Spending Review highlights by department

The detail from George Osborne's speech and how it relates to the property and regeneration industries.

Industry reaction below the bullet-points

Transport and infrastructure

  • 15% cut in overall Department for Transport £15.9bn budget
  • £431m Mersey Gateway funding protected, paving way for second bridge between Widnes and Runcorn
  • Capital spending, much of it on transport and infrastructure, will be around £2bn a year higher than set out in the emergency Budget, says Osborne
  • £100m electrification of train lines between Manchester, Liverpool, Preston and Blackpool goes ahead
  • £14bn will be invested in maintaining the nation's railways, including stations and network "around Manchester"
  • £30bn in total for transport over next four years
  • Prospect of High Speed 2 links from London to Birmingham and then Manchester and Leeds will continue to be explored, no cost detail given
  • The chancellor paved the way for rail ticket price increases by lifting the cap on regulated fares to RPI plus 3% for the three years from 2012. This will help pay for new rolling stock and improved passenger conditions
  • Superfast broadband pilot in Cumbria goes ahead
  • Transport secretary Philip Hammond will set out full transport spending plans next week


  • More flexible tenure terms for social housing in future
  • Terms for existing social housing tenants unchanged
  • New tenants to pay 80% of market rate rent
  • £4.4bn capital resources approved
  • 60% off the affordable housebuilding budget, gap to be filled by higher rents
  • Osborne: "…a generation ago only one in ten families in social housing had no-one working, this had risen to one in three by 2008-09."
  • Decent Homes programme to improve social housing stock continues
  • 150,000 new affordable houses to be delivered over the next four years

Local authorities

  • Osborne said: "Local democracy has been undermined in past…"
  • Council budgets cut by 7.1% a year for four years, a total of 28% over the period
  • Devolution of financial control to local councils will go ahead
  • Ring-fencing of revenue grants will end from April next year
  • Tax increment finance, borrowing against future business rates to pay for major developments, confirmed


  • Government aims to save £350m a year from Defence Estates budget
  • Budget to be reduced by 8% over four years to £33.5bn by 2014-15


  • £1bn for carbon capture and storage project
  • £200m for offshore wind technology and manufacturing at port sites
  • £1bn for Green Investment Bank raised from savings and asset sales
  • Cuts to Department of Energy and Climate Change budget of 30% by 2014/15
  • Defra budget down 8% a year


  • Osborne blamed banks' behaviour on poor previous regulation
  • Aims to extract maximum tax revenue from banks
  • Four out of 15 banks signed up to code of practice to pay taxes under Labour
  • "Permanent levy on banks… will provide more each year than one-year levy on bonuses."


  • Planning system "to put local people in charge"
  • Osborne said: "We will reform the planning system so we put local people in charge, reduce burdens on builders and encourage more homes to be built, with a New Homes Bonus scheme


  • Ministry of Justice budget will fall from £9.5bn to £7bn over four years at 6% a year
  • 153 magistrates and county courts to close
  • 14,000 full-time staff to go
  • £1.3bn for prison maintenance goes ahead
  • New 1,500 prison facility deferred
  • Capital savings of 50% over four years, investment focused on "essential maintenance and on projects that produce sustainable savings for the department."
  • No mention of surviving new court schemes specifically, such as the long-awaited decision on a new Liverpool magistrate's court


  • One of the so-called 'protected' departments, along with education, security and infrastructure
  • Health spending will rise each year over and above inflation from £104bn this year to £114bn over the next four years
  • Looking for £20bn savings but these will be reinvested in health
  • Spending on health research protected
  • Funding confirmed for priority hospital schemes including Royal Oldham and West Cumberland


  • Freeze on the science budget, in effect a cut over five years, budget is £4.6bn a year
  • £300m a year of efficiency savings to be reinvested in education
  • Capital spending will be cut by 60% by 2014 when counting the scrapping of the Building Schools for the Future programme, from £8.4bn over the previous three year period to £4.4bn over the next four years
  • Government still plans to rebuild and refurbish 600 schools with £15.8bn
  • Spend includes £3.5bn for the seven research councils and £1bn for university research through the Higher Education Funding Council for England
  • Higher education research and science parks helped by protected health budget

Communities and Local Government

  • Budget reduced by 33% in real terms by 2014-15
  • Size of department and number of arm's length bodies reduced
  • Further £1.6bn a year devolved to local government

Mike Creamer, chief executive of Contour Housing Group: "The leaked misinformation over the last few days has done nothing to soften the impact of these massive cuts, especially when combined with the housing benefit restrictions already announced.

