The constitutional shenanigans of the last few days, stemming from Boris Johnson’s determination to avoid parliamentary scrutiny of his Brexit strategy, have overshadowed scrutiny of last week’s Spending Review (SR) announcement.
The SR is meant to set firm expenditure limits for government departments and to state clearly what we should get for that spending. Introduced in 1998, and taking place every 2-4 years, the last one was in 2015. The government had announced that there would be a three-year SR before the summer but have been shuffling their feet ever since.
Let’s be clear. What we got last week was a pre-election stunt, not a serious SR. It was all about the Conservatives trying to get good news headlines.
We should have been having a three-year Spending Review after we had received updated economic reports and forecasts from the Office for Budget Responsibility (OBR). Instead, there were no OBR reports and we got a one-year SR.
Given what has happened to the UK economy since the last OBR report, it would have been likely that the Chancellor would have had less room for manoeuvre if he was to keep within his own fiscal rules. Whatever, he nearly ‘maxed the card’, as all his announced national additional expenditure is to be funded by increased borrowing and not by increased income. So much for ‘cutting the debt’.
Meanwhile, at local level, increased expenditure on adult social care and police is to be funded by increased council taxes and additional precepts. When the Chancellor announced the amount of extra money going to pay for extra police officers and extra care for the elderly, he assumed that every council in England would increase council tax and special precepts to the maximum amount allowed. Effectively, the government now sets every council’s council tax level, its police and adult social care precepts, and the business rates.
The total additional expenditure announced – £13.8bn – is less than a third of the cuts that have been announced since 2010, some £47bn. Many of those cuts are still unwinding locally, so any increase in resources is going to be from a new reduced base.
For example, many schools have still to reflect their real terms reductions in resources in their spending plans. To date, they have been paying some teachers and teaching assistants from their reserves. Increased resources may allow them not to sack teachers (more usually, not fill vacancies when teachers leave), but it won’t allow them to replace the teachers they have already lost.
For example, the additional funds for ‘more police officers’ isn’t sufficient to take the numbers back up to where they were in 2010. In any event, when we read the small print, this additional spending is not just for local policing but is also to fund some national projects. Take my word for it; there will not be the claimed additional 20,000 police officers. The best estimate is 13,000 nationally, well below the numbers when the Conservatives took office in 2010.
Despite the sticking plaster in the face of gaping wounds, adult social care is still facing a £2.6bn gap this year. Breaking promise after promise, the government has now ‘deferred’ the publication of a green paper on 8 occasions. This is all to do with political cowardice as, just as there are huge shifts in the Conservative Party on Brexit, there are similar differences on funding adult social care for the decades to come.
The next observation is that the total additional expenditure announced – £13.8bn – is not all ‘new money’. For example, more than half of the £1.8bn for the NHS is already in the bank accounts of local NHS Trusts. They have been saving it up to fund local building renewal and big maintenance projects. All that has happened is that the government is now going to allow them to spend it. Even so, it is far below the £6bn maintenance backlog which has built up since the cuts from 2010.
Of course, the extra £400m for Further Education and 16-19 education is welcome, but it is just one eighth of the cuts that have been made. The Institute for Fiscal Studies (IFS) reports that spending on further education and skills has fallen by £3.3 billion in real terms between 2010-11 and 2017-18, leaving our valuable further education sector severely underfunded at the very time we need to be increasing skills to support economic renewal and change.
Similarly, the extra expenditure on Special Educational Needs (SENDS) is less than half of the already identified gap between existing income and expenditure which councils are currently funding by stopping expenditure on SureStart, libraries, parks and highway maintenance.
And, don’t lets forget that the Chancellor was silent about social security where half of the already announced cuts are still to be implemented.
In the cold light of day, Boris Johnson and Sajid Javid have handed out a half-emptied box of sticking plasters with smiley faces which are simply not up to the job of supporting a transition to the operating theatre, let alone providing the route to a healthy, sustainable policy of economic, social and environmental renewal.