Spending Review: Local government set for further cuts

However, Osborne does not have too much room to manoeuvre as he has promised to slash £12bn from the UK’s welfare spending. Labour veteran Frank Field may provide a solution to Osborne on this tricky issue.

In addition, housing benefit is expected to take a hit as the chancellor attempts to scale back the benefits bill in the aftermath of the tax credits fiasco.

Housing benefit – some experts believe the Chancellor will cut the housing benefit budget.

Some experts believe he will be forced to admit he is set to breach the self-imposed cap on welfare spending – a move that would be highly embarrassing politically.

Jonathan House, PwC’s local government leader in the North, said: “The Spending Review offers a moment for a reset: a chance to shift from negotiating the best deal to get more funds towards a focus on delivery”. I’ve listened to the concerns.

Mr Osborne said he could abandon the controversial cuts of £4.4 billion due to improvements in public finances.

I’ve had representations that these changes to tax credits should be phased in.

The Chancellor will say the settlement is about picking priorities and insist tackling the “crisis” in home ownership is crucial.

This won’t be a Spending Review, ministers say, that displays an attitude of cutting a little bit here and there, moving money around the balance sheet to try to smooth out the pain.

“Rather than give in to misguided calls to ease up on spending restraint, the chancellor must use this week’s spending review to stay the course on deficit reduction”, said the TPA. “Above all, we choose homes that people can buy”.

In effect, it decides how £4 trillion of taxpayers’ money will be spent by setting caps on government departments. While the programme would not be means-tested, property values would be capped at £450,000 in London and £250,000 in the rest of the country.

All households earning less than £80,000 outside London or £90,000 inside London will be eligible, and constraints on people being able to buy them will be removed, including restrictions on the number of bedrooms, and requirements to be nominated by a local authority.

The Government will also invest £200m in 10,000 homes that will be available to rent at about 20 per cent below the market rent to allow tenants to save for a deposit while they rent.

According to the IEA, Osborne has protected spending on pensioners, the NHS, global aid, defence, funding for schools, and debt interest, while setting arbitrary targets for other departments.

In Wednesday’s Autumn Statement, the Chancellor can accommodate a small rise in the borrowing forecast and still adhere to his Charter for Budget Responsibility, which requires him to achieve a surplus by the end of the parliament.