revealed a £50bn capital investment in 2015 – stacking up to more than £300bn for ongoing infrastructure projects, such as roads, railways, bridges, broadband, science and schools by 2020.


Major infrastructure initiatives are powerful economic drivers and we in Lancashire will have to make the most of whatever government investments come our way.