"Limiting the security of tenure through intermediate tenancies will not improve the supply of affordable rented homes for those on lowest incomes in the short term. Far worse, in the long term insecure tenure will drive out the economically active from neighbourhoods, leaving residual communities on permanent benefit – a return to the early 1980`s.

"The prospect of more new homes at near market rents should also not be misunderstood. Something is needed for the millions of younger people who can't afford to buy, but who are not poor enough to qualify for traditional rented homes. However, Government will not want housing benefit to be paid on these higher rents. It is unlikely therefore that these "150,000 new homes" will be made available to those in greatest need.

"Overall, all that has been produced is a crude safety valve which will allow the pent up pressure for more homes to be relieved a little. The underlying causes remain. Housing Associations now need to work out how we can make the most of the cobbled together machinery and turn it in to something that works for those needing our help."

Ed Cox, director of the Institute for Public Policy Research North: "We welcome devolutionary measures such as removing the ring fencing of departmental budgets, localisation of council tax benefit and tax increment financing as initial steps in the right direction, but the overall level of spending is still being set by a small elite in London.

"If the Coalition is genuinely concerned about passing more power to communities then local councils should be given more control over financial decision-making. Given the radical nature of today's review, ippr north would like to see a greater proportion of taxation raised locally."

Prof Colin Talbot, professor of public policy and management at Manchester Business School: "University funding is essentially being privatised. I can see at least one North West university perishing.

"Capital investment spending is still at a historically low level particularly if you compare to the 1960s and '70s.

"On the one hand Philip Green says centralise procurement, yet on the other Osborne is talking about devolving power."

Stephen Chalcraft, head of real estate and public sector at Pannone: "There are big conflicts here in terms of procurement between the localist agenda and the drive for collective purchasing."

Nick Ogden, partner in the infrastructure team at the Manchester office of national law firm McGrigors: "The public sector will need to be bold, imaginative and creative to generate savings and create value while improving services that people actually want and need. We've been speaking with key players in the public and private sectors about how to achieve 'more for less' and it is indeed a daunting but achievable ambition.

"Improving transport infrastructure in the North West and elsewhere will play an absolutely essential role in securing a sustained economic recovery so the Chancellor's commitment to doing so in the region would appear to be a positive development although we'll have to wait and see what materialises."

Graham Archibald, partner and head of the social housing team at Hill Dickinson, says: "New funding models will have to be introduced into the social housing sector if the building of new homes is to be sustained in the face of cuts in the Social Housing budget announced as part of the Comprehensive Spending Review.

"One existing revenue stream that should be maximised is the level of rent charged in the social housing sector, which may assist in underpinning the level of return on investment, making investment into the sector more attractive to institutional investors.

"I expect the Chancellor's announcement in relation to the level of rent for new tenants will therefore be cautiously welcomed by the sector, however affordability will remain a key issue otherwise tenants may be pushed towards the largely unregulated private housing sector. It also remains to be seen whether the extra income that may derive from the change in the rents charged will offset the loss in Social Housing Grant."

Bernadette McQuillan, senior planner at CB Richard Ellis: "The cuts suggested through the Comprehensive Spending Review highlight a potential paradox between some local government departments, such as planning, and the coalition's localism agenda.

"At a time when the development industry needs transparency and certainty in planning decisions, for example, what we stand the chance of being faced with is planning departments stripped of the resources or training needed to embrace the new 'localism' agenda.

"The results of this could be poor planning decisions and/or the hi-jacking of the planning process by local pressure groups with the unintended consequences of the real decision making and interpretation of the Governments' localism policies being carried out via the Courts – neither devolutionary nor localist."

