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Ask the Experts – Spending Review

Wednesday November 3rd, 2010

By Morven MacNeil, GO Features Editor

GO Features Editor Morven MacNeil answers your queries on Spending Review 2010.

What are Spending Reviews?

A Spending Review is a Treasury-led process to allocate resources across all government departments, according to the Government’s priorities. Spending Reviews set firm and fixed spending budgets over several years for each department.  It is then up to departments to decide how best to manage and distribute this spending within their areas of responsibility.

In addition to setting departmental budgets, Spending Review 2010 examines non-departmental spending that cannot be firmly fixed over a period of several years, including social security, tax credits, some elements of local authority spending and spending financed from the proceeds of the National Lottery.

Spending Reviews have been an important part of governmental planning since the late 1990s. Prior to their introduction, departmental budgets were set on a year-by-year basis, which made multi-year planning more difficult.

What timeline does Spending Review 2010 cover?

Spending Review 2010 covers the four financial years from 2011-12 to 2014-15. The Chancellor of the Exchequer announced Spending Review 2010 on 20 October 2010.

What were the key points announced in the Spending Review?

Chancellor George Osborne made several key announcements. In 2011-12 expenditure will be £651 billion, rising steadily to £693 billion by 2014-15. Debt interest payments will be lower by £1 billion in 2012, £1.8 billion in 2013 and £3 billion in 2014, over £5 billion over the course of the Spending Review.

The Chancellor has stated that there will be 490,000 public sector job losses and council spending will be cut by 7.1 per cent every year for the next four years.

The Chancellor has confirmed that the next Budget will take place on Wednesday 23 March 2011.

How does the Spending Review relate to the June Budget?

The June Budget set out the overall level of public spending for the four years from 2011-12 to 2014-15. Spending Review 2010 is the process through which this spending is allocated to pay for all areas of government activity, including public services, social security, and administration costs.

How is this Spending Review different to previous ones?

The scale of Britain’s deficit has necessitated some tough choices about how the Government allocates spending in the current Spending Review. Successfully reducing the deficit requires a completely different approach.

At Spending Review 2010, the Government is:

  • thinking innovatively about the role of government in society
  • taking decisions collectively as a Government, led by the Public Expenditure Committee of senior Cabinet Ministers appointed by the Prime Minister and chaired by the Chancellor to advise the Cabinet on the high-level decisions that need to be taken
  • consulting widely with experts and the wider public, to get their ideas

The Government has said that its approach to these tough choices is guided by the principles of freedom, fairness and responsibility. It has also said that these choices should be supported by new and radical approaches to the provision of public services.

In addition, the Government has appointed an Independent Challenge Group (ICG) of Civil Service leaders, complemented by external experts, to bring independent challenge to the Spending Review process. The group’s remit is to think innovatively about the options for reducing public expenditure and balancing priorities to minimise the impact on public services.

Where can I find additional information on Spending Review 2010?

The Chancellor set out details of the Government’s strategy for delivering Spending Review 2010 in the Spending Review Framework document, published on 8 June 2010. Please visit: www.hm-treasury.gov.uk

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