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2004 Spending Review New Public Spending Plans 2005 - 2008

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2004 Spending Review New Public Spending Plans 2005 - 2008 2004 Spending Review New Public Spending Plans 2005 - 2008 July 2004 Stability, security and opportunity for all: Investing for Britain’s long-term future Cm 6237 Stability, security and opportunity for all: Investing for Britain’s long-term future 2004 Spending Review New Public Spending Plans 2005-2008 Presented to Parliament by the Chancellor of the Exchequer by Command of Her Majesty July 2004 Cm 6237 £22.75 © Crown copyright 2004 The text in this document (excluding the Royal Coat of Arms and departmental logos) may be reproduced free of charge in any format or medium providing that it is reproduced accurately and not used in a misleading context. The material must be acknowledged as Crown copyright and the title of the document specified. Any enquiries relating to the copyright in this document should be addressed to: The Licensing Division HMSO St Clements House 2-16 Colegate Norwich NR3 1BQ Fax: 01603 723000 E-mail: [email protected] HM Treasury contacts This document can be accessed from HM Treasury’s Internet site at: www.hm-treasury.gov.uk For further information on HM Treasury and its work, contact: Correspondence and Enquiry Unit HM Treasury 1 Horse Guards Road London SW1A 2HQ Tel: 020 7270 4558 Fax: 020 7270 5718 E-mail: [email protected] This and other government documents can be found on the Internet at: www.official-documents.co.uk ISBN: 0-10-162372-0 F OREWORD BY THE P RIME M INISTER The 2004 Spending Review takes forward the Government’s objective of a strong economy and a fair society with stability, security and opportunity for all. Building on the increased investment in key public services delivered since 1997, it sets out the Government’s spending plans for the next three years and the further improvements in public services that are planned. This Government has made significant progress in addressing the legacy of decades of under- investment in public services that we inherited. In health, education, criminal justice and other key areas, additional resources and reforms since 1997 are delivering better services for the public – more doctors, shorter waiting times, more teachers, better schools, more police officers and reduced crime. This Spending Review builds on these achievements by providing additional resources and setting stretching targets for further improvements across the public service. Investment must be accompanied by reform, and throughout this Spending Review the Government’s requirement is clear: for more provided in resources, more is expected in results. With the reforms agreed in this Spending Review the Government is extending devolution, increasing choice, supporting flexibility and ensuring greater personalisation in public services. The 2004 Spending Review announces investment and reforms in support of the Government’s key objectives: • a stronger, more productive economy • a fairer society with stronger communities • global security and prosperity • better public services The Government is investing in future growth with more money for skills, for science, for affordable housing and for transport. We are investing in security, with the longest planned period of growth in defence spending for twenty years and historic increases for counter-terrorism and resilience. We are enhancing global security and tackling poverty in the developing world by significantly increasing our overseas aid. We are investing in opportunity and fairness, with increased resources for health, for schools and for children. We are investing in safer communities with extra funding for the police and for Community Support officers. The Government is determined that increased resources must be focused on the front-line and deliver improvements in the services that matter to the public. The 2004 Spending Review sets stretching efficiency targets for all departments that will release additional resources for front-line services like hospitals and schools. Together, these measures will deliver a stronger, fairer, more secure Britain. C ONTENTS Page Foreword by the Prime Minister 1. Overview: Stability, Security and Opportunity for All 1 2. Efficiency 13 3. Better Public Services 27 4. A Stronger, More Productive Economy 41 5. A Fairer Society, with Stronger Communities 57 6. Global Security and Prosperity 73 7. Department for Education and Skills 85 8. Department of Health 93 9. Department for Transport 101 10. Office of the Deputy Prime Minister 107 11. Local Government 113 12. The Home Office, Constitutional Affairs and Law Officers’ Departments 119 13. Ministry of Defence 127 14. Foreign and Commonwealth Office 131 15. Department for International Development 135 16. Department of Trade and