/ Money, Parenting

How will the spending review affect you?

Pound sign being cut

Government plans for public spending were outlined in today’s spending review. £18bn will be cut from welfare spending by 2015 – find out exactly where the cuts will be and how you’ll notice them.

The chancellor, George Osborne, said: ‘We have chosen to cut the waste and reform the welfare system that our country can no longer afford.’

Mr Osborne also remarked: ‘It is a hard road, but it leads to a better future.’

Welfare reforms

  • The government had already pledged to cut £11bn of welfare spending by 2014-15. Today, it committed to a further £7bn saving, bringing the total reduction to £18bn.
  • Restricting Child Benefit is estimated to save £2.5bn of the welfare total. From January 2013 it will no longer be paid to families with a higher rate taxpayer. There had been speculation that Mr Osborne would cut further by reducing the age limit for Child Benefit but he confirmed today that it will continue until a child leaves full time education, at age 18 or 19.
  • Universal benefits for pensioners will be left unchanged, including eye tests, prescription charges, bus passes, TV licences for the over-75s and winter fuel payments.
  • Education Maintenance Allowance will be ended, however, saving an estimated £0.5bn
  • Household welfare payments will be capped from 2013, on the basis of median earnings after tax for working households- around £500 per week by 2013.
  • Welfare fraud will be targeted, with the intention of saving £5bn each year.

Pension age increase

The chancellor confirmed that state pension age for women will be set at 65 from November 2018. State pension age will then be increased to 66 for men and women by April 2020. The increase is expected to affect 5.1m people. The government expects the changes to save £30bn through reduced spending on state pension between 2015 and 2025 and bring in an additional £13bn through income tax and national insurance receipts.

Public sector redundancies

Mr Osborne admitted that the cuts will bring public sector redundancies and that the numbers employed are expected to fall by 490,000 over four years. He said that much of this would be accounted for by natural turnover, leaving posts unfilled as they become vacant.

Television licence freeze

The BBC has assumed responsibility for funding the World Service and has accepted a licence fee freeze for six years. This is seen as a 16% saving in its budget.

Rail fares to rise

Increases in regulated rail fares, mostly paid by commuters, are currently capped at the rate of inflation as measured by the retail prices index (RPI) plus 1%. From 2012 the limit will rise to RPI plus 3%. You can read more about this in our rail fare Q&A.

Equitable Life

The long-running saga of Equitable Life savers came a step nearer to resolution, when Mr Osborne announced that he accepted the findings of the Parliamentary Ombudsman. He pledged to pay out a total of £1.5bn to compensate policyholders who he described as ‘innocent victims of a terrible failure of regulation’. Those who had with profits annuities were identified as a group that had been particularly hard hit and the Chancellor announced that they will be the first to receive payments, due to start next year.

What’s your opinion on the spending review?

How will today’s announcements and cuts affect your life? Do you think the government should have made different decisions or do you think it could have gone further?


And if I hear any more concern for the poor and the affects on those on benefits I will scream! The poor? You mean those people who will now have to think how they spend the rest of their money once they’ve paid for their satellite subscriptions, trainers, fags and cheap designer clothes on credit they could never even afford to pay off? These greedy sub-primers contributed as much to the downfall of our economy as the greedy bankers that got rich feeding them.

Britain has some of the most intelligent and hardest working people in Europe, but it also has some of the most stupid and laziest. No jobs? Tell that to the millions of foreign workers that make the effort to travel thousands of miles to Britain to graft to keep our economy ticking over. Just seen some bloke on Newsnight from Merthyr Tydfil who can’t even get off his backside and look for a job in Cardiff. Why am I and my partner (an employee of Sir Philip no less), regularly working 120 hours per week between us, and the other hard-working people of this country subsidising so many lazy dole scroungers? How about some breaks for tax payers?

Granted, not everyone can work and there are some truly genuine cases. But we have people in wheelchairs begging to be given work yet someone with a slightly dodgy back is claiming incapacity benefit.

