Magazine article Public Finance

Curiouser and Curiouser

Magazine article Public Finance

Curiouser and Curiouser

Article excerpt

When are 'firm three-year plans' that 'provide a more stable foundation for managing public services' neither firm nor stable? Answer: when they are organised by the Treasury.

These quotes are taken from the very first Comprehensive Spending Review, published by the government in 1998. Last week it used almost identical terms to announce that public service spending totals for 2007 to 2008 - the third year of the current review period - would be adhered to.

So why did the government feel the need to announce that their 'firm' spending plans were still on track? What is going on? To understand, we need to go back to the beginning.

In 1998, Chancellor Gordon Brown conducted the CSR in complete secrecy. This delineated a three-year spending plan. The next Spending Review should have been published in July 2001. Instead, it appeared a full 12 months early.

Year three of the 1998 plan was scrapped. In its place came the first year of a new but egually 'firm' three-year plan for 2001 to 2004.

Why did this happen? The simple if somewhat cynical answer is that no-one had realised that a July 2001 Spending Review announcement would have taken place after the general election, pencilled in for May 2001. Labour's generous new spending plans would have offered little electioneering value after the event. Suddenly, in the Treasury's Alice in Wonderland-speak, 'firm three-year plans' became a 'three-year planning cycle reviewed every two years'.

One other small but significant change in wording: in 1998 we had a 'Comprehensive Spending Review'. Since then they have been relabelled as mere 'Spending Reviews'.

We are promised another CSR in 2007, offering a fundamental zero-based public spending evaluation. It would not be too outlandish to assume that after CSR 2007, the 'Comprehensive' will go out, though the Spending Review will remain.

Any speculation that the most recent shift - emphasising the current plan's 'firm' nature - has anything to do with politics, changes at the top or election cycles is obviously pure cynicism.

The next general election will be in 2009 or 2010. The next set of spending plans will be announced in July 2007 and - assuming they then revert to two-year cycles - July 2009. This would allow an election to be held in either autumn 2009 or spring 2010.

Now add this to the news that Brown wants to redefine the economic cycle, which has led critics to guestion whether or not the chancellor's self-imposed 'golden rule' has been broken. …

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