Kate Creer heads the planning team at DLA Piper in Liverpool which advises Halton Council on the Mersey Gateway project. She said: "The chancellor's confirmation of support for the Mersey Gateway project and the electrification of the rail link between Liverpool, Manchester, Preston and Blackpool, is a vote of confidence for the North West. These projects have been in the pipeline for a substantial period of time – the fact that both have survived such widespread cuts is a clear signal of their importance to the regional economy.

"Transport is receiving the biggest capital investment after defence, and the confirmed support for these key projects in the North West reaffirms the region as a solid and viable area for investment and development. Such a tangible vote of confidence by the government at a difficult time bodes really well for the likelihood of attracting further private investment in the region.

"However, the spending review is never as transparent as it first seems. What remains to be seen is whether or not there is an agreed funding package for these projects .The full story will lie in the detail of the Chancellor's announcements today."

Gerry Hughes, executive director at GVA Grimley: "A reduction in spending by 7.1% per year for local authorities will put the focus on making better use of public assets to reduce costs and dispose of surplus assets. This will give an opportunity to local authorities to use their estates to pump prime development projects by helping to de-risk these schemes.

"Local authorities will also have to be much more effective in delivering services, given their funding reductions. They will need to direct their resources towards the most enterprising and innovative schemes to maximise value for money.

"Furthermore, the swinging cuts in departmental budgets, such as the Ministry of Justice, will lead to the disposal of substantial parts of the public estate over the four year Spending Review period. The budget cuts will place a major emphasis upon Government plans to introduce new property vehicles to manage their entire estate more effectively. But these new vehicles will need to be realistic about the speed at which both disposal receipts and savings can be achieved. In particular, the Government will need to co-ordinate proposals to ensure that 'flooding' of the market will not occur as local and central government seeks to off-load surplus property simultaneously in some urban areas.

"However I would have liked to have heard more about the Government's proposals to improve procurement processes relating to regeneration and other projects. The slow and complex systems of procurement are deterring private sector investors as a result of the huge amounts of information required. A critical priority for Government should be to simplify these wasteful and over engineered practices."

Lorraine Rogers, chief executive of The Mersey Partnership: "Funding for the new Mersey Gateway and electrification of the Liverpool to Manchester line is great news. These were priority projects for the city region and can generate economic growth. We now need careful evaluation of the rest of the announcements. TMP has already started this work and our next economic review will look at these specific impacts on our region's economy over the next three or four years. In particular we need to understand how the loss of public sector jobs can be balanced by the creation of new jobs led by private sector involvement and investment especially in the four areas of the economy that can deliver more growth: visitor economy, knowledge economy; low carbon economy and superport."

Frank McKenna, chairman of Downtown in Business: "While the cuts are regrettable, the spending review has at least given us a framework for growth and we now have a clear strategy which allows us to move forward without uncertainty. By maintaining investment in transport and infrastructure with the Liverpool to Manchester rail electrification getting the go-ahead, there is significant potential for growth in the North West. News that funding will be ploughed into science and green technologies is also very welcome as the region is already well placed to develop in this sector."

Andrew Thomas, chief executive of the Centre for Construction Innovation North West: "The decision to cease funding to CABE, by the Department for Culture, Media and Sport just makes local centres for architecture, design and the built environment, such as CCI, CUBE and the design review panels even more valuable and important for the future than ever before.

"Collaborative working delivered in conjunction with excellent and sustainable design are key to the delivery of the efficiencies and savings that the CSR seeks to secure from Industry and Private Sector partners. CABE have done some good work and we must ensure that its legacy is not lost to the sector."

Your Comments

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Great summary, Paul, thanks!


In some parts of the North West social housing rents are probably already close to 80% of the market rent so this is unlikely to generate significant new supply.

By UnaPlanner

Excellent and up-to-date review of the effect on the NW. Well done

By Suburban

UPDATED: Adds commentary from CB Richard Ellis, Downtown in Business, The Mersey Partnership, GVA Grimley and more…

By Ed

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