Spending Review 2013: departmental breakdowns

CSW sets out the Spending Review’s main implications for each department below, covering the changes in their resource and capital DEL, their administration budgets, and explaining the main policy and operational challenges facing civil servants.

By CivilServiceWorld

27 Jun 2013

Departmental Breakdowns

Devolved Administrations HMRC Single Intelligence Account  

Cabinet Office

Resource DEL: £0.3bn – cut by 25% from 2014-15
Capital DEL: £0
Administration budget: £115m – cut by 29% from 2014-15

The Cabinet Office will spend £148m to fund the 2015 general election, the parliamentary boundary review and individual electoral registration arrangements.

It also expects to make efficiency savings through pay restraint, reduced IT running costs and completion of the department’s estate consolidation programme.

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Department for Business Innovation and Skills

Resource DEL: £13bn – cut by 4.4%
Capital DEL: £2.5bn – increased by 19%
Administration budget: £557m – cut by 8.1% from 2014-15

The Chancellor committed £4.6 billion to maintain resource funding on science and £1.1bn to maintain capital spending on science as well as £185m of additional resource funding for the Technology Strategy Board, which has in the past supported projects such as ASTRAEA (Autonomous Systems Technology Related Airborne Evaluation and Assessment) project autonomous vehicles.

The government expects to save £60m by freezing student maintenance grants in the academic year 2015-16.

Osborne in his speech pledged to “put more money into apprenticeships, and continue with the dramatic increase in support we’ve provided to exporters through UKTI”. However, the spending review document only says that the government will “maintain spending on apprenticeships for those aged 19 or above” and “consult on major reform of apprenticeship funding this summer”.

The department will cut administration by a further 8.1%. In the course of this Parliament, it has already cut administration by almost 50%, saving just under £500m.

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Department for Communities and Local Government

Resource DEL: £1.1bn – cut by 8.3%
Capital DEL: £3.1bn – cut by 35.4%
Administration budget: £277m – cut by 8.6% from 2014-15

Osborne has committed more than £3bn for affordable housing and pledged to extend the Troubled Families Programme to reach 400,000 more vulnerable families – costing £200m.

The department will achieve savings in its administration budget by sharing offices with the Home Office – a move, which will “help reduce the cost of the civil estate by £24 million annually”, according to a government announcement in April this year.

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Department for Culture, Media & Sport

Resource DEL: £1.1bn – cut by 8.3% in 2014-15
Capital DEL: £0.1bn – cut by 66.7% from 2014-15
Administration budget: £138m – cut by 2.8 % in 2014-15

Elite sports will be protected and reduction to funding for community sports, arts and museums will be limited to five per cent. The Government also remains committed to free entry.

National museums will be able to independently decide on pay and procurement, as part of a four-year pilot.

The department has a further cut in administration of 2.8%. Last year, DCMS asked all staff to reapply for their jobs.

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Department for Education

Resource DEL: £53.2bn – cut by 1% in real terms
Capital DEL: £4.6bn – cut by 1.7% in real terms
Administration budget: £316m – cut by 9.5%
While the schools budget has been protected in real terms, funding to local councils and central agencies will be reduced, including savings of £150m in the “central costs” of the Aaademies, and a cut of £200m to the Education Services Grant given to local authorities.

The education department’s administration budget falls by £33m, taking the overall reduction in administration costs at the department to 50% since 2010-11.

The formula for allocating funding to schools will be revised, and the government has also published a review of efficiency in schools which suggests there is “significant scope” for savings by reducing back office costs.

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Department for Environment, Food and Rural Affairs

Resource DEL: £1.6bn – cut by 5.8% in 2014-15
Capital DEL: £0.5bn – remaining largely the same as in 2014-15
Administration budget: £436m – cut by 7.8 % in 2014-15

Osborne announced Defra will “set out plans for a major commitment to new flood defences for the rest of this decade”. But in his spending review document he says that resource spending on flood defences will “remain at current levels in cash terms” adding that the government will invest to strengthening existing defences. More detail on this will be set out in an announcement by the Chief Secretary today.

Defra is increasing the funding available to South West Water to £40m in 2015-16, resulting in customers’ bills reducing by £50 per year.

