Why Spending Review 2013?

The Coalition Government’s Spending Review 2010 was supposedly a 4-year plan covering the fiscal years 2011-12 until 2014-15. So a new Spending Review would be needed, if this timetable was adhered to, sometime in 2014 for a new plan covering 2015-16 onwards.

Instead, it now looks like there will be a Spending Review in 2013, as Danny Alexander let slip on the BBC today. The question is why?

First, a 4 year plan was always extraordinarily ambitious. Labour tried for 3 year plans and only managed it twice in five Spending Reviews (the others all turned out to be two year plans). This is especially true as the economic predictions on which the 2010 Spending Review were based have been shot to pieces. Growth, the fundamental determinant, has faltered spectacularly. Even if this context hadn’t changed, there will be sufficient pent-up need to redistribute spending amongst departments and policies to need an SR.

Second, the politics. It is now becoming increasingly obvious that the two Coalition parties are starting to position themselves to go into a 2015 General Election on very different economic and fiscal policies. To agree a Spending Review in 2014, so close to an Election, and then try to say something very different in their respective Manifesto’s a few months later would be ridiculous. Spending Review 2013 would however have faded sufficiently by 2015.

So, as I have been saying for a long time, there will be an earlier SR – I thought either 2012 0r 2013 – the latter is now almost certain.

One thought on “Why Spending Review 2013?

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