For central government budget-making, the first plan is that income should match expenditure over one phase of the economic cycle. The key sources of revenue of central government are taxes and duties from individuals and corporates, tax allowances excluded, whilst the fundamentals of total managed expenditures will go to run government and deliver services, to collect taxes, and support grants and benefits (Flynn 2007). The Tories Party prefers to contemplate a reduction or abolition of the 50 per cent top rate of income tax budget. Reducing corporation tax and deregulating the labour market is likely to make expending shrinking, public services especially. (The Economist 20/03/2012).
The first impact of the budget’s cut in the top rate of income tax is to offer a banker on £5 million annually and to make living costs higher. At a time, the “squeezed middle” of workers will face rising fuel prices, higher energy bills and loss of child benefits. Besides, it is suggestive that millions of the seniors are likely to get trouble in real terms of pensions as a result of freezing pensioners’ tax allowances and a money-saving change (The Economist 24/03/2012).
According to the 2010 Spending Review, the Department of Transport was being given an average £3 billion for road maintenance between 2011 and 2015, and the government planned to lower 15 per cent in real terms by 2014-15 than its £12.8 billion budget in 2010-11, aiming to make £3.5 billion of annual efficiency savings across the rail network. But overall savings would not be made, higher repair costs and more potential extra claims by motorists against local authorities for damage to their vehicles would occur as a result of the deterioration in the network. In the long term, this could cost taxpayers more. (BBC News 13/03/2012).
The review reports that the Coalition Government tends to allocate an additional funding £2 billion in social care over the next four years, i.e. an increase by 0.4 per cent in real terms. Half made available will come from the National Health System (NHS), the reminder half from the general local government. The first positive insight of increasing budget for social care is to support the delivery of social care and to avoid demand upon social care due to the reduction of unnecessary hospital admissions, provision of sufficient resources to protect people’s access to care and the avoidance of further restrictions to services. Additionally, residents’ interests and the NHS will benefit from investment in social care (HM Treasury 20/10/2010). But spending on social care for the elderly in England was falling in 2012. It is estimated that £7.3 billion was being budgeted, and this led to a drop of 4.5 per cent in line with inflation. The ultimate result will be to restrict access to services as well as increasing the fees charged, in other words, only the poorest could receive care completely free. Also it seems to become a growing crisis in care for older people because an increasing number of the seniors are not able to get formal support as a result of shortage of carers (BBC News 30/01/2012).
In recent one decade, NHS received incomes not dependent on keeping their spending within a fixed revenue budget, but on the basis of how many activities they carries out, operating within a ‘Payment by Results’ system introduced by Labour Party since 1997. Its aim is to reduce waiting list (Flynn 2007). Further expenditure cuts in the NHS means an attempt at centralisation in which the centre will ‘set standards, monitor performance, put in place a proper system of inspection, provide back up to assist the modernisation of the service and correct failure’ (Flynn 2007). The building programme in the NHS will be blocked. Additionally, a shortage of staff will worsen because they are not paid enough to keep themselves in public services.