As pensions soak up ever larger sums, other areas of the budget face harsh cuts. Our specialist correspondents analyse the impact on some specific areas
The Guardian has trawled government data on public expenditure to build a comprehensive picture of what taxpayers’ money is spent on.
It reveals huge cuts taking place across departments as austerity measures take effect, even in supposedly protected areas such as health. Public spending in 2011-12 was £694.89bn – compared with £689.63bn in 2010-11. That may look like an increase but once inflation is taken into account, it works out as a real-terms cut of 1.58%, or £10.8bn.
Given that Michael Gove is among the most cuts-friendly cabinet ministers and has already promised to slash a quarter of the jobs in his own empire, it is little wonder to see the Department for Education (DfE) reducing spending £58.28bn to £56.27bn – a real-terms cut of 5.7%.
Within this are some notably severe figures, particularly a trenchant 81% cut to schools infrastructure, the continued result of Gove’s decision to scrap Labour’s Building Schools for Future (BSF) programme, while curbing Sure Start plays its part in a 17% reduction to the children, young people and families budget. Reductions in schools spending are partly offset by the transfer of huge sums into the academies programme, with a budget 191% higher at £5.3bn.
While school infrastructure spending cuts were widely touted – not least when Gove, new to the job, was criticised for botching the initial list of schools affected by ending BSF – some argue that such a severe reduction condemns thousands of children to learn in outdated, leaky or ill-heated classrooms.
The Times Educational Supplement’s survey in September of more than 2,000 teachers found about 20% considered their classrooms unsuitable to teach in, with two-thirds saying their school’s infrastructure was outdated, while an Observer study of headteachers in May found almost 40% saying their buildings were not fit for purpose.
In July last year the DfE launched its own programme, called Priority School Building, aimed at the most desperate examples. Any new work will face strict curbs on costs, revealed in October, such as smaller corridors, cheaper materials and no curves, glazed areas or atriums.
Teaching groups are clear in their views. Chris Keates, general secretary of the NASUWT union, said: “There is now gross unfairness in the distribution of money for capital repairs and refurbishment of schools. Rather than prioritising schools badly in need of work to make them fit for the 21st century, the secretary of state appears to be using capital funding as a slush fund to bribe and reward those who embrace his academisation and free schools project.”
Other groups such as the British Council for School Environments, argue that classroom and school design have a big impact on learning and have warned that excessively cheap buildings could prove a false economy. Sharon Wright, chief executive of the group, said: “It’s inevitable that we’ve seen a sharp drop in funding with the end of the Building Schools for the Future programme, and some schools have lost out hugely. Good buildings improve teaching and learning, so it’s good to see that funding from the Priority Schools Building Programme is coming through.”
A DfE spokeswoman said: “As part of this we have made £2.8 billion available for the maintenance of school buildings, and are rebuilding or refurbishing 261 schools under the Priority School Building Programme. We are also carrying out condition surveys across the entire education estate so future funding is targeted at those schools in the greatest need.”
The benefits bill for the country reflects demographic change, political decisions and economic reality. There is no surprise that the amount paid to the jobless rose by 7.6% last year with the budget for jobseekers’ allowance up to £4.9bn. Similarly, the falls in incapacity benefit are balanced by rises in the payment designed to replace it, employment support allowance. But the Department for Work and Pensions’ big-ticket items are pensions, housing benefit and disability living allowance. Rising rents and stagnating wages are pushing up housing benefit.
The politics is not about tackling fraudsters and scroungers, which are widely paraded as reasons for benefit reform, but about diverting attention from the elderly. State pensions are the largest item in welfare – costing the taxpayer £74bn a year. Prying eyes might note that the old get by far the largest slice of the benefits budget.
Social fund expenditure, which is at present system is a series of loans and payments considered a lifeline for the utterly destitute, . It’s about to be reformed but not because of its huge cost. Although the “expenditure incurred by the social fund” is in the accounts as £2.4bn, this includes winter fuel payments for the old.