I am all for fairness. Work hard – play hard. Won’t work – suffer.


Hi fat sam, I’ve sorted out the starred out word in your comment.


I totally agree with you. It should not be an ambition of the children today to have a council house, that is there if you need help. Many people are proud to sit at home. Some say they can’t get out of bed early but they do line up early for their checks at the job centre.

My husband and I will have as many kids as we can afford, but why can’t they do it? Then they complain that their children don’t have enough. It is simple maths one pie + a lot of mouths = everyone gets a smaller piece!

I am not sure why people keep saying there aren’t enough jobs as I look at the newspaper everyday and its full! We can all do something!

If they want benefits then they should volunteer in order to get it benefits. You don’t volunteer you don’t get benefits! Then we can keep some services running that are going away and it will be better for them as they will get skills and experience which will make them more hireable.


Can’t work suffer – There are nearly 1 million young people that cannot get a job – nor do they have the facilities to get one – they have been taken by – EU migrant – World immigration.

If I hear yet another of the self-centred proclaiming – “all those on benefit should suffer” and ” I got a job therefore they can get a job” – I’ll think about committing suicide

When everybody is identical in opportunity – ability – environment – and education – then the self satisfied may have a point – everybody is not – and I’ve been hearing Tory dogma more and more.

Seeing a job in a newspaper makes no difference – if you have had poor parents – gone to a poor school .- live in a deprived area – only the bright get a job – In fact all of the immigrants and migrants are bright – that’s why they are here – But in the meantime blame the poor and vulnerable.for not getting a job.

Don’t know much about it – Taught for 40 years in a slum school (the one where children went that were refused entry in other schools) in the most deprived area in London. I did it because I wanted to help the disadvantaged – not punish them. I did a few went to Uni or obtained good careers – many could not overcome their disadvantages inflicted on them by uncaring governments.


PS loving the word ‘poppycock’, Penny. I’m surprised part of it hasn’t been *d out!

Sue Shaw says:
22 October 2010

I’m a ‘Grey Voter’ who tried to save and budget all my life and now have to survive on a lowly pension because Gordon Brown stole most of it when he became chancellor in 1997. I worked in the private sector so was not entitled to a massive pension for life. I stopped at two children because we could not afford any more and we survived without ‘child tax credit’ and only bought luxuries when we had saved up and could afford them. Labour didn’t save and budget so we are now in deep trouble. Why did Labour not take control of what the banks were doing and stop them. Vince Cable could see it coming 5 years ago but Labour would not listen. Give us ‘Grey Voters’ a break. Most of us are not scroungers and didn’t have benefits to fall back on.


Spot on. Why do people who save and contribute their whole life always seem to be the ones that get penalised, particularly when any benefits are means-tested? That is most certainly not fair!

There should be some kind of ‘No Claims Bonus’ for people who have claimed little or no benefits whilst paying tax/NI, payable as a lump sum on retirement.


I am a “Greyer Voter” – I saved and budgeted all my life – Thatcher broke the link between My pension to Average Earnings – so that my pension is 40% less now than it should be. Cameron promised to restore it and has not – Thatcher also deregulated banks and rents and sold off Council housing stock at below market value – so banks were free to gamble – and the “buy to rent” people free to raise rents to levels not affordable by the poor. They used to be. So the only way that many poorly paid girls could get accommodation was to become pregnant There are no affordable flats for the wages they could earn

The only reason the whole western world went into credit crunch was because banks were greedy and gambled on get rich schemes like loaning to those who could not pay it back and lost – Remember it was a western world recession – not a Gordon Brown recession

So please blame the problems on gambling Banks – and cronies of Thatcher’s Tory Oppression/

Most people are not scroungers – but there are some that cannot get jobs because brighter people from abroad have taken them and have no choice.

Have to point out that those that are forces to work for very very low payments AKA benefits are not volunteers they are slaves,

I will never ever vote for the Tories or the Lib-Dems – I’d sooner vote BNP.