Spending Review: ideas for change or just a list of budgets?

9 November 2015

Today is the first day in which the Spending Review has commanded the headlines for several months. The Chancellor has praised those departments that have agreed their cuts, amid speculation that he is putting pressure on those that have yet to agree. Four departments have agreed cuts of around 30 per cent over the Parliament.

So much of the Spending Review is inevitably about the budget numbers. A lot of the reporting over the next fortnight will inevitably concern the exact settlements for each spending department.

Even more important, however, are the ideas that underpin the Review. The budget numbers are essential for the Treasury but the ideas on public services will determine whether those services go on to improve or not, and if so, how fast.

Government voices have put forward a number of ideas so far, notably:

  • Devolution. This was one of the two themes in the Treasury’s framework document. Greater local control of services should enable closer co-operation and even integration of some services.
  • Digital technology, the second theme highlighted by the Treasury.
  • Disposal of public sector land, highlighted by the Chancellor in July.
  • Competence “hubs” in Whitehall. Speaking at Reform’s annual conference, John Manzoni hinted that the Review would see central “hubs” in certain areas of competence, such as procurement, which can benefit all of central Civil Service.
  • “Reform”. In the Prime Minister’s excellent speech on public services on 11 September, he used “reform” to mean a new shape for public services to give better results. He gave examples such as early intervention, social impact bonds and better recruitment. The 2013 Spending Round emphasised the joining up of different services, in particular health and social care (via the Better Care Fund).
  • “Efficiency”. In the same speech, David Cameron called for common sense ways for public services to cut costs, such as the sharing of overheads between police and fire services.

These are all great themes but they might not work perfectly without some guidance. A key question is how devolution fits in. At first sight, there might be a tension between devolution and a centralisation of competence, for example. Under the Coalition, various inconsistencies and downright contradictions in the Government’s objectives held back the whole effort.

Regardless of Ministers’ wishes, the rest of the public sector will look to them to express clearly the ideas that will win support and so are worth pursuing. The simpler and clearer the story, the better. The Chancellor today highlighted the idea of selling inner-city prisons and building new, fit for purpose facilities as a result. That is fantastic but it doesn’t bear on the question of devolution, for example.

Ministers may naturally fear that the public sector is generally antagonistic towards any further cuts, and so to the Spending Review. Work by Reform, Deloitte and also Ipsos Mori indicates in fact that many public sector leaders are realistic about the financial picture and are passionately committed to improving services from now on. They want a clear lead from Government to help them. Over to you, Mr Osborne.

Andrew Haldenby, Director, Reform

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Think tanks on... the Comprehensive Spending Review - Think Tank Review

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[…] or finding other people to pay, according to the Social Market Foundation. This needs to be about ideas, not just budgets, says Reform, claiming that public sector leaders are committed to improving services, but need […]