Osborne unveils age of austerity

A NEW age of austerity, a leaner welfare state, a smaller public sector with 490,000 fewer employees, a longer working life for all, was revealed by Chancellor George Osborne in the Spending Review.

Yorkshire looks set to benefit from measures including investment in green energy, a commitment to improving broadband access in rural parts of the region and a raft of transport improvements getting the go-ahead.

But with one-in-five people in Yorkshire working in the public sector and the Government removing a large slice of budgets in areas such as council spending there will be significant impacts.

Mr Osborne said tackling the £114bn budget deficit was ‘unavoidable’ as he revealed an extra £7bn cuts to the welfare budget, introduced a permanent levy on banks’ profits and axed Home Office and Ministry of Justice spending each by 23%.

These tough actions he said would: “Take Britain back from the brink of bankruptcy.”

Mark Lister, managing partner in PKF’s Leeds office, said: “The Spending Review announcement gave the highlights and over the coming days and weeks we will learn the detail, only then will we be able to assess the full implications.

“The Government is expecting the private sector to compensate for the reduction in employment in the public sector as a result of today’s Spending Review. However, the big question is whether the more positive of yesterday’s announcements will stimulate growth within the private sector enough and can the private sector cope with the longer term pressures that will be felt by their local communities?

“Looking at the positives, the devolution of fiscal powers to local communities will help them support the individual needs of their local economies. The support for a green economy, ring fencing the science budget and nurturing the creative industries will create new opportunities for businesses.

“On a local level, the investment in the transport infrastructure will no doubt facilitate growth within the private sector as the region becomes more accessible for business.”

Labour – blamed consistently by Mr Osborne for leaving the economy in a never-before-seen economic mess – said the Chancellor was risking the recovery by cutting too far, too fast.

Union leaders reacted furiously, with radical left-wing RMT leader Bob Crow suggesting that British workers take to the streets to protest, as some in France have done and there were a series of demonstrations in Whitegall last night.

Although funding for science was protected, Government funding to universities will be cut by £3bn to £4.2bn by 2014. In future funding for universities will be focused on science and technology.

The Government promised improvements to the East Coast Mainline and between Sheffield and St Pancras and a new entrance at Leeds station as well as funding for a new high speed rail link from London to Birmingham, Manchester and Leeds although this will not be built for many years.

On the roads, the Government allowed a major PFI scheme for Sheffield’s roads to survive the cuts and promised new investment on the M62 but abandoned plans for improvements on the A1 at Leeming.

North Yorkshire will be one of four pilot schemes to look at ways of improving broadband access to rural areas after a successful bid by North Yorkshire County Council and NYnet

David Cullen, NYnet Chief Executive, said: “We have already demonstrated that alternative sustainable models can be found- this decision will have a very significant impact by providing funding for an accelerated programme of broadband roll-out in the rural communities of North Yorkshire.

“The geography and demographic makeup of North Yorkshire represents a typical ‘final third’ area and the project will provide a valuable testing ground that will assist the government in providing broadband access to the whole of the UK.”

Last night, Leeds City Council warned that the Government’s spending cuts would leave the authority facing a £150m shortfall.