Geeky Gripes About the Autumn Statement. (#SR2013)


George Osborne delivered his Autumn Statement today to general critical declaim.

Let me begin with a rather geeky gripe about the Autumn Statement. It was a mini-Budget, indeed a mini-Spending Review, rather than an Autumn Statement. In this George Osborne has gone one up on his predecessor, Alistair Darling, who has famously said he delivered 6 Budgets in his 3 years as Chancellor (in his book ‘Back from the Brink’).

Let me explain. When Gordon Brown reformed the way Government makes it’s big spending decisions back in 1997/98, he created a three-tier system:

July (every other year): At the top sat Spending Reviews (SR) – the big change here was that these were going to be multi-year fixed spending plans for all Government departments. Originally they were going to be 3 year plans (when the first one was published in July 1998) but then in practice they became “3 year plans revised every 2 years” (2000; 2002; 2004; and 2007*). This was meant to replace the dreaded “annularity” of a yearly spending round.

(* Yes, 2004 and 2007 SRs ended up running for the full three years)

March every year: Next came the actual Budgets, every March, that would implement the Spending Review plans, as well as making changes to taxation.

October (every year): And before every Budget there would be a Pre-Budget Report (PBR or Autumn Statement) that set out the state of the nations economy and public finances. In ordinary Budget years this would not set out any changes to public spending (they had been decided in the preceding SR) but might outline broad tax changes (usually for consultation before implementation in the following Budget).

In the year before a Spending Review was due (e.g. this year) the PBR/Autumn Statement would also set out the macro-public spending envelope for the SR – the total amount the Government was going to spend for the next 2/3 years.

Still with me? So, if George Osborne was sticking to this system what we could have expected today was the parameters for next year’s Spending Review – how much would it commit and over what period (2, 3 or 4 years) – and not any Departmental detail.

Instead what we’ve had is an ill-disciplined mixture of spending plans over 2, 3 and 5 years, with some detail about Departmental spending and others waiting for the Spending Review 2013. It is frankly a procedural mess. Does it matter? Yes, because what the Chancellor claims to want to do is reassure “the markets” and others that we have a clear deficit reduction plan – today’s announcements were as clear as proverbial mud.

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About Prof. Colin Talbot

Professor of Government (Emeritus). Universities of Cambridge and Manchester, England.
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