#SR2013 Watch No. 2: Is it Really Going to Happen?

So, what is happening with Spending Review 2013 and is it going to happen at all? All sorts of rumours are flying about – in the absence of any clear statements from government.

It is worth noting first of all that this government is proving to be exactly like it’s predecessor in one respect – a complete lack of transparency about Spending Reviews. New Labour chopped and changed Spending Review processes without explanation, frequently withheld information about what they were doing until the last minute and refused to divulge all sorts of mundane information about them.

For example, when I was assisting the Treasury Select Committee we frequently were left ‘out of the loop’ about when Spending Reviews would be announced to Parliament until the last minute.

When I asked for copies of the guidance issued to ministries during Spending Reviews on how they should formulate their ‘Public Service Agreements’ it eventually took an FOI request to wrestle these out of HM Treasury.

Nothing much has changed under this supposedly more transparent Coalition government.

So what is going on? Well, my best intelligence suggests that SR2013 is indeed in train, but it is somewhat unclear whether it will ever actually be called a “Spending Review” or merely some sort of ‘review and adjustment’ of SR2010. It also seems that it is now unlikely to be announced before autumn 2013, rather than in July as has more often been the case.

Whatever happens a review of some sort has to happen. The ambitious idea of a fixed four-year spending plan set out in SR2010 was based on economic and fiscal assumptions that have been shattered by the double-dip recession. It was always unlikely to survive the four years.

There seems to be two big cleavages within the government over its basic shape.

First, there is a split which cuts across party lines over benefit spending. The Chancellor wants to make big additional savings from the benefits budget – between £10bn and £20bn, but this is being fiercely resisted by Iain Duncan-Smith and others. Particularly during the transition to Universal Credit, the benefits budget needs sufficient flexibility to cushion the losers which it would not have if such a large additional chunk were taken out.

Second, there is the delicate political problem of what the overall public spending envelope should be and how far both parties to the Coalition want to sign up to plans that take them well beyond the next Election.

There have been siren voices on the right arguing that this is the opportunity to hack the state back – from the historic 43% or so average public spending as a percentage of GDP down to something more like America – i.e. about a third. The Institute of Directors, Taxpayers Alliance and Adam Smith Institute, to name but three, have all come out with something along these lines. But this is not a simple Tory-Lib Dem split either. Some Tories are very nervous about becoming the ‘nasty party’ again and some clearly believe such radical cuts would be wrong. And on the Lib Dem side people like David Laws are adopting the ‘roll back the state’ position, making this a muddled debate in party political terms.

Whilst at the moment tensions within the Government are focussed on the very public splits over House of Lords reform, a subterranean struggle seems to be taking place over “SR2013”. Neither party to the Coalition is likely to want to go into the General Election in May 2015 committed to the same spending plans. How far this tension will focus on SR2013 and could even split the Coalition even further remains to be seen.

Given the lack of transparency currently surrounding SR2013, all intelligence would be gratefully received.

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