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Comprehensive spending review: what you need to know Comprehensive spending review: what you need to know
(3 months later)
What is a spending review?What is a spending review?
Governments hold spending reviews to determine how much money each department will have to spend in coming years. These decisions used to happen annually, but Gordon Brown introduced a system of three-year spending reviews to bring more certainty to long-term planning.Governments hold spending reviews to determine how much money each department will have to spend in coming years. These decisions used to happen annually, but Gordon Brown introduced a system of three-year spending reviews to bring more certainty to long-term planning.
When was the last one?When was the last one?
In 2010. It was George Osborne's first spending review, and it covered a four-year period, from 2011-12 to 2014-15. Today's will be Osborne's second.In 2010. It was George Osborne's first spending review, and it covered a four-year period, from 2011-12 to 2014-15. Today's will be Osborne's second.
What will it cover?What will it cover?
Just one year – spending in 2015-16.Just one year – spending in 2015-16.
That's after the election. So why are we having one?That's after the election. So why are we having one?
Because the 2015-16 financial year will start just before the 2015 general election takes place in May. The Conservatives and the Lib Dems will fight the general election with different spending plans, but Osborne decided that they needed a spending review for 2015-16 because the coalition will need to make plans for that financial year. If it waited until after the elections, Whitehall departments would not have budgets for the year.Because the 2015-16 financial year will start just before the 2015 general election takes place in May. The Conservatives and the Lib Dems will fight the general election with different spending plans, but Osborne decided that they needed a spending review for 2015-16 because the coalition will need to make plans for that financial year. If it waited until after the elections, Whitehall departments would not have budgets for the year.
And why are we having it now?And why are we having it now?
Good question. In theory, Osborne could have waited until next year. But this will be an announcement about cuts, and it seems that Osborne was keen to get it out of the way as soon as possible.Good question. In theory, Osborne could have waited until next year. But this will be an announcement about cuts, and it seems that Osborne was keen to get it out of the way as soon as possible.
Any other reason?Any other reason?
Party politics comes in to it, too. When Osborne first announced the review, Labour would not say whether it would support the coalition's spending plans, and the chancellor wanted to set Ed Balls a challenge: either reject the coalition's plans (and face accusations of profligacy) or accept them (and enrage the Labour left).Party politics comes in to it, too. When Osborne first announced the review, Labour would not say whether it would support the coalition's spending plans, and the chancellor wanted to set Ed Balls a challenge: either reject the coalition's plans (and face accusations of profligacy) or accept them (and enrage the Labour left).
How has Labour responded?How has Labour responded?
Recently Labour has said that it will accept the coalition's plans for day-to-day spending in 2015-16 as a starting point. It may switch spending between departments, but it won't borrow more to increase current spending. However, it may borrow more for capital spending (for example, on housing).Recently Labour has said that it will accept the coalition's plans for day-to-day spending in 2015-16 as a starting point. It may switch spending between departments, but it won't borrow more to increase current spending. However, it may borrow more for capital spending (for example, on housing).
What cuts will Osborne announce?What cuts will Osborne announce?
Osborne says he has to find cuts worth £11.5bn. Some departments – health, international aid and schools – are "ringfenced", and so the cuts will come from other departments. For example, spending on local government is expected to be hit particularly badly.Osborne says he has to find cuts worth £11.5bn. Some departments – health, international aid and schools – are "ringfenced", and so the cuts will come from other departments. For example, spending on local government is expected to be hit particularly badly.
And what else will be in the announcement?And what else will be in the announcement?
Osborne is also expected to announce details of his plan to impose some kind of cap on long-term welfare spending, or parts of welfare spending. And he will announce extra investment in infrastructure, although the full details will not be available until Danny Alexander, the chief secretary to the Treasury, makes an announcement on this subject on Thursday.Osborne is also expected to announce details of his plan to impose some kind of cap on long-term welfare spending, or parts of welfare spending. And he will announce extra investment in infrastructure, although the full details will not be available until Danny Alexander, the chief secretary to the Treasury, makes an announcement on this subject on Thursday.
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