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Department for International Development

Resource DEL: £8.5bn – increased by 2.4% from 2014-15
Capital DEL: £2.6bn – increased by 30% from 2014-15
Administration budget: £95m – increased by 1.1% from 2014-15

Describing DFID’s budget as “the lion’s share”, Osborne said he “refused to balance the budget on the backs of the world’s poorest” by continuing to spend 0.7 per cent of the UK’s total income on development.

One of a handful of departments which will see their spending increased, DFID will focus fostering economic growth to create jobs and boost incomes for the world’s poorest, and improving the life chances and outcomes for women and girls through education and family planning.

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Department for Transport

Resource DEL: £3.2bn – cut by 9.3%
Capital DEL: £9.5bn – increased by 5.5% in real terms
Administration budget: £235m – unchanged from 2014-15

The transport department’s capital budget will see the “largest rise of any part of government,” according to the chancellor, who committed to repeating this rise every year until 2020. He also said government will be “looking at the case for Crossrail 2 linking London from north to south,” and will set out plans for “the largest programme of investment in our roads for half a century”. Further details of long-term investment in road and rail will be announced today by the chief secretary to the Treasury.

Savings in the department’s resource DEL will be found within rail and Transport for London budgets, with the administration budget for the central department remaining unchanged.

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Department for Work and Pensions

Resource DEL: £5.0bn – cut by 9.5% in real terms
Capital DEL: £0.2bn – cut by 22.5% in real terms
Administration budget: £855m – cut by 20%

The work and pensions department will make £420m efficiency savings in 2015-16, including £100m saved by bringing some IT services in-house, and over £100m from procurement reform.

The chancellor set out a number of welfare reforms including introducing a “temperature test” to stop pensioners in hot countries receiving Winter Fuel Allowance, and setting an overall cap on the benefits bill, to come into force from 2015. There were also a number of changes to unemployment benefits: jobseekers will now be required to “turn up with a CV, register for online job search, and start looking for work”, and wait a week before they receive benefits, but will be given more time with jobcentre assessors and a “progress review” every three months. Parents will be expected to look for work when their youngest child turns three, and jobseekers who don’t speak English will be required to attend language courses or face benefit cuts.

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Department of Energy and Climate Change

Resource DEL: £1bn – staying the same as in 2014-15
Capital DEL: £2.3bn – increase by 4.5% in 2014-15
Administration budget: £175m – increased by 1.2% from 2014-15

Osborne said tax and planning changes would be made in order to “put Britain at the forefront of exploiting shale gas”. He also re-iterated a pledge made by DECC yesterday to provide certainty for investors by setting out the price government is willing to pay to companies producing renewable energy, which Osborne said “investors are crying out for in western countries”.

The department will see a rare increase in its administration budget.

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Department of Health

Resource DEL: £110.4bn – increased by 0.1% in real terms
Capital DEL: £4.7bn – increased by 0.1% in real terms
Administration budget: £2,706m – cut by 27%
Existing NHS funding for social care, along with an additional £2bn from the NHS budget, will be used to create a pooled budget for health and social care services (See box below).
The Department for Health says that these Treasury figures do not provide an "like-for-like" guide to administration cuts in 2015-16, which a spokesperson says will number £300m or 10%.

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Foreign & Commonwealth Office

Resource DEL: £1.1bn – cut by 8.3%
Capital DEL: £0.1bn – staying the same as 2014-15
Administration budget: £163m – cut by 8.4% from 2014-15

The FCO’s network of embassies will be maintained in an effort to “focus diplomats on British commercial interests”.
The Government will also provide more than £1bn in 2015-16 for a new Conflict, Stability and Security Fund (CSSF) – to be managed by the National Security Council. This fund will finance a range of activities to help prevent conflict affecting vulnerable people in the world’s poorest countries and tackle threats to UK interests from instability overseas. This will include the UK’s contribution to multilateral interventions overseas to help prevent conflict and instability and support post-conflict stabilisation.

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Resource DEL: £3.1bn – cut by 3.1% in 2014-15
Capital DEL: £0.1bn – remaining largely the same as in 2014-15
Administration budget: £755m – increased by 0.3 % from 2014-15

HMRC expects to raise more than £1bn more in tax revenues from “those who try and avoid paying their fair share”, according to Osborne.

