Winners tough to pick in government Spending Review

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Wednesday, 24 April 2013

It’s a tense time for our political leaders as their departments' budgets are reassessed. Is it just a case of limiting the degree to which they lose?

Portcullis with Jon Bennett

There’s no process better designed to ride roughshod across notions of collegiate Government than the Spending Review. Erstwhile political allies smile sweetly across the Cabinet table while briefing the press on the outrageous waste of their colleagues’ departments. Hostilities that bubble beneath the surface of the Coalition explode into the open as ministers seek to defend their own and their parties’ interests.  And the relationship between civil servants and their political masters is severely tested.

The tricky thing about this Whitehall game is knowing what constitutes a win. Essentially, there are two strategies:

First is the zealot strategy. Eric Pickles came to the Spending Review table in 2010 with a passionate ideological desire to cut spending. He served up his Communities and Local Government (CLG) department on a plate, with cuts of 68% to the core budget and cuts to local authority budgets of more than 28%. The prize for this approach is a place in the Star Chamber, where those ministers who reach a settlement with the Treasury early can sit in judgement on the budgets of their colleagues. But the prize can be bittersweet. CLG’s capitulation to the Treasury is no free pass for future cuts. The autumn statement of 2012 confirmed that local government funding is set to fall by an extra 2% (£445m) in 2014-15. And Pickles’ local authority colleagues are furious with their supposed champion’s lack of support for them in Whitehall.

The second strategy is to be the staunch defender of a public service under siege – the approach apparently favoured by Philip Hammond at Defence and Vince Cable at BIS. This line accepts the old political reality that money is power. If you lose money, then you lose your power, influence, departmental respect and services. Planning Minister Nick Boles has been quoted on the amusing inconsistencies of this position as far as his colleagues in the Conservative party are concerns, saying, that they are “in favour of all spending cuts in general and none specifically.”

Previous Spending Review winners will face a tougher task this year than in 2010. The Treasury is already framing a narrative to justify hits on some previously protected sectors. University research was one of the winners in the last spending review, with its budget ring-fenced and frozen in cash-terms. Thanks to this, Universities Minister David Willets won the admiration of many in the academic community. But he may win fewer friends this time around. Treasury officials have reportedly labelled universities as “awash with cash”, and well-briefed press coverage this week has pointed to the unsustainability of student loan subsidies. If those ideas gain momentum it would be easier for the Treasury to call time on the protection afforded to parts of the higher education budget.

In such a tough environment, it doesn’t look like a game with any winners at all. So it’s the degree to which you lose that’s all important.