Chancellor Osborne responds to criticisms of the Spending Review

Financial News

An article detailing the responses to the unveiling of yesterday’s Spending Review.

A blog about the government spending cuts planned for the next four years.

Chancellor George Osborne has defended the cuts outlined in yesterday’s Spending Review after Labour described them as a reckless gamble unfair to the lives of many.

The £81 billion in spending cuts included a £7 billion cut in the welfare budget with reforms to tax credits, incapacity benefit and housing benefit. Child benefit will be axed for higher rate payers, saving a total of £2.5 billion, and there will be a £3.5 billion increase in public sector employee pension contributions.

Mr Osborne said the cuts had to be made to avoid the “path to economic ruin” and restore the “sanity to public finances”.

However, shadow chief secretary to the Treasury Angela Eagle said: “What we have got here is not actually a blueprint for recovery, it is not actually a plan for a big society. When you look at it, it is the state retreating. It is a blueprint for a smaller, meaner and nastier society and we think the government has got it wrong”.

Carl Emmerson, acting director for the Institute for Fiscal Studies, described the cuts as regressive. He said the changes will have a greater impact on the bottom half of the income distribution than the top half.

The measures are also expected to result in the loss of 490,000 public sector jobs.

Shadow Chancellor Alan Johnson said there were “serious unanswered questions on how many jobs will be lost and how much the redundancies will cost the taxpayer” after describing the cuts as a “reckless gamble with people’s livelihoods”.