Spending Review 2013

spending review 2013 Dominic Pendry

Overview

Director, Public Affairs

The Chancellor’s task to secure one final spending round agreement for 2015/16 has been a relatively straightforward affair, wrapped up in most parts several weeks ago. Determining just one year of spending – 2015/16 – the Coalition’s focus was simple enough: to agree the bare minimum the country needs to get across the finishing line of this Parliament, without tying either party into long-term commitments which might undermine their pitch to the electorate in 2015.

After several tough Budget settlements in a row, there is much to be said for the discipline shown as Ministers squeezed a further £11.5bn from the annual £740bn Government budget with barely a squeak. It undoubtedly helps that the Chancellor now has public opinion increasingly on his side in relation to deficit reduction, a shift

that led Labour to commit to match the Chancellor’s spending plans last week.

The Government has long since conceded defeat on its original target to remove the structural deficit within this Parliament, so the public will have to get used to austerity measures continuing in one form or another until at least 2018/19.

Osborne’s gamble is that the British public will warm to his theme of moving the country from ‘rescue to recovery’. Tomorrow’s flurry of announcements on investment in roads, railways, housing and energy will surely help. It remains to be seen whether this will be enough to convince the public the Government has a credible plan for growth to complement its plan for cuts.

Political Reaction George Osborne Chancellor of the Exchequer Step by step this reforming government is making sure that Britain lives within its means...as we make more progress towards an economy that prospers, a state that we can afford, a deficit coming down, and a Britain on the rise.

Ed Miliband Leader of the Labour Party Today’s Spending Review shows British people paying the price for government’s failure on growth, failure on living standards and failure on debt.

Nick Robinson BBC Political Editor Today’s Spending Review is a reminder that Plan A is well off course.

John Cridland Director-General, CBI

We need quick and decisive action on the big decisions that will move projects from blueprints to building

George Eaton Editor, New Statesman’s Staggers Blog

The Chancellor’s decision to set out plans for 2015-16 nearly two years in advance has everything to do with politics and nothing to do with economics.

Queen’s Speech 2013 Spending Review 2013

TheBills Headlines Headline Departmental cuts for 2015-16

£11.5bn Allocated capital spending in 2015-16

£50bn Average cuts per department

8.5% Biggest losers

10% cuts

10% cuts

Department for Communities and Local Government

Ministry of Justice

Ringfenced budgets

NHS, schools and international aid

Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | www.edelmaneditions.com Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk

Sector Perspectives Local Authorities Sarah Richardson

Infrastructure & Energy Rob Jeffery Summary

Summary

In an attempt to offset the latest round of Departmental cuts, the Chancellor has today outlined capital spending priorities and total capital spending commitments for infrastructure projects for the next five years.

Further detail on the £100bn worth of projects that will be funded through these capital spending plans will be revealed by the Chief Secretary tomorrow, although Osborne did give the green light to a major road building programme, £3bn capital spending on housing and initial seed funding for Crossrail 2. He also hailed investment in renewable energy projects, shale gas exploration and new nuclear, despite delays with EDF’s Hinkley Point.

However it wasn’t all good news. Lord Heseltine’s Local Growth Fund, originally mooted to be as much as £50bn, was confirmed instead at £2bn p/a. Additionally, DECC’s budget was cut by 8% and DEFRA, who were battered in the last spending review, saw their budget cut by a further 10% despite commitments for new flood defences.

Nevertheless, this renewed focus on infrastructure will be welcomed by an industry in desperate need of long term certainty. The devil will be in the detail tomorrow as the Government tries to convince sceptical business leaders that rhetoric will be met with action.

Local government’s response to reductions in its central government grant proves that necessity is the mother of invention. Having taken a hit of around 10%-15% in 2011-12 and 2012-13, today’s further 10% will come as no surprise.

Smarter councils have already realised that the future of local government is reliant on restructuring, shared services and senior leadership, pooled resources and joint procurement. Salami slicing front line services will simply not deliver what is needed. Rather, councils must address expectations around their role, including ceasing to operate in some areas, and invest in early intervention (such as The Troubled Families initiative, which offers the scope to save billions). Of course, budgets have been squeezed hard already and Ministers are worried about the effects of further reductions on vital social care services.

And yet there are growing whispers that these straitened times have actually improved services. In fact, residents satisfaction with council services has increased, during a period of spending cuts. And council chief executives, often maligned for their own six-figure salaries, have found the impact neutral or positive. Better organised and offering not just cheaper but better services: that is the future of local government.

Creative Industries Anthony Marlowe

Health & Social Care Camilla Horwood Summary

The intention to ring-fence the NHS budget until 2015-16 was common knowledge but this spending round sees changes to the distribution of funding for health and social care allocated to local authorities. Since the last CSR in 2010, rising sums have been paid by Department of Health to local authorities to facilitate joint working and the closer integration of NHS and social care services.

For this period local authorities had to seek approval from clinical commissioning groups on their spending but Ministers have been working on a different approach for 2015-16 onwards. This will see both councils and health commissioners being given the role of approving spending, together with Health and Wellbeing Boards being given control of more than £1bn of funding transferred from the Department of Health budget.

The measures will address a significant imbalance in the allocation of funding and also expand the use of ‘whole place’ or ‘community budgets’. These are seen by the Treasury as an effective vehicle to pool public service budgets around people, families and communities. This theoretically allows for savings from improved efficiency and the ability to improve health outcomes while also improving value for public money.

Queen’s Speech 2013

Summary

The Department for Culture, Media & Sport, alongside the majority of the creative industries community in the UK, will largely let out a sigh of relief after hearing today’s news. Yes, the 7% cut in the Department’s budget will impact a number of organisations which rely on public funding, but the reality today could have been much worse. Only a few months ago, the Secretary of State, Maria Miller MP, let out a rallying cry to the sector to demonstrate its value to the Government. Its response, combined with Miller’s strong defence of her Department, has led to a funding cut which many will see as a victory, if not a complete triumph.

However, there continues to be speculation about the future of DCMS itself. Its two most significant projects - the Olympic and Paralympic Games’ legacy programme and roll out of broadband - are well underway. A question mark remains, therefore, about the need for the Department to exist in its current form, or whether the best value for money is ultimately transferring its responsibilities across other central Government departments.

Edelman | Southside | 105 Victoria Street | SW1E 6QT London | www.edelman.co.uk | www.edelmaneditions.com