FACTBOX-Austerity measures in Britain

Oct 14 (BestGrowthStock) – The Conservative-Liberal Democrat
coalition plans to cut average spending in government
departments by a quarter as it tackles a record budget deficit.

Here are some details of what is known so far before a
Comprehensive Spending Review is unveiled on Oct. 20:

* SPENDING REVIEW:

— In its June emergency budget, the government announced
its intention to cut a budget deficit of nearly 11 percent of
national output down to 2.1 percent by 2015, a fiscal tightening
of 113 billion pounds.

— The coalition plans to cut departmental budgets by 83
billion pounds, with the rest coming from tax rises.

— With the National Health Service and overseas aid
ring-fenced, departments face average cuts of 25 percent over
the next four years.

* MEASURES ALREADY ANNOUNCED:

— VAT sales tax will rise to 20 percent from 17.5 percent
from January 2011, while a bank balance sheet levy will start in
2011, aimed at raising an annual 2.5 billion pounds.

— Payroll taxes for employees will also rise by one
percentage point from April 2011.

— The coalition will scrap child benefit from 2013 for
households where either parent earns over 44,000 pounds
($69,500) a year. It has announced a ceiling on the total
benefits any family can receive.

— The Treasury plans to raise four billion pounds a year by
cutting tax relief on pensions for about 100,000 higher earners.

— The government will abolish, merge or reform 481
semi-independent state agencies, under a plan that could cost
thousands of jobs.

* DEFENCE:

— Britain will unveil a new national security strategy on
Oct. 18 that will explain the principles underpinning defence
spending cuts to be announced a day later.

— The Ministry of Defence, which has a budget of 36.9
billion pounds ($58.6 billion) this year, is believed to have
been asked by the Treasury to plan for cuts of 10 percent over
four years.

— Britain’s Trident nuclear missile system is likely to be
renewed but it is unclear who will pay for it — the Ministry of
Defence or the Treasury. The submarine-based system is due to be
replaced in the early 2020s and a decision to commit the 20
billion pounds required will be made in 2014 or 2015.

* WELFARE:

— The government has said welfare payments in 2009 totalled
192 billion pounds ($308 billion), against 35 billion spent on
defence, 50 billion on education and 98 billion on health.

— The coalition wants to cut at least 11 billion pounds a
year in welfare spending and said it would impose a two-year
freeze in public sector pay for all but the lowest paid.

— Millions of British public sector workers should pay more
into pensions to ease the pressure on public finances, according
to a review by former Labour cabinet minister John Hutton. The
potential changes are a flashpoint with unions.

* HIGHER EDUCATION:

— The government has given tentative backing to proposals
that may double university fees. The proposals would remove the
cap of 3,290 pounds ($5,250) a year that universities are
allowed to charge students.

For a story on budget cuts click on [ID:nLDE69D1DO]
(Additional Writing by David Cutler, London Editorial Reference
Unit)

FACTBOX-Austerity measures in Britain