And by reducing tax credits error, fraud and debt, HMRC predicts to collect an additional £95m of tax credit debt over the next two years, including £80m of AME savings, by commissioning debt collection agencies to collect additional tax credit debt on a payment by results basis.

HMRC also expects to save more than £130m in 2015-16 through improved productivity, further digital transformation, reducing inefficient manual processing and dealing with error.

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HM Treasury

Resource DEL: £0.1bn – remaining largely the same as in 2014-15
Capital DEL: 0
Administration budget: £106m – cut by 7.8% from 2014-15

The Treasury will, “lead by example,” Osborne said, seeing its resource budget cut by ten per cent. It will continue to lead the government’s work on deficit reduction and manage the UK Guarantees scheme, which was put in place to help provide access to debt finance for infrastructure projects.

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Home Office

Resource DEL: £9.9bn – cut by 4.8%
Capital DEL: £0.4bn – cut by 20%
Administration budget: £402m – cut by 19.3% from 2014-15

The Home Office settlement includes continued funding for the police counter-terrorism budget and the creation of an ‘innovation fund’ of up to £50m for police forces to work jointly with each other and local authorities.

It also includes plans to reform the criminal justice system: Osborne wants to publish a ‘cross-Criminal Justice System’ (CJS) action plan, based on the work of the Ministry of Justice, Home Office, police and Crown Prosecution Service (CPS). Under this plan, the new CJS will be based on a common digital platform, and police and CPS will do more to identify cases where a guilty plea is anticipated and deal with those cases early.

It also includes a plan to increase visa fees.

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Ministry of Defence

Resource DEL: £23.9bn – cut by 1.9 % in real terms,
Capital DEL: £8.7bn – cut by 2.3% in real terms
Administration budget: £1,766m – cut by 5.4%

The defence resource budget is being cut, but the government committed to increasing the defence equipment budget by one per cent each year from a 2015-16 baseline of £14bn.
The Ministry of Defence will make approximately £1bn efficiency savings, through further reductions to civilian headcounts; contract renegotiations which aim to save £750bn; reducing construction cost across the defence estate and reforming the organisations which buy its equipment and infrastructure.
Osborne also committed to fund the military covenant – which supports former service people – permanently, through money collected from Libor fines.

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Ministry of Justice

Resource DEL: £6.2bn – cut by 8.8%
Capital DEL: £0.4bn – increase by 33.3%
Administration budget: £479m – cut by 8.4% from 2014-15

The MoJ will see its court and prison services and legal aid reformed – leading to savings of 10 per cent in the MoJ’s departmental budget.

Osborne, who pledged that the Government will “take forward measures to improve confidence in the legal aid system”, said legal aid for non-UK residents will be restricted.

Separately, services and structures will be reviewed across the MoJ and its arm’s length bodies to deliver £130m of savings in back office and administrative costs.

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Devolved administrations

The Scotland, Wales and Northern Ireland Offices will each see their resource budgets reduced by 10% in real terms.

Scotland will be given new borrowing powers, and will be able to introduce a Scotland-specific Stamp Duty and landfill taxes. These powers are part of the ongoing implementation of the Scotland Act 2012, and will see Scotland’s capital spending power increase by almost 13% in real terms. Its resource budget will be set at £25.7bn.

The Welsh resource budget will be £13.6 bn, and Osborne said government will shortly publish its response to the Silk Commission into fiscal devolution. The Spending Round documents suggest that this will include some element of self-financing.

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Single Intelligence Account

Resource DEL: £1.7bn – increased by 3.4% in real terms
Capital DEL: £0.3bn – increased by 24.2% in real terms
Administration budget: £61m - increased by 1.7%
In his speech Osborne praised the intelligence services for “silently, and often heroically,” protecting “us and our way of life”. The increase in funding for intelligence agencies includes an extra £210m funding for the National Cyber Security Programme.

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Reporting by Winnie Agbonlahor and Suzannah Brecknell

Click here to read more CSW coverage of the 2013 Spending Round.

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