When the Coalition Government published its Spending Review in 2010 it ambitiously set out spending plans not for 3 years, as had been the case in the 5 previous Spending Reviews under New Labour, but for 4 years. This was always “ambitious Minister”, as Sir Humphrey would say.
(NB – note to Editors and journo’s: there have been two “Comprehensive” Spending Reviews – in 1998 and 2007. All the others, including the 2010 one, have just been called “Spending Reviews”. So please stop calling 2010 a Comprehensive Spending Review – maybe it was in practice, but that is not what’s written on the cover.)
Sorry about that diversion – where were we? Are yes, SR2013, or will it be SR2104, or maybe no SR at all?
If the fixed four year spending plans covering the fiscal years from 2011-12 to 2014-15 were actually meant to be stuck to then the Government has no need to publish another Spending Review until sometime between July and October 2014, for implementation from 1st April 2015 (just before the putative date for a General Election).
New Labour found sticking to three-year plans difficult – hence we had Spending Reviews in 2000 and not 2001 and so on. Only SR2004 and CSR2007 lasted the full three years, for reasons no-one in government, at the time, was willing to spell out (Alistair Darling does offer some idea why in his “Back from the Brink”).
And that was in the (mostly) good and stable times. The idea that the Coalition in bad and unstable times could stick to four years was always a bit fanciful. As it turns out the economic and fiscal premises on which their SR2010 was based have been shot to hell.
My initial hunch was they would be forced to ‘refine’ their Spending Plans as early as July-October 2012, but at the time there was so much talk about the need for “Plan B” that it would have looked like that was what they were doing. Instead, Ministers started letting it be known there would be a new SR, but in 2013. Nothing official of course, heaven forbid our rulers would actually tell us how they intend to rule us.
Now rumours abound that it will be 2014, or maybe not at all. As the decision about resourcing Social Care got deferred to the Spending Review this week, the stakes ratcheted up another notch. Last night on Newsnight their Political Editor Allegra Stratton announced she was now being told it was being pushed back as far as possible and she implied it could well be the point at which the Coalition split before the Election.
So the Spending Review is fast becoming something the Coalition government cannot live with and cannot live without.
It cannot live with it because there are some very hard choices to be made which do not divide Ministers, yet, on purely Party lines (as I wrote earlier) but as the Election and ‘divorce’ get nearer they surely will become more and more Party political. There is a very real danger that a Spending Review in 2013 will bring forward the divorce earlier than either Party want it to happen. At the very least, it will make the shambolic leaking in the run-up to Budget 2012 look small beer by comparison to the torrent of briefing and counter-briefing that could drag on for months or even more than a year (i.e from now until SR2013 in October next year).
On the other hand there is no way the Government cannot make substantial adjustments to its spending plans fairly soon, given both the short-term bleak economic situation and the emerging debate about long-term trends (see the Office of Budget Responsibility and Institute for Fiscal Studies reports this week). They simply have to do something, and indeed already have made many changes to their plans since October 2010. True, they haven’t adjusted the overall spending envelope very much, but they have made lots of small re-arrangements of the deck-chairs.
I have no idea how this will unfold, but what is becoming clear is that the Spending Review may, perhaps unexpectedly, turn out to be the rock on which the Coalition founders.