What Will CSR2010 Tell Us?

 

public-spending-gdp-50-years
Five Decades of Public Spending as percentage of GDP

 

The Comprehensive (?) Spending Review to be announced on 20th Oct 2010 will:

– tell us some things we already know

– tell us some things we do not yet know (officially)

– not tell us some things that people want, or expect, to know

What We Already Know

Chancellor George Osborne already set out, in his ‘Emergency Budget’, the plans for the totals of public spending over the four fiscal years 2011-12 to 2014-15. these total show a steep decline in public spending a proportion of GDP (see figure above). [The flat line in the above figure is the average level of public spending and a percentage of GDP over the past 5 decades].

What We Don’t Know

How is this total spending going to be divided up between different Whitehall departments? This is the key information CSR 2010 will give us.

It is possible that CSR 2010 will vary the pace at which cuts are made, even varying the pace between different Whitehall Departments. So although the end-point of the cuts is (supposedly) known, the exact phasing between here and there may be different in different areas. Some of the plans already announced do not take effect for 2 or 3 years, so some other cuts may be brought forward to compensate.

Because of the funding formulas for Scotland and Wales, CSR 2010 will also tell the devolved governments how much they will have to spend over the same period.

What CSR 2010 Wont Tell Us

Once Whitehall departments know what their totals are for the next four years, they have to decide how that money is further divided up between their various areas of spending. Most of the money Whitehall spends actually goes out to other public bodies – the NHS, agencies, quangos, local government and other local services. They will not know how much money they are getting, for certain, until the next Budget in March 2011.

The Budget only legally sets spending for one year, so they cannot be certain what happens after that either. The reality is that the effects of the cuts will only trickle down to so-called “front-line services” some time later in 2011 at the earliest, and even then they will not always know what will happen to them in subsequent years.

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