Strategy & Operations » Governance » Spending review brings Britain ‘back from the brink’

LONDON (SHARECAST) – Chancellor George Osborne tore into benefit scroungers and the bloated civil service during an hour-long speech to parliament at lunchtime, outlining billions of pounds of spending cuts.

The Comprehensive Spending Review, charged with slashing spending by as much as £83bn over the next four years, brought “sanity to the public finances,” Osborne claimed.

Around £1.8bn will be cut from the pensions bill for public sector workers every year by 2014/15 and the pension age for all men and women will rise to 66 by 2020, four years earlier than planned.

Osborne demanded changes to the welfare system that means “it will always pay to work”.

Welfare currently accounts for a third of all public spending and the benefits bill has ballooned to a colossal £200bn. New caps on benefits will save the country £7bn a year.

There will also be big changes for civil servants. The government has “gone further than we thought possible in cutting back office costs”, the chancellor said proudly.

Whitehall will find savings of £6bn, twice the amount previously expected, although 490,000 public sector jobs will disappear within four years. Many will go through natural turnover, but Osborne admitted there “will be some redundancies”.

Treasury big wigs have agreed to cut costs by a third, the Foreign Office will find savings of 24% in its budget, and even the Queen has agreed to freeze the Civil List next year and take a 14% cut in the royal budget for 2012/13.

A 10-year fight for justice by Equitable Life policy-holders will disappoint many. They’ll receive fair” compensation of around £1.5bn for losses incurred as a result of the insurer’s near-collapse. They were demanding around £5bn.

Today’s OAPs will be happy though. They’ll still be eligible for free eye tests and free bus passes, while the temporary increase in cold weather payments is made permanent.

The rest of us will still be able to visit museums and galleries for nothing and the BBC has been forced to freeze the licence fee at £145.50 a year for the next six years.