Spending Review (United Kingdom)
Encyclopedia
A Spending Review or occasionally Comprehensive Spending Review is a governmental process in the United Kingdom
carried out by HM Treasury
to set firm aditure limits and, through public service agreements, define the key improvements that the public can expect from these resources.
Spending Reviews typically focus upon one or several aspects of public spending while Comprehensive Spending Reviews focus upon each government department's spending requirements from a zero base (i.e. without reference to past plans or, initially, current expenditure). The latter are named after the year in which they are announced – thus CSR07 (completed in October 2007) applies to financial years 2008–2011.
Other developed countries have similar review processes, e.g. Canada
, New Zealand
, Italy
, and France
. France conducted its first comprehensive spending review
(called in French "la Revue Générale des Politiques Publiques") in 2008.
. This review was driven by a desire to reduce government spending in order to cut the budget deficit
.
Chancellor of the Exchequer
George Osborne
announced the details of the spending review on 20 October 2010. The cuts have been described as the biggest since World War II. The review will lead to an £81 billion cut in public spending in the remaining four years of the parliament, with average departmental cuts of 19%. In addition major changes in welfare were announced including £7 billion of extra welfare cuts, changes to incapacity benefit, housing benefit and tax credits and a rise in the state pension age to 66 from 2020. Public sector employees will face a £3.5 billion increase in public pension contributions.
The Home Office
faces cuts of 25%, local councils will face a yearly 7% cut in funding from central government each year until 2014. The Ministry of Defence
will face cuts of around 8%. In addition many other public sector bodies will face cuts to their funding. Although not part of government the BBC had its licence fee frozen for 6 years and will take on the funding of the BBC World Service
, BBC Monitoring
and S4C
.
The Office for Budget Responsibility
predicts that the spending review will lead to a loss of about 490,000 public sector jobs by 2015.
The NHS
will see a 0.4% increase in spending in real terms over the following 4 years.
A £200 million payment was announced to compensate savers in the collapsed savings society Presbyterian Mutual
.
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
carried out by HM Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...
to set firm aditure limits and, through public service agreements, define the key improvements that the public can expect from these resources.
Spending Reviews typically focus upon one or several aspects of public spending while Comprehensive Spending Reviews focus upon each government department's spending requirements from a zero base (i.e. without reference to past plans or, initially, current expenditure). The latter are named after the year in which they are announced – thus CSR07 (completed in October 2007) applies to financial years 2008–2011.
Other developed countries have similar review processes, e.g. Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
, Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
, and France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
. France conducted its first comprehensive spending review
French General Review of Public Policies
The French General Review of Public Policies , in French "Révision générale des politiques publiques", aims at reducing public spending while increasing the efficiency and quality of public action. It was launched by the Fillon Government in July 2007...
(called in French "la Revue Générale des Politiques Publiques") in 2008.
2007 Comprehensive Spending Review
The UK's 2007 Comprehensive Spending Review included three significant changes. The first was that it represented the first test of the capacity of the Spending Review process to plan and deliver a discretionary fiscal consolidation in the UK. The previous four Spending Reviews took place during a period of steady public growth in the economy from 37% in 1999–00 to 42% by 2007–08. As both the UK’s then fiscal rules (the Golden rule and the sustainable investment rule) began to bite, the UK government desired to halve the real rate of growth in public spending from 4% per annum over the last decade to 2% per annum over the next three years – a 0.5% below than the trend rate of growth of the economy. A second noteworthy development in the 2007 CSR was a marked extension in the certainty that the UK system now provides to managers about their future budgets. Finally, CSR07 saw the UK’s public service 110 largely departmental-based Public Service Agreements consolidated into 30 inter-departmental agreements.2010 Spending Review
A spending review for the years 2011/12 through to 2014/15 was announced by the coalition governmentUnited Kingdom coalition government (2010–present)
The ConservativeLiberal Democrat coalition is the present Government of the United Kingdom, formed after the 2010 general election. The Conservative Party and the Liberal Democrats entered into discussions which culminated in the 2010 coalition agreement, setting out a programme for government...
