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.

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:

• Make progress towards achieving 50% of young people entering higher education by 2010; in part this requires raising participation among under-represented people from lower socio-economic groups and the Higher Education Funding Council will be required to meet year-on-year improvement targets. With an additional £100 million per year allocated, the Spending Review is funding more places in higher education with additional funding focussed on vocationally-oriented "foundation degrees".
• Improve standards in primary and secondary schools - in particular by extending help to young children at risk of falling behind and raising standards. The DfEE wants 85% pupils those aged 14 to achieve level 5 or above in each of the key Stage 3 tests in English, maths and ICT (the current rate is 60%) and 80% achievement in science. Total funding per pupil - which has already increased by over £300 per pupil in real terms since 1997 will rise in real terms by another £370 over the three years. In England, much of the funding will by-pass Local Education Authorities and go directly to Headteachers who will receive £540 million in direct grants - some £240 million more than this year - and this will be sustained by 2¾% growth over the following two years. The DfEE says that a typical secondary school will receive £60,000 compared to this year’s £40,000 and a typical primary will see an increase from £9,000 to £20,000. Capital expenditure will increase by over £1.5 billion by 2003-04.
• Increase the numbers of 16 year olds remaining in the learning system by extending Education Maintenance Allowances. £150 million a year will be allocated to the allowances and the Government aims to have 80,000 more young 16-18 year olds staying in education by 2004 - with nearly 60% of young people aged 21 achieving level 3 qualifications.
• With around 20% of the adult population having low numeracy and literacy, the Government will also invest more in helping adults with low or no skills to gain proficiency in literacy, numeracy and ICT profficiency. Around 300 Information and Communications Technology (ICT) learning centres will be open by spring 2001 and up to 1,000 by 2002. Up to 100,000 poorer families will be able to lease low cost recycled personal computers under the Government's pilot project 'Computers Within Reach'.

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

• increase employment and to reduce adult unemployment;
• reduce the number of children in households with no one in work;
• increase the employment rates of disadvantaged groups - people with disabilities, lone parents, ethnic minorities and the over 50;
• increase (in parallel with the neighbourhood renewal strategy) the employment rates of disadvantaged areas - in particular, the 30 local authority districts with the poorest initial labour market position - and reduce the difference between their employment rates and the overall rate.

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.

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.

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

• substantially increase Sure Start funding from £184 million this year to £500 million in the year 2003-04; by next year, the Government expects there to be 250 programmes running supporting 18% of poor children under four and the new target will be to reach one third of poor children aged under four by the year 2004; although still focussing on young children in deprived areas, the expanded Sure Start will target particular pockets of deprivation, so some of the new programmes will be geographically small; it will also include extra help for first-time mothers and more training and support for Sure Start programme staff. Targets for achievement by 2004 in the Sure Start areas will include: a 20% reduction in the proportion of children aged 0-3 who are re-registered within the space of 12 months on the child protection register; a 10 per cent reduction in mothers who smoke in pregnancy; a reduction of five percentage points in the number of children aged 0-3 with speech and language problems requiring specialist intervention by the age of four; reduction of the number of 0-3 year olds living in households where no-one is working.
• fund the progressive introduction of the Connexions personal adviser service for teenagers and expand other services for vulnerable young people, including mental health services, supported housing and drug treatment. There will be increasing co-location of these services, better systems of referral between them and greater sharing of data.
• create a Children's Fund worth £450 million between 2001-02 and 2003-04 to invest in preventive services to help vulnerable children and young people and prevent them from falling into poverty and disadvantage; a part of this fund will be distributed to local community groups through a network of local funds; The Fund will support services to identify children and young people who are showing early signs of disturbance and provide them and their families with the support they need to get back on track. Its aim is to prevent children falling into drug abuse, truancy, exclusion, unemployment and crime. The Fund will be worth a total of £450 million over three years and will support two programmes:

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.

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:

• a new Neighbourhood Renewal Fund covering the most deprived areas which will be worth £100 million in 2001-02, £300 million in 2002-03 and £400 million in 2003-04, to allow local authorities and other agencies to start improving services in poorer communities.
• a New Deal for Communities budget totalling £1.2 billion over 3 years which represents a more than threefold increase in the current level of expenditure.

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:

• the next phase of the New Deal for Communities will focus on supporting more, smaller schemes.
• there will be additional support to help local people influence public services;
• promoting community involvement at local and neighbourhood level
• following the National Strategy for Neighbourhood Renewal consultation (currently underway), an Action Plan will be published in the autumn.
• establishing a National Centre for Neighbourhood Renewal to improve access to information on 'what works' in deprived areas, and providing better neighbourhood-level data.
• the DTI's budget for the Phoenix Fund, launched in November 1999 will be trebled - to make enterprise open to all by supporting access to finance and innovative business assistance in disadvantaged communities.

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.

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:

• working in strategic partnership with the Small Business Service to deliver the £1 billion Regional Venture Capital Funds.
• taking on the lead strategic role in ensuring that the regional plans for the European Structural Funds are delivered.
• being represented on the boards of the national and all local Learning and Skills Councils and being consulted by all local LSCs in drawing up their skills plans.
• drawing up local deprivation strategies for the new Neighbourhood Renewal Fund
• being "key members" of the partnerships in the areas in which they are investing - in particular the new Local Strategic Partnerships within which all local authorities must work.

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.