Myths, half-myths and Spending Reviews

Sorry to be a stickler for details but a widespread myth emerged during the Election that the Labour government had “postponed” a Spending Review and “put it off until after the Election”.

So let’s try and tease out the truth – which as ever is more complex and fuzzy. When the whole concept of Spending Reviews was introduced, back in 1998, they were originally billed as setting public spending limits for government departments, or DEL in the jargon, for three year ahead (financial year’s 1999-2000 to 2001-02).

It soon became apparent that Spending Reviews were actually “three year plans reviewed every two years”, in a marvellous bit of Sir Humphrey-ish gobbledygook. Thus, after the first Spending Review in 1998 we had further reviews in 2000, 2002 and 2004. If this was the pattern then after the 2007 Spending Review there should have been a Spending Review 2009 – but there wasn’t.

But careful readers will have immediately spotted that the fifth Spending Review took place in 2007 – after three years – rather than in 2006, breaking the previous pattern.

One further detail – Spending Reviews have mostly been published in July for implementation in the next year’s Budget.

So there were two possibilities – either a two year Review published in July 2009 (two years) or July 2010 (three years).

The allegation that Labour “put off” a Spending Review only fully stands up if every previous Review were every two years, but that isn’t true. At best it is half-true. It is possible to accuse the Labour government of manipulating the timing of Reviews for political purposes (and unlike many of those now doing so, I have consistently since 2000) but you can’t claim that a 2009 SR really “due”. The truth is we didn’t know when an SR was “due” because, as usual, the Government hadn’t told us.

And one further thought – all three main parties are committed to keeping the Spending Reviews, but none have said clearly if they will be two, three or even four year reviews (some statements suggest the latter).

All of the above is of great amusement, if not bafflement, to the many international audiences I address who can’t believe that this isn’t all embedded in legislation and is so open to manipulation. The Government’s Fiscal Responsibility Act went some way to changing this, but we still don’t have a legally-based multi-year budget system. Watch this space…..

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