UK Spending Review: Academics & industry cheer but commuters jeer

Initial analysis of the UK government’s Comprehensive Spending Review suggests that industry and academia have come away better than was feared.

Scientists were today celebrating a "vote of confidence" after learning they had been spared swingeing cuts. Months of campaigning by academics appeared to have paid off when it was revealed that the science budget would be frozen over the next four years, at £4.6bn a year.

Gail Cardew, head of programmes at the Royal Institution, said: "It is encouraging that the science budget will be maintained, given the critical role that research and innovation will play in the UK's economic recovery over the next decade. While it is still a cut in real terms, this decision is a significant vote of confidence in the UK's scientific community and the contribution it makes."

Professor Peter Weissberg, medical director of the British Heart Foundation, said: "Immediate reaction? Relief that science has been spared the deepest of cuts. Followed swiftly by the realisation that even at about 10 per cent down, we'll be playing catch-up in an international field which could see UK science left behind."

He pointed out that charities were likely to come under greater pressure to fund more medical research.

Swings and roundabouts

The Chancellor of the Exchequer, George Osborne, announced that the Department for Business, Innovation and Skills’ budget would be cut by an average of 7.1 per cent a year, involving the abolition of 24 quangos and of programmes such as Train to Gain. On the plus side, he said that investment in adult apprenticeships would help fund 75,000 new apprentices a year.

Similarly, he said that while the settlement for the Department for Energy and Climate Change would fall by an average of five per cent, and Defra will deliver resource savings of an average eight per cent a year, the Green Investment Bank would go ahead with £1bn of funding.

The Chancellor said that £30bn would be invested in transport projects over the next four years, including £14bn to fund maintenance and investment in railways. He claimed that the amount of money for transport projects over the next four years would be greater than for the previous four years, and confirmed that the £16bn London Crossrail scheme would go ahead

Mr Osborne also listed a number of other key transport projects that would escape the axe, including Manchester to Liverpool rail electrification, widening schemes on the M25, improvements to the M1, M4, M5 and an upgrading of the A11 in East Anglia.

Fare’s unfair?

However, transport unions and pressure groups attacked his announcement that the cap on regulated rail fares would rise to three per cent above inflation for the three years from 2012, which he said was to help pay for new rolling stock and improve passenger conditions. At present the annual increases in regulated fares, which include season tickets, are capped at one per cent above the retail price index (RPI) inflation level, but if today’s increase was introduced for next January, it would mean season tickets going up almost eight per cent.

“We are appalled at the Government's plan to allow rail fares to rise so far above the inflation rate,” said Campaign for Better Transport chief executive Stephen Joseph. “Hard-working commuters who depend on the train face paying over £1,000 more for their annual season ticket by the time of the next election. These eye-watering rises are unacceptable at a time when we should be growing the railways in order to tackle congestion on our roads and reduce carbon emissions in line with Government targets."

Bob Crow, general secretary of the RMT transport union added: "The massive increase in rail fares will drive people off the trains and onto the roads, and it looks like the profits of the private rail companies will be ring fenced while upgrades are kicked into the long grass, forcing passengers to pay through the nose to travel on creaking, overcrowded services."

Taxing decisions

Jane Bennett, head of campaigns at the Forum of Private Business, said that she welcomed some of the Chancellor's announcements, in particular on apprenticeships and science funding, but noted that the changes announced in the CSR would “not be enough on their own to allow small businesses to substantially create employment in order to replace the 490,000 jobs that will be lost in the public sector.”

She added: “We feel that one crucial area the Government has addressed is tax. HM Revenue and Customs will be expected to find savings of 15 per cent via new technology and other efficiencies and these are likely to include reforms to the UK’s complex tax system. This should save money for both the government and small businesses, which we have found spend £1.8bn every year on tax administration.

“It is pleasing the Government is investing £900m in tackling tax evasion and fraud in order to claw back £7bn in lost tax revenues.

“It is also pleasing that all banks will have to sign up to the code of practice on tax payment but the Government should also directly address tax avoidance carried out by big businesses, including closing the Channel Islands VAT loophole ‘low value consignment relief’. For a long time we have complained that small businesses cannot compete on a level playing field because large companies find avoiding their tax commitments is far too easy.”

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