The Government’s Spending Review 2010 :: American Government, Budgeting, Spending Plans

The presidencys Spending Review 2010The way the government sets out its budget is through allocation of monies to different governmental departments. These departments then allot monies for services such as, health, defence, welfare benefits etc. The Spending Review is the way that the Government sets overtakeing plans for each department over a period of several(prenominal) years (Anon, 2010)1. On 20th October 2010, the Government announced substantial UK spending cuts with local authorities, police, defence and welfare budgets all reduced. As a conclusion the Government intends to cut 81 bn from public spending over four years (BBC, 2010)2. Up to 500,000 public sector jobs could go by 2014/15, as a result of the cuts programme, according to the Office for Budget Responsibility (HM Treasury, 2010)3.Over the last few years the gap between what the Government took in as income and what it had to borrow to spend on services grew significantly. The yearly gap between the Gover nments income and what it spends is known as the deficit. In recent years this deficit has with child(p) in coat. The key outcome from the Spending Review 2010, was to set in train a process of cutting the deficit and to make it more directed and affordable in the future years. The government intends to do this through, reduction in government spending, such as, savings from welfare reforms and increases in taxation, e.g. the increase in bath to 20 percent in January 2011 (Williamson, 2010)4.In the UK the Government obtains its income mainly from taxation, National Insurance contri plainlyions and excise duties. Due to the recession which began in 2008, the Governments income dropped, but Government spending continued to increase. The deficit last year (2009/10) was 155 bn (Anon, 2010)1. This is the amount of additional money the Government had to borrow to be able to succumb for its spending on governmental activities last year. MacroeconomicsThe UK Government is pinning its hopes in the growth of the British economy, to help increase its income from taxation and by reducing the size of the public sector. The Office for National Statistics (ONS,2010)5, confirmed in its press release on 24th November 2010, that the UK economy grew at 0.8% between July and September 2010. The 0.8% figure represents a slow down from 1.2% in the second quarter, but is still better than had been expected in the summer (Grierson, 2010)6.