'Not Acting Now Would Be Disastrous' Says Treasury

Last year, Britain's deficit was the largest in peacetime history. The state is currently borrowing one pound in every four that it spends, and every day it costs almost £120 million just to pay the interest on the nation's debts.

According to the HM Treasury, the consequences of not acting now are serious. All regions across England would be faced with higher interest rates, business failures, rising unemployment and even potentially the end of the recovery.

The Treasury say the review promotes long-term economic growth, improves fairness by supporting the most vulnerable, and gives people the freedom to better themselves and their families in the future. 

They say the government is determined “to remove barriers and provide focused support to ensure that all places can realise their growth potential by supporting appropriate infrastructure, stimulating private sector growth in all regions and providing local areas with incentives and powers through devolution.”

They continue that the Spending Review supports investment in infrastructure that underpins economic growth. Thriving cities and urban areas will be critical to the success of the private sector, and will increase the UK's resilience to economic shocks. 



For London, the Spending Review confirms support for many capital programmes, including: the Crossrail - a new line linking East and West London providing an additional 10% to London's rail capacity; £220 million funding for the UK centre for Medical Research and Innovation; Continued transport funding to help support the tube upgrade programme which will increase capacity by 30% in 2020; and transforming East London for the Olympics, five major new sporting venues for elite and community, along with an initial 2,800 new homes, and an estimated 8,000-10,000 new jobs on the park. 




The Government has set in place a number of important initiatives to support growth across the English regions, including those with a recent track record of below average economic performance.

The Local Growth White Paper, to be published shortly, will outline key initiatives to support growth locally and in the regions, including: £1.4 billion Regional Growth Fund over 2011-12, 2012-13, and 2013-14, Tax Increment Financing, and Local Enterprise Partnerships (LEPS).

Providing local areas with incentives and powers through devolution 

the Government is clear of the need to encourage and incentivise growth in all regions, and ensure that local communities benefit from these actions.

The Spending Review outlines how local authorities will have greater control over more than £7 billion of funding from 2011-12 which is moving into Local Government formula grant, being unringfenced or is new funding for the SR10 period, enabling them to better meet local communities' needs.

The review also highlights reducing barriers by establishing the first Community Budgets in 16 local areas, including Westminster, Islington, Barnet, Lewisham, and Croydon, from April 2011. Pooled departmental budgets will help councils and their partners to work together to support families with complex needs. All places may be able to operate these approaches from 2013-14.

The Chief Secretary to the Treasury, Danny Alexander said: “The consequences of not acting now would be disastrous. We would be faced with higher interest rates, business failures, more job losses and even potentially the end of the recovery. So, we have to be brave and tackle it now. Delaying decisions would mean even more money wasted on debt interest, and so even bigger cuts in the end. 

Instead the choices we make will invest in the future - to give everyone the opportunity for a fair start in life regardless, of their background. By being tough on waste and welfare, we are able to find money for the services that really matter - giving children a good start in life, supporting the NHS, and caring for older people.”

(BMcN/GK)