Osborne sets the stage for ‘once in a generation’ spending review
By Ian Dunt
George Osborne has published a framework laying out the groundwork for the “once-in-a-generation” spending review this autumn
The framework will demand that government departments submit their initial plans before the summer recess and demonstrate that they meet “tough” new criteria to deliver value for money.
It also confirms government plans to consult the private sector, the public, voluntary organisations and experts on all changes as part of a grand consultation repeatedly touted by senior government figures over the weekend.
Plans for a ‘star chamber’, where department heads must explain their plans to the chancellor, chief secretary to the Treasury Danny Alexander and senior Cabinet ministers, were also confirmed.
A newly-formed ‘spending review challenge group’ of experts from within government and from outside will act as “independent challengers”, while each secretary of state will be forced to appoint a minister specifically to ensure value for money.
The document confirmed that social security, tax credits and public service pensions would all be looked at closely in the spending review and that departments would replace Labour’s target-driven mechanisms with standard business plans.
Click here for the full spending review framework
“This is the great national challenge of our generation: after years of waste, debt and irresponsibility, to get Britain to live within its means,” Mr Osborne said.
“It is a time to rethink how government spends our money.
“We didn’t choose the terrible economic situation we inherited. But we can work to put it right, to deal with our debts, to set our country on a brighter economic course, and show that we are all in this together”.
During Treasury questions this afternoon the chancellor accused Labour of being “outside the international mainstream” on the timing of cuts.
The document followed a ‘fire-and-brimstone’ speech by David Cameron yesterday and a series of potentially ruinous developments in the economy this morning.
As if to substantiate Mr Osborne’s arguments, the International Monetary Fund (IMF) warned against “delayed or half-hearted” steps to deal with public spending in its annual review of euro area policies this morning.
IMF pressure eases Osborne’s task
Meanwhile, sterling plunged to a new low against the dollar and the euro when the Fitch ratings agency delivered a harsh verdict on the state of the British economy, branding the UK’s fiscal challenge “formidable”.
Sterling falls on rating agency warning
Yesterday, the prime minister delivered an alarming speech saying the deficit problem was worse than the government had feared, and highlighted the devastating level of interest repayments which could result from a prolonged period of inaction.
Cameron: Our economic problems are worse than we feared
Speaking in the debate on the Queen’s Speech, former chancellor Alistair Darling delivered an impassioned and forceful defence of Labour’s record in office.
“The reason our economy is growing now is because of the action we took in 2008 and 2009,” he told the Commons.
David Winnick, a Labour MP, gave an impassioned speech reminding the new chancellor why so many figures on the Labour benches were wary of a Tory cuts agenda.
“However dismissive the chancellor may be, those of us who were here from ’79 saw what the last Tory government did, saw only too clearly that the burden of the cuts that were carried out then were on those least able to bear it, and the rich and the prosperous did very well indeed,” he said.
“That’s why we are so sensitive about the people that we represent, and why we are so suspicious of what the chancellor is saying, no matter what sort of qualifications he makes.
“It’s our people, the people that sent us here on the Labour benches, who I’m afraid are going to suffer the worst of the burden.”
Mr Osborne also faced criticism from his own side, when former chancellor Nigel Lawson dismissed the consultation in an interview with Radio 4 as “essentially a PR ploy”.
But government sources insisted that the spending review would be a game-changing moment in the life of the coalition.
“Anyone who thinks the spending review is just about saving money is missing the point,” a Treasury official said.
“This is a once-in-a-generation opportunity to transform the way that government works.”
