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| Spending review (United Kingdom) | |
|---|---|
| Name | Spending review (United Kingdom) |
| Country | United Kingdom |
Spending review (United Kingdom) The Spending review (United Kingdom) is a periodic fiscal exercise where the Chancellor of the Exchequer sets departmental expenditure limits through negotiations with Treasury officials and ministers from departments such as the Home Office, Ministry of Defence, and Department for Education. It determines resource and capital allocations that affect entities including the Bank of England, National Health Service England, and devolved administrations like the Scottish Government and Welsh Government, and interacts with institutions such as the Office for Budget Responsibility and HM Revenue and Customs.
The Spending review evolved from Treasury planning processes dating to precedents set under Chancellors such as Nigel Lawson and Gordon Brown, formalising multi-year departmental settlements used alongside annual statements like the Budget (United Kingdom) and the Autumn Statement (United Kingdom). Its purpose is to translate fiscal strategy announced by the Chancellor in venues such as 10 Downing Street and the House of Commons into resource limits for departments such as the Ministry of Defence, Department of Health and Social Care, and Department for Transport. The review aligns public expenditure with frameworks used by organisations like the Office for National Statistics and mechanisms reviewed by select committees such as the Public Accounts Committee.
The process is led by the HM Treasury and involves officials from departments including the Home Office, Foreign, Commonwealth and Development Office, and the Department for Education, with analytic input from the Office for Budget Responsibility and the Institute for Fiscal Studies. Timetables have varied: multi-year spending reviews under Gordon Brown and George Osborne set three- to four-year cycles, while emergency reviews during crises like the 2008 financial crisis and the COVID-19 pandemic prompted out-of-cycle settlements. Negotiations culminate in a statement delivered in the House of Commons by the Chancellor and published alongside documents used by agencies such as Her Majesty's Revenue and Customs and auditors like the National Audit Office.
Notable reviews include the multi-year settlements under Gordon Brown in the late 1990s, the 2010 Comprehensive Spending Review following the 2010 United Kingdom general election, and the 2020 Spending Review during the tenure of Rishi Sunak as Chancellor in response to the COVID-19 pandemic. Outcomes have affected institutions and programmes such as the National Health Service, British Armed Forces, Universal Credit implementation by the Department for Work and Pensions, and capital projects like High Speed 2 and rail infrastructure overseen by the Department for Transport and Network Rail. Settlements have also shaped funding for devolved bodies including the Scottish Government and Northern Ireland Executive.
Spending reviews operate within fiscal rules set by Chancellors and informed by fiscal watchdogs like the Office for Budget Responsibility and political bodies such as the Financial Secretary to the Treasury. Rules have included targets for public sector net debt and deficit reduction advocated by figures like George Osborne and debated by economists at the Institute for Fiscal Studies and universities such as London School of Economics. Constraints are influenced by external events tied to entities like the International Monetary Fund and agreements such as those involving the European Union prior to Brexit.
Allocations from spending reviews determine budgets for departments including the Ministry of Defence, Department for Education, Department of Health and Social Care, and Home Office, affecting frontline services in hospitals run by NHS England, policing by Metropolitan Police Service, and welfare administration by the Department for Work and Pensions. Reviews have led to reorganisations within bodies like the Civil Service and funding changes for projects managed by Local Government Association members and combined authorities such as the Greater London Authority.
Debates around spending reviews involve political actors including party leaders such as Margaret Thatcher, Tony Blair, David Cameron, and Keir Starmer in broader discussions about austerity policies, public investment promoted by think tanks like the Resolution Foundation, and macroeconomic policy stances debated in venues such as the House of Commons Treasury Committee. Economic commentators from institutions like the Institute for Fiscal Studies and the National Institute of Economic and Social Research have assessed reviews’ impacts alongside market reactions involving the Bank of England and credit agencies.
Criticisms have been levelled by MPs on the Public Accounts Committee and commentators at the Institute for Fiscal Studies regarding short-termism, opaque departmental ring-fencing, and the effects of cuts on services like the National Health Service and policing by the Metropolitan Police Service. Reforms proposed by figures such as former Chancellors and analysts from the Joseph Rowntree Foundation and Resolution Foundation include multi-year binding settlements, improved scrutiny by bodies like the National Audit Office, and strengthened forecasting from the Office for Budget Responsibility to address transparency and planning concerns.
Category:Public finance of the United Kingdom