By Vivienne Russell | 26 June 2013
Education and health emerged as relative winners from today's Spending Review, with the chancellor pledging an overhaul of the school funding system and reaffirming the government’s commitment to the NHS.
On schools, George Osborne said a national funding formula would be introduced to give the lowest-funded local authorities an increase in their per-pupil funding.
‘And we will consult on all the details so that we get this historic reform right,’ said Osborne.
He added that there would be real-terms protection for the pupil premium, while the capital budget for 2015/16 would be set at £4.6bn.
There was also backing for Education Secretary Michael Gove’s Free Schools programme with a promise of 180 new free schools to open in 2015/16.
The NHS’s budget is to be set at £110bn in 2015/16, up from £96bn in 2010/11. Capital spending in the health service will be set at £4.7bn.
But Osborne said this funding settlement did not ‘insulate the health service from tough choices’.
He said: ‘There are already 7,000 fewer managers. And the NHS will continue to make efficiency savings. But these savings will enable new investment in mental health, and funding for new treatment for cancers like prostate and breast cancer.’
Elsewhere, the chancellor said the defence resource budget would be maintained in cash terms at £24bn, with the equipment budget at £14bn and growing by 1% in real terms thereafter.
The civilian workforce in defence would continue to be reduced but ‘we will not cut the number of soldiers, sailors and airmen’, Osborne said.
Home Secretary Theresa May will receive a 6% cut to her department, although the police budget is to be reduced by less than that. A cut of 10% has been passed to the Lord Chancellor’s department.
The intelligence services received a 3.4% increase in their combined resource budget, but the Foreign and Commonwealth Office had an 8% cut.
Business, Innovation and Skills received a 6% cut to its budget, but a 9% boost to capital investment. Student maintenance grants would be retained but not increased, Osborne said.
The Department for Culture, Media & Sport's resource budget was cut by 7%. Funding for elite sports was protected, but community sports, arts and museums were cut by 5%.
Julian McCrae, deputy director of the Institute for Government, said there were few surprises in the chancellor's statement.
'Of the unprotected departments, those which have been making the loudest political cases - defence, Home Office and business – did best,' he said.
Dan Corry, chief executive of New Philanthropy Capital, told Public Finance: 'The distribution of the cuts across departments shows the effect the protection of the budgets (in real terms) of key areas like health and schools is having on the not protected departments.
'Leaving the overseas aid budget to one side, these choices probably reflect where the public are but they are starting to have some strange effects.'
