© 2000 Unemployment Unit & Youthaid
(click here to read our copyright terms)

The Comprehensive Spending Review

By Paul Convery

Working Brief 117, August/September 2000

The Government's spending review on 18th July announced substantial rises in education and training expenditure, a new Employment Opportunities Fund, expansion of help to disadvantaged children and teenagers, neighbourhood renewal funds, new funds and responsibilities for Regional Development Agencies. The spending review is characterised by a number of tough achievement targets and the Treasury will only release funds to spending Departments if targets are being met.

Skills and education

The Government's stated aim is to "ensure that everybody has the opportunity to acquire the skills necessary to get jobs" in a changing economy. Central government spending on education and training across the UK will increase in real-terms by an average of 5.4% a year between 2000-01 and 2003-04. Exact allocations across the UK depend on decisions taken by devolved administrations in Scotland, Wales and Northern Ireland, but at 5.6% a year, spending growth for England will average slightly more than the UK average. Education spending will increase as a proportion of GDP from 4.7% in 1996-97 to 5% by 2001-02, rising to a projected 5.3% by 2003-04.

The spending review's main goals are to:

Welfare to work

The Government has set itself four main targets for the three years to 2004. Taking account of the economic cycle, it will aim to:

A new Employment Opportunities Fund will be created to finance New Deal employment programmes, the ONE service, the costs of establishing a new "working age agency" and associated programmes. The Fund will be worth £3.8 billion over the 3 year period. About £3.1 billion of this will be funded from general Government incomes with approximately £720 million utilised from an under-spent carry-over of the £5.2bn that was raised from the "windfall tax" on utility companies following the 1997 General Election.

Over the 3 year planning period, the Government expects to allocate the following sums to the Employment Opportunities Fund:







Ministers say that there is an "unallocated element within the Fund" which will allow the Government to provide additional funds for those areas "where policy is still developing" as evidence emerges over the next three years, and allow for continuous improvement of existing programmes.

The ONE service: currently being piloted in 12 areas, this integrated approach to managing benefits and employment advice for all people of working age will be rolled-out nationally. It will be delivered by a new agency to be established during 2001 that brings together the Employment Service, elements of the Benefits Agency and will "build upon the current partnership approach to working with the private and voluntary sectors".

Enhanced New Deal 25 plus: the March 2000 Budget had already set out plans to intensify and extend the New Deal for 25 plus on a national basis from April 2001. However, the spending review will now fund a larger "enhanced" New Deal 25 plus which "will provide a step change in provision" for people aged over 25 who have been unemployed for 18 months and be part of a wider package of provision for people aged over 25. From six months of unemployment, there will be a staged increase in provision and support culminating in the enhanced New Deal 25 plus.

At less than 6 months:

  • Immediate access to help for those with serious basic skill needs

At 6 months unemployed the programme will include the following:-

  • Basic Skills Training: All participants will be screened for basic skills needs. Training may include soft skills and support similar to that in the Basic Employability programme of WBLA. The programme is expected to run for between 12 and 20 weeks. Learners will receive ES Allowances.
  • Short Job Focused Training: This will include soft or key skills. Some groups (yet to be defined) will be eligible to enter the programme from day 1. The programme is expected to run for up to 6 weeks. Learners will receive ES Allowances.

At 12 months

  • Longer Occupational Training: Some groups, to be defined will be eligible to enter the programme from day 1. The programme is expected to run for between 10 and 20 weeks. Learners will receive ES Allowances.

At 18 months:

An enhanced mandatory programme for clients aged 25+, including:

  • A Gateway period of 3 to 4 months
  • An individually tailored, flexible Intensive Activity Period, which will vary according to the needs of the client
  • A period of Follow Through

New Deal for Disabled People: national extension of the programme will be "exploratory", continuing to test different ways of helping disabled people into work. The Government is still evaluating what policies are most effective in helping disabled people but it will launch an early intervention programme to help people when they first become sick at work. New pilots will be funded to ensure effective retention and rehabilitation and compare the effectiveness of different types of assistance to people who are off work because of sickness. The pilots will evaluate what assistance is most effective across a range of measures, including jobs, earnings and future health.

Childcare: the Government will provide additional funding to support the expansion in childcare provision - including new funds to "kick-start provision in disadvantaged areas" and grants and support for new childminders. A business support package will encourage the emergence and development of new childcare businesses and there will be additional support in areas where the "childcare market faces barriers" to development. This will be achieved by focusing "significant new funds" on helping childcare providers - both private and voluntary sector.

