20 October 2010 – Spending Review Key Announcements

20 October 2010

The Spending Review key announcements include the following:

Learning and Skills Sector/ BIS

Over the course of the Spending Review period, the Department for Business, Innovation and Skills (BIS) will reduce its resource budget by 25 per cent. Taking into account anticipated receipts, the cut to capital spending by 2014-15 will be 44 per cent. The Department’s Administration budget will be reduced by 40 per cent, including savings from abolition of the RDAs. The average annual savings will equal 7.1%, however, the decline in funding becomes steeper over the spending review period.

· The Further Education resource budget will be reduced by 25%, or £1.1billion, from £4.3 billion to £3.2 billion by 2014-15.
· BIS will increase adult apprenticeship funding by £250 million a year by 2014-15 creating 75,000 additional places.
· Raise the participation age to 18 by 2015.
· Provide additional places for participation in 16 to 19 learning.
· BIS will abolish Train to Gain and replace it with an SME focused training programme, English for Speakers of Other Languages (ESOL) funding for people not in settled communities will be abolished in 2012.
· Replace education maintenance allowances with ‘more targeted support’.
· Remove the entitlement to free training for a first full level 2 qualification for those over 25. Further education students aged 24 and over studying for a level 3 qualification (A-level equivalent) will be asked to pay fees. These students will be supported by the offer of a government-backed loan where repayments will be dependent on the learner’s income.
· Expect adult learners and employers to contribute more to the cost of further education.
· BIS will continue to support basic skills provision in basic numeracy and literacy skills; Adult and Community Learning and will ‘reduce the complexity and bureaucracy that hampers providers from responding to community needs’.
· BIS will manage the reductions in resource spending by reforming Higher and Further Education funding which will deliver broadly 65 per cent of BIS resource savings; driving efficiencies will deliver around a further 25 per cent and the remainder of resource savings, around 10 per cent, are from cancelling lower priority activities.
· BIS will reduce spending on administration by £400 million a year by 2014-15. The number of Arms Length Bodies will be reduced from 57 to 33, with 9 still under consideration.

Schools/ DfE
· Schools budget to rise from £35bn to £39bn.
· Overall resource savings in DfE’s non-schools budget of 12 per cent in real terms by 2014-15, contributing to overall DfE savings of 3 per cent in real terms.
· An extension from 2012-13 to 15 hours per week of free early education and care to all disadvantaged two year old children.
· A £2.5 billion pupil premium targeted on the educational development of disadvantaged pupils.
· 5 to 16 schools budget rising by 0.1 per cent in real terms each year.
· Capital funding for new schools.
· £15.8bn to rebuild or refurbish over 600 schools over the spending review period
· Real terms increases of 0.1 per cent in each year of the Spending Review for the 5 to 16s.
· Sure Start services will be maintained in cash terms, including new investment in Sure Start health visitors.
· Sure Start will be refocused on its original purpose of improving the life chances of disadvantaged children.

Higher Education
· Overall resource budget for Higher Education, excluding research funding, will reduce from £7.1 billion to £4.2 billion, a 40%, or £2.9 billion, reduction by 2014-15. The Department will continue to fund teaching for Science, Technology, Engineering and Mathematics (STEM) subjects.
· A National Scholarship fund of £150 million a year by 2014‑15 for students on the lowest incomes.
· Reform of the higher education sector to shift a greater proportion of funding from the taxpayer to the individuals who benefit.

Local Government
· Overall savings in funding to councils of 7.1% a year for four years – except simplified school grants, and a public health grant.
· Ring-fencing of all local government revenue grants will end from April 2010.

Families
· Pension age to increase to 66 by 2020.
· Withdraw child benefit for families with a higher rate tax payer.
· Replace all working age benefits and tax credits with a single Universal Credit.
· Expand use of personal budgets for special education needs, children with disabilities and long-term health conditions.

Voluntary Sector
· Pay private and voluntary sector providers by results for delivering reductions in reoffending.
· £100 million transition found for the voluntary and community sector facing hardship.

Other
· Reduction in total public sector headcount of 490,000 over the Spending Review period – anticipated from natural turnover of approx. 8% and leaving posts unfilled as they become vacant and some inevitable redundancies.
· Green investment bank funding of £1bn, with an additional £0.5bn in the third year.
· Additional allocations to support Big Society, establish community organisers and launch the pilots for the National Citizen Service.
· DCLG overall resource budget to be reduced to £1.1bn.
Next steps:
· Each government department is to publish :
o vision and priorities to 2014-15;
o a structural reform plan, including actions and deadlines for implementing reforms over the next two years; and
o the key indicators against which it will publish data to show the cost and impact of public services and departmental activities. This section will be published for consultation to ensure that the Government agrees the most relevant and robust indicators in time for the beginning of the Spending Review period in April 2011.
· Government to publish a reform White Paper early in the New Year.

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