Industry 141 17. Department for Environment, Food and Rural Affairs 147 18. Department for Culture, Media and Sport 153 19. Department for Work and Pensions 157 20. Northern Ireland Office 161 21. The Chancellor’s Departments 165 22. Cabinet Office 169 23. Regions and Devolved Administrations 173 Annex A: Statistical Annex 181 Annex B: Resource Accounting and Budgeting 193 Annex C: Departmental Groupings 197 Annex D: List of Abbreviations 199 OVERVIEW: STABILITY, SECURITY AND 1 O PPORTUNITY FOR A LL The Government’s objective is to build a strong economy and a fair society with stability, security and opportunity for all. The 2004 Spending Review sets targets and allocates resources up to 2007-08 in support of this objective. The 2004 Spending Review sets departmental spending plans for the three years from 2005-06 to 2007-08 within the overall envelope for public spending set in Budget 2004 and consistent with the fiscal rules. These plans lock in the significant additional resources for public services delivered in the past three Spending Reviews and focus additional investment on the Government’s long-term priorities. Investment must be matched with reform and the 2004 Spending Review confirms and reinforces the Government’s commitment to improving public service performance. This Spending Review sets ambitious performance targets for all government departments to 2007-08. It also sets out stretching efficiency targets, agreed with departments, that will deliver efficiency gains equivalent to over £20 billion a year across the public sector by 2007-08. Together these steps will ensure that increased resources have the greatest possible impact on front-line delivery. The outcome of the 2004 Spending Review is set out under four key themes. A stronger more productive economy To raise productivity and deliver balanced growth across the UK, the 2004 Spending Review: • sets a ten year ambition to increase the ratio of UK R&D spending to GDP to 2.5 per cent, with science spending over £1 billion higher in 2007-08 than in 2004-05, an annual average growth rate of 5.8 per cent in real terms; • invests in learning and skills, with total spending on education in England £12 billion higher in 2007-08 than in 2004-05 and average per pupil funding rising to at least £5,500 by 2007-08, more than double the 1997 figure; • launches a major programme of investment in affordable housing and housing decency, with spending on housing £1.3 billion higher in 2007-08 than in 2004-05, delivering a 50 per cent increase in new social housing building; • increases investment in transport and provides additional resources to put the railways on a sustainable footing, with real terms growth in transport spending of 4.5 per cent a year on average over the three years of the Spending Review and expenditure in 2007-08 £2.4 billion higher than in 2004-05; and • devolves additional resources and responsibilities to the Regional Development Agencies to support small business, invest in skills, improve business-university links and promote economic development and regeneration in the regions. A fairer society with stronger communities To increase opportunity for all and ensure stronger, safer communities, the 2004 Spending Review: • provides significant additional resources for children, delivering 2500 Children’s Centres by 2008, on the way towards achieving the Government’s goal of a Children’s Centre in every community; 2004 Spending Review 1 1 OVERVIEW: STABILITY, SECURITY AND O PPORTUNITY FOR A LL • reaffirms the Government’s commitment to eradicate child poverty, with a new target to halve the number of children in relative low-income households by 2010, on the way to eradicating child poverty by 2020; • confirms the increased resources for health announced at Budget 2002, with health spending growing at an annual average of 7.2 per cent a year in real terms between 2002-03 and 2007-8; • tackles crime and the fear of crime, with spending on crime and justice £3.5 billion higher in 2007-08 than in 2004-05 and 20,000 more Community Support Officers by 2008; and • draws together existing funding streams into a new Safer and Stronger Communities Fund to empower communities to tackle anti-social behaviour, improve public space and reduce crime. Global security and prosperity To combat terrorism and create a safer, fairer world for all, the 2004 Spending Review: • reinforces the Government’s commitment to tackling global poverty with development spending increasing to nearly £6.5 billion in 2007-08, reaching a ratio of official development assistance to Gross National Income of 0.47 per cent, the highest level since 1979; • delivers resources to enable UK Armed Forces to respond to global threats, with spending on defence growing in real terms every year for seven years to 2007-08, the longest period of real
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