It’s worth noting that pensioners’ average income has grown by almost 50% over the past decade – more than three times earnings – and almost three-quarters of over-65s now own their home. Carl Emmerson, of the Institute for Fiscal Studies, points out that if tax credits, housing benefits and other welfare payments are added to pensions, the elderly account for more than 65% of benefit spending.
The detailed spending figures published on Tuesday underline how, unlike in Margaret Thatcher’s Britain, the criminal justice services, especially the police, have not been exempted from the spending squeeze.
A House of Commons analysis of police force figures shows that 6,800 frontline police officers had gone by March 2012 over the previous two years as a result of the coalition’s public spending cuts.
This was about 1,000 higher than the original estimate by the Inspectorate of Constabulary and shows the impact of the 6.64% reduction in the single year of 2011-12 in the Home Office budget for crime and policing. The reductions have been “frontloaded” in the first two of the four-year spending review, which will see a cumulative 20% cut in Whitehall grants to the police.
Against this background, the 37% rise in the cost of police pensions to £1.1bn in just one year shows why ministers regard reform as overdue and urgent in this area.
The frontloaded nature of criminal justice cuts is also reflected in the 21%, or £1.5bn, reduction in the budget of the UK Border Agency. It has since been split into two, with the new Border Force rising out of the ashes of the Brodie Clark affair and UKBA dealing with immigration and asylum casework.
The 21% cut was met through a mix of efficiency measures, savings in overheads and the loss of 1,000 in staff numbers, with many taking voluntary redundancy. Immigration is due to shed 5,200 posts by 2015 but started at 700 below strength at the last election. Total job losses are expected to be 4,500 in immigration by the next election.
At first glance it is a major surprise that the budget of the Department of Health (DH), of all departments, fell in 2011-12 from the previous year. It was always supposed to be a rare special case, enjoying exemption from the government’s cuts across Whitehall in recognition of the political importance of the NHS. In the financial year to March 2012, the DH actually received £106.66bn from the Treasury, up by 1.15% in cash terms (ie, not allowing for inflation) from the £105.45bn in 2010-11.
However, once you factor in the Treasury’s calculation that inflation between the two financial years was 2.38%, we find that so the DH saw a real-terms decrease.
The NHS budget in England last year was £97.46bn, down 1.2% in real terms on what it got in 2010-11, despite David Cameron’s high-profile promise during the 2010 election campaign that “I’ll cut the deficit, not the NHS.”
The vast majority of the DH’s budget is classed as “departmental expenditure limit spending”. That means that it is set out in advance in a three-year plan agreed with the Treasury. By that measure, the DH’s income fell in real terms by 1.43% year on year.
The rest of the DH’s total spending is called annually managed expenditure (AME). This is money that is given to the department to cope with changing levels of demand and as such it goes up and down. It is also not something that the DH can be expected to control.
Labour and unions representing the 1.5 million-strong NHS workforce may seize on these figures as proof that the coalition has broken a key pledge.
Ministry of Justice
The MoJ faced an even deeper early cut of 11% in the first full year of the coalition with big real-term cuts in spending on courts (down 23%), prisons (down 15%) and criminal injuries compensation (down 45%).
The deep cut in the prisons budget has been met by freezing jail-building, closing four prisons and doubling up prisoners in cells. Severe cuts in the Criminal Injuries Compensation Scheme came into effect last week when violent crime victims who suffer “minor” injuries, such as a broken nose or mild concussion, were excluded in a package designed to take £50m out of the annual £200m bill.
The reduction in spending on courts may partially reflect the programme of magistrate and county court closures. More than 140 have shut down around England and Wales in a plan aimed at saving £41m from the department’s budget.
Although the legal aid bill appears to be rising in the latest MoJ figures, projected cuts in civil legal aid come into effect in April 2013. That reduction will slice £350m off the department’s annual £2.1bn spent on legal aid. The impact is already being felt in law centres and citizen advice centres across the country.