More spending review scrutiny from MPs is needed

The upcoming spending review, which will set the government’s direction for the rest of the parliament, will not be easy. Economic growth is weak, public services are on the brink and defence spending is in spotlight. 

Darren Jones, Chief Secretary to the Treasury, has announced an overhaul of the spending review process in an effort to achieve better outcomes with limited government resources. Effective scrutiny of the government’s spending plans will be more important than ever. 

There are signs that parliamentarians, who have historically not had many opportunities to scrutinise planned spending, are also keen take a different approach. The Liaison Committee – a super-committee of committee chairs from the House of Commons – has announced that it is encouraging select committees to write to their respective departments to request further information on their spending review submissions.  This welcome move sends a strong cross-party message that this new parliament – with more new MPs than any before – wants to play a greater role in this spending review.

Parliamentary scrutiny of the spending review process is weak

The UK is an international outlier in giving its elected representatives so little opportunity to scrutinise spending. Unlike the budget, which is legislated for through the finance bill, the spending review – an internal government process – has no statutory basis. The main opportunity for MPs to scrutinise departmental budgets is the estimates process – which is no more than a couple of days of debate and is largely disconnected from the spending review itself. New MPs in 2024 were surprised to find themselves approving over a trillion pounds of government spending plans in their first few days with little opportunity for scrutiny.

Select committees play a vital role in holding the government to account, but they have often struggled to get the information they need to undertake detailed scrutiny of spending, or the information has come too late — an issue acknowledged by Darren Jones at our Government 2025 conference. 

But the current generation of select committee members are unusual: 75% are newly elected MPs. Many come from backgrounds where they are used to higher levels of spending scrutiny – including local government.

The Liaison Committee has sent a strong message: backbenchers see scrutiny as a priority

Parliamentary analysis of spending reviews has been an obvious but unaddressed lacuna, overshadowed by other priorities and hampered by the difficulty of obtaining the necessary information from government. In a recent report we recommended establishing an ‘expenditure committee’ – a dedicated parliamentary resource to look at future government spending – to counteract this tendency, echoing the Procedure Committee’s 2019 proposal to set up a budget committee. 

However, in lieu of new formal mechanisms for expenditure scrutiny, it is welcome that the Liaison Committee is prioritising scrutiny of the spending review and working to coordinate a new approach. Working together in a systematic way could allow existing committees to fulfil many of the roles we envisaged an expenditure committee could play. 

While all departmental select committees are seeking to understand the pressures facing their relevant departments, the Treasury Select Committee – under the leadership of Liaison Committee chair Meg Hillier – has a particular role in scrutinising the process of how settlements are agreed. Its recent ‘Work of the Treasury’ evidence session with senior officials, and its January inquiry into the Office for Value for Money, have shone a welcome light on novel aspects of this spending review.

More transparency would make for better spending decisions

The Liaison Committee is right to call for more information from departments on their spending plans. In the past, a lack of openness has been a barrier to good decision-making in spending reviews, with the gaming of baseline spending numbers, over-optimistic bids and unrealistic spending plans all damaging trust between the Treasury and departments. The opaque process through which final settlements are reached, combined with a lack of detail in published settlements, has prevented effective scrutiny by those outside government, including select committees and parliament more broadly. The final settlements announced on 11 June can only be understood in the context of the pressures spending departments and the Treasury expect to face. 

The IfG has called for departments to publish spending baselines early in the process, and for these to be scrutinised by an independent body. With demands for efficiency savings a common feature of spending reviews, establishing a “shared truth” of the cost and demand pressures facing departments’ budgets would provide the basis for better negotiations and more realistic spending settlements. Savings identified should be grounded in a clear and shared understanding of what government intends to do differently, or stop doing entirely, to achieve them. 

The Liaison Committee’s announcement demonstrates the determination of parliamentarians to play their part in improving government spending processes. How ministers respond to committees’ requests for information and engagement will be an important indicator of this government’s commitment to governing better.