Young people

Special interventions will be funded to target the areas of greatest need and to help children at risk to:

  1. a £380 million programme of preventive work with children primarily in the 5-13 age group to bridge the gap between Sure Start and Connexions, helping children before they hit a crisis. The fund will work in partnership with local authorities and others, including the voluntary sector delivery, dove-tailing with other initiatives such as Excellence in Cities; and
  2. a £70 million network of local children's funds, as announced in the Budget and developed in consultation with the voluntary sector. This will be administered by the voluntary sector itself, for children of all ages, and will focus on helping local and community groups to provide local solutions to the problem of child poverty. It will include a strong emphasis on children and young people's own aspirations and views.

These programmes will be overseen at a strategic level by a new Cabinet Committee on Children and Young People's Services, and will be administered by a new Unit. There will be improved local coordination through local authority level partnerships that bring together the main public services and the voluntary and community sectors. The co-ordination of services to support children will be "broadened and strengthened" through local Children and Young People's Partnerships in order to "reduce the incidence of multiple disadvantage" along with better tracking of child progress. Lastly, young people's opinions of public services will be assessed.

Neighbourhood Renewal

Although the spending review has allocated £2 billion to help the most deprived neighbourhoods, Government departments including Health, Home Office, DETR and DfEE will be required to change their funding allocation processes to ensure that funds are more targeted at deprived areas. The new resources for neighbourhoods include:

To improve the delivery of mainstream services in the non-statutory, local and central government sectors Local Strategic Partnerships will be encouraged so that service providers "work together at local level to improve outcomes". These will build on local government's new Community Planning duty and the range of existing cross-sectoral partnerships. The Government says that these will form part of a "wider drive to encourage the rationalisation of existing partnerships into simpler and less bureaucratic structures." In the most deprived areas these partnerships will receive start-up funding through the New Deal for Communities and detailed guidance on their role will be published in the Autumn.

To make sure that refocused main services and these Partnerships are better complemented, all the Government's current area targeted initiatives will be reviewed. In practical terms this means:

Business growth

Small businesses will receive targeted support and advocacy from new funding of £54 million in 2001-02, £73 million in 2002-03 and £63 million in 2003-04 through the Small Business Service (SBS), to provide high quality information and advice to all businesses, both on-line and through a call centre. There are also measures to extend enterprise to all through free advice packages from the SBS, support for social venturing and encouragement for enterprise in schools. The Government will also increase funding to help small and medium sized firms to become further e-enabled: the number of small and medium sized firms wired-up almost doubled between 1997 and 1999 (to 600,000 businesses). So the DTI spending plans will provide an extra £10 million in 2001-02 and £5 million in 2002-03, on top of the existing funding, to encourage more small businesses to get on-line, but also to help them make best use of e-business opportunities.

Regional Development

The Government promises "a step change" in Regional Development Agencies' (RDA) funding to raise regional productivity. RDAs will have a "key strategic leadership role" in raising every region's economic performance, (measured by increases to the trend in growth of each region's GDP) and "promoting social renewal" of their regions by supporting jobs, promoting enterprise and "harnessing business-led growth" as a means of tackling deprivation and disadvantage.

Budgets will rise by £250 million in 2001-02, £350 million in 2002-03 and £500 million in 2003-04 compared to 2000-01 with total expenditure reaching £1.7 billion by 2003-04. The RDAs' funding will be brought together in a single cross-departmental funding framework and all relevant Government Departments will be working together to "release the energies of the RDAs". The agencies will be given the flexibility to encourage more business-led innovative working as "more decision-making is devolved to the individual regions". However, they will be required to deliver "challenging outcome targets set collectively by Departments" - the first is to bring 17% of all derelict and contaminated land back into productive use by 2010.

The RDAs will have a leading strategic role across a range of Government interventions:

European match funding

The Government has guaranteed to match-fund the European share of Objective 1, 2 and 3 projects although these will be contained within departmental allocations. This is estimated to total £4.2 billion for EU Structural Funds in the UK over three years - including an estimated total of £600 million for new Objective 1 programmes in English regions. It also includes an allocation of £270 million for Wales to ensure match-funding of its Objective 1 requirements.