. This review was driven by a desire to reduce government spending in order to cut the budget deficit
Deficit spending
Deficit spending is the amount by which a government, private company, or individual's spending exceeds income over a particular period of time, also called simply "deficit," or "budget deficit," the opposite of budget surplus....
.
Chancellor of the Exchequer
Chancellor of the Exchequer
The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...
George Osborne
George Osborne
George Gideon Oliver Osborne, MP is a British Conservative politician. He is the Chancellor of the Exchequer of the United Kingdom, a role to which he was appointed in May 2010, and has been the Member of Parliament for Tatton since 2001.Osborne is part of the old Anglo-Irish aristocracy, known in...
announced the details of the spending review on 20 October 2010. The cuts have been described as the biggest since World War II. The review will lead to an £81 billion cut in public spending in the remaining four years of the parliament, with average departmental cuts of 19%. In addition major changes in welfare were announced including £7 billion of extra welfare cuts, changes to incapacity benefit, housing benefit and tax credits and a rise in the state pension age to 66 from 2020. Public sector employees will face a £3.5 billion increase in public pension contributions.
The Home Office
Home Office
The Home Office is the United Kingdom government department responsible for immigration control, security, and order. As such it is responsible for the police, UK Border Agency, and the Security Service . It is also in charge of government policy on security-related issues such as drugs,...
faces cuts of 25%, local councils will face a yearly 7% cut in funding from central government each year until 2014. The Ministry of Defence
Ministry of Defence (United Kingdom)
The Ministry of Defence is the United Kingdom government department responsible for implementation of government defence policy and is the headquarters of the British Armed Forces....
will face cuts of around 8%. In addition many other public sector bodies will face cuts to their funding. Although not part of government the BBC had its licence fee frozen for 6 years and will take on the funding of the BBC World Service
BBC World Service
The BBC World Service is the world's largest international broadcaster, broadcasting in 27 languages to many parts of the world via analogue and digital shortwave, internet streaming and podcasting, satellite, FM and MW relays...
, BBC Monitoring
BBC Monitoring
BBC Monitoring is a division of the British Broadcasting Corporation which monitors, and reports on, mass media worldwide. Based at Caversham Park in Caversham, Reading in southern England, it has a number of overseas bureaux including Moscow, Nairobi, Kiev, Baku, Tashkent, Cairo, Tbilisi, Yerevan...
and S4C
S4C
S4C , currently branded as S4/C, is a Welsh television channel broadcast from the capital, Cardiff. The first television channel to be aimed specifically at a Welsh-speaking audience, it is the fifth oldest British television channel .The channel - initially broadcast on...
.
The Office for Budget Responsibility
Office for Budget Responsibility
The Office for Budget Responsibility provides independent economic forecasts as background to the preparation of the UK budget. It was formally created in May 2010 following the general election, although it had previously been constituted in shadow form by the Conservative party opposition in...
predicts that the spending review will lead to a loss of about 490,000 public sector jobs by 2015.
The NHS
National Health Service
The National Health Service is the shared name of three of the four publicly funded healthcare systems in the United Kingdom. They provide a comprehensive range of health services, the vast majority of which are free at the point of use to residents of the United Kingdom...
will see a 0.4% increase in spending in real terms over the following 4 years.
A £200 million payment was announced to compensate savers in the collapsed savings society Presbyterian Mutual
Presbyterian Mutual
ThePresbyterian Mutual Society, also known as Presbyterian Mutual is a Belfast based mutual society with around 9.500 investors, most of whom are members of the Presbyterian Church in Ireland....
.
External links
- Justin Tyson Implementing a 'Spending Review' -- Italy Seeks to Improve the Quality of Public Expenditure International Monetary Fund, 12 November 2007
- Richard Hughes United Kingdom Concludes Its Fifth Multi-Annual Spending Round International Monetary Fund, 5 May 2008
- HM Treasury - Spending Review 2010
- Guardian Special Report - Spending Review 2010
- 2004 Spending Review