The Government plans much of its spending in a series of Spending Reviews. Since their introduction in 1998, they have taken place every two to four years. Each one sets out the long-term spending limits for all Government departments (or at least those that can reasonably be planned in advance). They typically cover the next three or four years. As we are now coming to the end of the period planned by the 2015 Spending Review, a new one was expected.
This Insight will look at the reasons we have not yet seen a new Spending Review and what MPs can do to influence spending decisions.
What was supposed to happen?
Spending Reviews aren’t a legal requirement, but they are very much a normal part of the landscape when it comes to the Government’s financial planning. Departments rely on the reviews to tell them how much money they will have in the coming years, in order to do their own long-term planning.
Although there is no fixed format for Spending Reviews, they have typically consisted of discussions between departments and the Treasury. Each department bids for the amount of funding it needs; these are then negotiated to form agreed settlements, which are then announced publicly.
In the Spring Statement in March, Chancellor Philip Hammond said he intended to “launch a full three-year Spending Review before the summer recess, to be concluded alongside an Autumn Budget.” However, he added the caveat that this would only be the case “assuming a Brexit deal is agreed over the next few weeks.”
What actually did happen?
Most people reading this will be well aware that despite several attempts by the Government, a Brexit deal has not yet been agreed by Parliament. As recently as 15 May, the Treasury was still holding to its original plan; however, Prime Minister Theresa May then announced on 24 May that she would resign as Conservative leader on 7 June, triggering a leadership contest.
As Spending Reviews are driven by the priorities of ministers far more than by fixed processes or conventions, and because a new leader would probably bring in their own leadership team and have their own spending priorities, it now seems likely that the Chancellor’s plan will have to change.
Giving evidence to the House of Lords Economic Affairs Committee on 4 June, Chief Secretary to the Treasury Liz Truss confirmed this. She said that although conversations between the departments and the Treasury had already begun, it was now unlikely that the Spending Review would follow the original schedule. While she did not set out a new schedule, she did say: “we will need to set revenue budgets for 2020,” implying that a single year’s worth of budgets could be set instead of the usual four or five.
What can MPs do?
Parliament has no formal role in the Spending Review, but individual MPs can get in touch with the Treasury to make suggestions about how spending should be allocated. In her evidence before the Procedure Committee in March, Liz Truss said she was, “very keen that we make sure the Spending Review reflects the priorities of the public,”, and to do so she was “very happy to take representations from MPs…in terms of priorities.”
MPs can also talk to the various departments which will be making the bids to the Treasury. Because Parliament cannot itself propose any new spending, or increase the amounts that the Government proposes, directly talking to the people who set the budgets is the only way for MPs to get more money for their areas of concern.
Spending Review 2015: the future of overseas aid, House of Commons Library.
Philip Brien is a Senior Library Clerk at the House of Commons Library, specialising in public spending.