Autumn statement – predicting the impact of the Chancellor’s spending review

The next four years of this parliament and the framework for the next election will be shaped by the events of this week.

This spending review will coincide with the Chancellor’s autumn statement, which is delivered every year.

The chancellor has said austerity measures are needed because there can be no national security without economic security.

The Spending Review determines how the Government will spend taxpayers’ money over the course of the parliament.

The issue Osborne is grappling with reflects two different sides of Conservative thinking.

Apart from sharing out the pain of the spending squeeze, the biggest decision facing Mr Osborne is over how he softens the impact of planned reductions to tax credits, after the House of Lords threw out his proposal to slash £4.4 billion from the payments to millions of families from next April.

ANd in our view it will be nigh on impossible to shield any departments from having to introduce yet more cuts.

Targeting pensions tax relief is one of the most straightforward ways for him to move towards both of those goals.

When people talk about welfare spending, they typically imagine it is largely unemployment benefits for those on the dole.

And that’s not the only dilemma. Is the Chancellor advocating a 2% rise in council tax over and above any rise an authority is already planning?

The spending cuts being imposed as part of the spending review are a key part of that story.

Mr Osborne has refused to rule out further cuts to front-line policing but states there will be increased spend and resources in counter-terrorism and defence.

“That sense of imperfection is one that pervades more than just the options available to Osborne on the tax credit side”.

“Osborne has been there five years”. The chancellor hinted on the Andrew Marr show that he might even have to water down his target of achieving a £10bn surplus by 2020, something he would be loath to do.

Although a little more than half of the cuts are now done, Britain will, from hereon, be cutting further and faster than anyone else.

The full results of the spending review are revealed in Wednesday’s Autumn Statement.

Britain’s police departments and the justice system, which runs courts, are also likely to bear the brunt of further cuts. He pointed out the shortsighted nature of such measures, the one-off financial accumulation and even questioned its legality. Nor can the care sector shorten stays to save money, another way in which the NHS has been able to cut down on costs in recent years. But with the Home Office in line for deep cuts in its budget, McDonnell said: “They are offering security but in reality they are increasing risk”. This is particularly true of health spending which the chancellor is being encouraged to boost in an attempt to smooth over the row with junior doctors over pay.

TUC general secretary Frances O’Grady said: “The spending review needs to focus on a bigger economy, not a smaller state”.

Work and Pensions has reached agreement, although the details have not been announced.

Gordon Brown is often demonised for his so-called tax raid on United Kingdom pensions of £10bn a year, but compared to the changes being wrought by the current resident of Number 11, he seems generous to a fault.

So there are some tough choices to be announced on Wednesday that will shape politics for years to come.