Yesterday the Chancellor announced the Spending Review 2013 which will have implications for all departments and civil servants. I wanted to update you on the key elements which will affect you.
The tough choices on budgets and pay are firmly aimed at reducing the deficit. Since 2010 progress has been significant and the Government has now delivered 65% of the £80bn savings announced then. These tough choices have helped reduce the deficit by a third, as a percentage of GDP. The Spending Review sets out how the £11.5bn of savings that were set out in the Budget will be achieved (see my blog on the Budget).
The Chancellor’s defining principles of how the savings will be delivered are fairness, growth and reforming public services. He announced earlier in the year that spending on health, schools and overseas aid would continue to be protected. The average cuts to unprotected departments will be around 7%.
But the Spending Round is not just about the reductions in spending. The Government has also announced investments in a range of areas to transform public services. For instance:
- A new £3.8bn health and social care pot will be shared between the NHS and local authorities to deliver better services more efficiently for older and disabled people
- £200 million to expand the Troubled Families programme to a further 400,000 families
- A £1 billion Conflict, Stability and Security Fund to prevent conflict and tackle threats to UK
You will also have seen announcements about public sector pay. As announced in the Budget, pay awards will be limited an average of up to 1% in 2015/16. To make the pay system fairer and more sustainable departments will also be putting in place plans to end automatic progression pay in the Civil Service. Pay restraint is not being applied evenly across the public sector. Departments will involve staff and the Unions on ending progression pay and departments will be offered flexibility to increase pay for some staff in the short term to achieve this. Whilst I appreciate that this not good news for staff who receive pay progression, for the vast majority of you it will mean a fairer system.
Since 2010 the Civil Service has become remarkably more efficient thanks to the hard work of individuals and teams around the country. At the Department for Work and Pensions productivity went up by 12% in 2011/12, helping more people to get back into work. The Department for Transport agreed a new 10 year contract for Search and Rescue for £1.6billion (£1.5billion below the cost ceiling). Coverage of the service around the country will be better than it is now; 85% of areas reached in 30 minutes as opposed to 70% now. The list goes on and the clear message is that we are becoming both smaller and in many ways stronger.
So I want to thank you for your continued work to deliver both savings and improvements. I am proud to lead an organisation which is delivering so much for the public.