Don’t Get Distracted: Why The Comprehensive Spending Review Is So Important

Posted by: on Apr 10, 2019 | No Comments

Whilst the political and media attention is on Brexit, it is important to remember that some of the biggest decisions facing the Government will be made in the Comprehensive Spending Review and that’s what makes it so important for you.

The timing of the Comprehensive Spending Review (CSR) remains a little unclear but what was clear from the Chancellor’s Spring Statement was that all the big decisions are being put off. The Chancellor did say he intends to launch a full three-year Spending Review before the summer recess and that it would be concluded alongside the Autumn Budget.

But Brexit, of course, gets in the way.

Whilst the end of austerity has already been announced, the Spending Review will have to deliver the reality of what that means – who gets more of what? If we are the other side of Brexit by the time of the Budget, then the end of austerity will be part of the ‘proof’ of the new era we are entering.

In the event that there is a Brexit deal then the Chancellor has suggested that there will be a ‘Deal Dividend’ to spend delivered not least through a boost in the economy but also a recovery in confidence.

Treasury officials appearing in front of the Treasury Select Committee suggested that the emphasis of the CSR will be on focusing more on outcomes, scrutiny of the delivery and cost of major projects, and on breaking down silos between government departments.

In terms of the finance, some of it is already allocated. Money is already promised for the NHS and in the current climate the Police are bound to secure funds to tackle knife crime. Brexit, and the type of deal / No Deal that we get, will impact not just on the level of spending available but the priorities as well. Farmers and the fishing industry will be fighting hard against the public sector for whatever support is available.

As the Chancellor recognised in the Spring Statement, the Government’s decisions will need to ‘reflect the public’s priorities between areas like social care, local government, schools, police, defence and the environment.’ There will no escaping the language of winners and losers.

But the PM’s announcement that she plans to step down, complicates the picture still further. Depending on the timing of the leadership election. the CSR could well need to reflect the priorities of the new leader (and doubtless new Cabinet and likely new Chancellor as well).

So whilst there is no doubt that HM Treasury is busy working away on the contents of the CSR, the outputs may need to change nearer the time of the statement. What is also less clear is how much work the other departments are doing to contribute. Brexit is sucking the life out of them.

A new PM may also choose to alter the spending periods covered by the CSR. They could be shorter or longer, and will doubtless leave wiggle room before a General Election in 2022? In other words, whatever the Chancellor said in the Spring Statement does not bind the hands of the new leader.

So what does all this tell us?:

  • work with your department but also take the arguments direct to HM Treasury – you are going to have to be your own best champion;
  • pay attention to the leadership campaign – this may cause changes in your approach and there may be last minute changes to the CSR;
  • don’t forget devolution – the process isn’t just about central government and your best allies may be outside of London;
  • projects – the CSR will consider specific, larger, infrastructure projects such as HS2 and the business case for Northern Powerhouse Rail. The promised National Infrastructure Strategy will also come out with the Budget and CSR. So this is not just about the spending available to individual departments but the future of projects as well. Given some of the sums involved, I would expect some significant announcements on projects; and
  • it is a competitive environment – especially post Brexit, the level of competition between industries, sectors, and departments will be fierce. If you not making the case then there is a real danger that you will out.

No-one should under-estimate the importance of the CSR. It is not just about what post-Brexit Britain looks like but is also about the priorities and agenda for the likely new PM. 2019 will get even more interesting.