Spending Review: In graphics

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Graphic showing current share of seats
Graphic showing predicted share of seats

There was a slew of announcements in Wednesday's Spending Review, as £81bn of savings were mapped out for the next few years. So how will different sections of society be hit?

The speech was a little more than an hour, but its effect will be felt for years.

Chancellor George Osborne told the Commons how his government plans to cut the deficit, with the welfare budget alone making an extra £7bn of savings.

The graph above shows the impact of changes to tax and benefits to different income earners, based on Treasury figures which, as BBC economics editor Stephanie Flanders explains, differ from those used by the Institute of Fiscal Studies.

The Spending Review's finer, and more painful details, will emerge in the coming weeks as the numbers are crunched and the hard decisions are made across the UK, many miles from Westminster.

For example, town halls have yet to work out how they will respond to the 7.1% squeeze on their budgets.

But there were some certainties announced on Wednesday, which will hit the pockets of different people in different ways.

Pensioner

  • There is good news for pensioners, including the better-off. Universal benefits for pensioners such as free eye tests, free prescription charges, free bus passes, and free TV licences for the over-75s will remain, along with winter fuel payments
  • Mr Osborne repeated the pledge made in the Budget that the state pension would rise in line with the CPI, average earnings or 2.5%, whichever is the higher
  • But there could be very bad news further down the line - provision for the elderly could be a major casualty as squeezed local authorities decide where the axe must fall
  • And for those 10 years away from retirement, the pipe and slippers will be tantalisingly out of reach. The state pension age for both men and women will rise to 66 by 2020. This change will take place six years earlier than had been planned by the Labour government

Young person

  • Changes to housing benefit mean people up the age of 35 will not be able to claim as much as before from April 2012. They will be able to claim housing benefit only for a room in a shared house rather than their own flat
  • If the government enacts the Browne report, then from 2012 students face a huge hike in tuition fees, emerging from university with an average £30,000 debt, paid over periods of up to 30 years

Long-term sick

Start Quote

It's a bitter pill, but I think we just have to take it”

End Quote Tom Gaughan Director and father of two
  • Those claiming employment and support allowance - the successor to incapacity benefit given to those whose ability to work is limited by disability or illness - will only be able to do so for a year if they are judged able to work in future. Expected to affect 200,000 people
  • The mobility element of disability living allowance, of either £18.95 or £49.85 per week, which is used by those in residential care for hiring adapted cars or scooters, is being scrapped
  • There may be good news through an extra £1bn for councils to fund social care - alongside an additional £1bn channelled through the NHS - although there are fears councils making cuts may simply absorb the cash
  • Charities also say cuts to council budgets and social housing provision will disproportionately affect disabled people, while benefit reform may damage the chances of people getting back to work
  • Services like transport for children with special educational needs may also face cuts

Middle-income family

Spending review branding
  • The chances are that many of the 490,000 public sector workers who face job cuts will fall into this category
  • Teachers, nurses, police officers, council workers and civil servants will all have to contribute more to their pensions. Mr Osborne wants to raise an extra £1.8bn, so that could mean individuals paying in about 3% more
  • They may also feel the effects of town hall spending cuts, with services like after-school clubs likely to face the axe
  • Regulated rail fares are set to rise at 3% above inflation, which would put hundreds of pounds more on to an annual season ticket
  • Families with two working parents who pay the basic rate of tax will avoid the cut in child benefit, although some with one working parent who is a higher-rate taxpayer will lose out
  • From next year, couples with children will also have to work for at least 24 hours a week between them in order to be eligible for the working tax credit
  • The percentage of childcare costs claimable under the family element of working tax credit will also be trimmed from 80% to 70%

High-earning family

  • A couple with one main earner on more than £44,000 will see their child benefit stopped, which would cost a two-child family £1,752.40 a year
  • Those who use trains to commute to work are likely to face higher fares

Single parent, low income

Start Quote

One of the consequences of the shrinking state outlined today may be that women stay at home rearing children”

End Quote Mark Easton BBC home editor
  • The chancellor has boosted the child element of the child tax credit by an extra £30 above inflation next year and £50 in 2012-13, which will leave single parents better off
  • Child benefit for children aged 16-19 will not be cut, despite expectations to the contrary
  • But the percentage of childcare claimable under the family element of working tax credit will be trimmed from 80% to 70%, and about six out of 10 recipients of this tax credit are single parents
  • Schoolchildren from poorer families will be helped by the £7bn "pupil premium" announced before the spending review
  • But housing costs could spiral. The average rent for a three-bedroom social home is around £85 a week - and the National Housing Federation warns that this could treble to a "staggering" £250 a week
  • Bus fares could also be squeezed as operators face a cut to grants
  • The television licence fee is to be frozen at its current level of £145.50 for six years - the same for everyone, but more of a saving for those on low incomes

More on This Story

The Spending Review: Making It Clear

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