The spending round: What to watch for on Wednesday

25 June 2013

The announcement of the results of the 2015-16 spending round is almost upon us. Naturally we will all be paying a lot of attention to each department’s cash settlement: who are the winners and losers, both in terms of policy areas and – for the more politically minded – individual cabinet ministers?

Outside Whitehall local authorities are bracing themselves for big cuts, with some speculating they could lose as much as 12% from their central grants.

There will also be a chance to glimpse the more distant, post-election future. Watch what happens to the ringfences. Some may remain intact (maybe schools). Others may survive for now but be placed on borrowed time (maybe pensioners’ welfare). And some new ringfences may be constructed (maybe defence). Here the Opposition’s response will be just as important as the Chancellor’s speech, as the “non-battle lines” of the next election are drawn.

I’d also suggest those with a deeper interest in how our government operates watch for four other things.

First, what is the tone of the Chancellor’s speech? In his 2010 Spending Review speech, the Chancellor included around two positives for every one negative announcement. Sensible political speech making? But, if he does it again, it may indicate that the political energy and planning has gone on the tactics of small measures to disguise the overall impact of cuts, potentially at the expense of crafting a careful strategy to balance the inevitable pain.

Second, does the government really have the stomach for radical decentralisation? The Chancellor should be announcing the size of the Single Local Growth Fund, created in response to Lord Heseltine’s Growth Review last year. The noble Lord suggested a pot of £49bn over four years. How close will the Chancellor get to this number? And whatever the size, will he guarantee the funding over several years, or only for 2015-16? Others will be watching how the Chancellor responds to calls from Boris’s London Finance Commission for greater devolution of tax raising powers.

Third, will the Chancellor announce any changes to how Whitehall itself works to make achieving the cuts more likely? For example, will we see changes to how it manages large projects or how it runs procurement?

Finally is there a plan for the future? With two more years of cuts, 2016-17 and 2017-18, to be announced immediately after the next election, departments need to invest now in understanding the choices they will be presenting to any incoming government. Civil servants themselves know this requires a new way of working, collaboratively looking for savings across, rather than just within, departmental silos. Will the Chancellor announce anything to change Whitehall’s chronic departmentalism, making a new approach more likely?

With all this in mind, I hope you enjoy the speech!

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