The Chancellor of
the Exchequer George Osborne and Chief Secretary to the Treasury
Danny Alexander today announced details of how the next Spending
Review (SR) will be conducted. The SR, due to conclude in the
Autumn, will set spending limits for every Government department
for the period 2011-12 to 2014-15.
The timetable for the review, the process and guiding principles
that will underpin the Government’s approach to setting spending
limits are set out in the Spending Review Framework presented to
Parliament today.
The Spending Review Framework sets out how the SR
will:
• require departments to submit their initial plans to deliver
their priorities before the Summer Recess and demonstrate that
they meet a tough new set of criteria to deliver value for money.
The criteria cover questions such as: is the activity being funded
essential to the Government’s priorities, does the Government need
to fund the activity, and can it be provided more efficiently?
• start a period of external engagement between the Government
and all parts of society including; the private sector, the
general public, voluntary/charitable organisations and experts, in
order to obtain the best ideas from those most involved in and
affected by public services
• establish a new Star Chamber chaired by the Chancellor and
Chief Secretary and drawing on the expertise of other senior
Cabinet Ministers to ensure that the Government challenges every
department’s spending plans to ensure that they deliver more for
less. Other Cabinet Ministers will be considered to join the
group, once they have settled their department’s budget.
• seek input from the brightest and best individuals in this SR
by establishing a Spending Review Challenge Group of experts –
both from within Government and outside – to act as independent
challengers and champions for departments throughout the process.
Their remit will be to think innovatively about the options for
reducing public expenditure while balancing priorities.
• require each Secretary of State to appoint a Minister with
specific responsibility for driving value for money across their
department, identifying savings opportunities and playing an
important role in challenging spending in all areas, including on
contracts and programmes.
• comprehensively examine areas such as: social security, tax
credits and public service pensions as part of the process
• end the previous administration’s complex system of Public
Service Agreements that relied too heavily on rigid targets and
instead ask departments to publish business plans that show the
resources they need to put in place in order to protect key
frontline services and deliver on their objectives.
Tough decisions need to be taken in order to reduce the
unprecedented deficit. The Government is committed to achieving
the bulk of this through reductions in Government spending, rather
than tax increases, while protecting the quality of key frontline services.
This SR is not just about cutting spending and setting budgets.
It will be a complete re-evaluation of the Government’s role in
providing public services. The SR will look at what services the
Government should be providing and how to get more for less.
Chancellor of the Exchequer George Osborne:
"This is the great national challenge of our generation:
after years of waste, debt and irresponsibility, to get Britain to
live within its means. 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".
Notes for Editors
The Spending Review Framework can be found on the HM Treasury
website:
http://www.hm-treasury.gov.uk/spend_index.htm
1. Last year, Public Sector Net Borrowing was the largest in
Britain's peacetime history. The March Budget forecast
the UK deficit to be 11 percent of GDP this year. According to the
IMF, the UK has the highest deficit in the G7 and G20.
2. The Government has made clear that the bulk of the reductions
in the current structural deficit will be achieved through
reductions in spending.
3. On 24 May the Chancellor set out how the Government will
reduce spending this year by £6¼ billion by cutting waste. This
was the first step on the road towards restoring good management
of Britain’s public finances.
4. Even tougher decisions will be required at the Spending
Review. The Spending Review will set out the Government’s spending
plans for the next Parliament, setting departmental budgets for
the years 2011-12 to 2014-15.
5. In the Budget, the Government will set out the overall path it
will pursue for the public finances, against which the OBR will
judge its fiscal policy. This will include setting the path for
expenditure in the next SR period, which will give a clear sense
of the scale of the challenge.
6. To ensure that the SR looks comprehensively across the whole
of Government expenditure, it will also cover significant elements
of Annually Managed Expenditure, where the risk is taken by the
Exchequer as a whole, including social security, tax credits and
public service pensions, setting out plans for savings and reform
in these areas.
7. To ensure that resources are prioritised within tighter
budgets, departments will be asked to prioritise their main
programmes against a tough set of criteria to ensure value for
money in public spending. The criteria:
• Is the activity essential to meet Government priorities?
•
Does the Government need to fund this activity?
• Does the
activity provide substantial economic value?
• Can the
activity be targeted to those most in need?
• How can the
activity be provided at lower cost?
• How can the activity be
provided more effectively?
• Can the activity be provided by a
non-state provider or by citizens, wholly, or in
partnership?
• Can non-state providers be paid to carry out
the activity according to the results they achieve?
• Can
local bodies, as opposed to central Government, provide the activity?
8. The Government is determined to take decisions in a way that
is in line with its values of freedom, fairness and
responsibility. Therefore the Government will:
• Deliver its guarantee that health spending will increase in
real terms in each year of the Parliament, and that 0.7 per cent
of GNI with be spent on overseas aid by 2013;
• Limit, as far
as possible, the impact of reductions in spending on the poorest
and most vulnerable in society, and on those regions heavily
dependent on the public sector
• Protect, as far as possible,
the spending that generates high economic returns
• Make
further savings to fund the priorities set out in its programme
9. To lead collective decision-making in Government on spending,
the Prime Minister has appointed a Committee of senior Cabinet
Ministers - the Public Expenditure Committee (PEX/Star Chamber).
Chaired by the Chancellor of the Exchequer and supported by the
Chief Secretary, the PEX Committee will advise the Cabinet on the
high-level decisions that will need to be taken in the Spending
Review. The membership of the Committee will be:
• Chancellor of the Exchequer (Chair) – The Rt Hon George
Osborne MP
• Chief Secretary to the Treasury (Deputy Chair) –
The Rt Hon Danny Alexander MP
• Foreign Secretary – The Rt Hon
William Hague MP
• Minister for the Cabinet Office and
Paymaster General – The Rt Hon Francis Maude MP
• Minister of
State at the Cabinet Office – The Rt Hon Oliver Letwin MP
10. The Government will require the input of the brightest and
best individuals to achieve the optimal outcome in this Spending
Review. Therefore, it will form a Spending Review Challenge Group
of experts – both from within Government and outside – to act as
independent challengers and champions for departments throughout
the process. Their remit will be to think innovatively about the
options for reducing public expenditure and balancing priorities
to minimise the impact on public services.
11. The Government is determined that this Spending Review
process will be open, responsible and fair and conducted in a way
that protects the poorest and most vulnerable in our society. Over
the next few weeks, the Government will begin a process to engage
and involve the whole country in the difficult decisions that will
have to be taken.
12. The Government is committed to greater transparency to enable
the public to hold politicians and public bodies to account, and
will build on the actions it has already taken to publish raw
public spending data from the Combined Online Information System
(COINS). It will publish more user-friendly subsets of COINS data
by August 2010, and has committed to publishing online all new
items of central Government spending over £25,000 from November
2010.
13. The Government will also organise a series of events over the
summer to discuss and debate various aspects of public spending.
The line-up of events will incorporate many of the key areas that
need to be considered as part of the overall SR process. A range
of people will be invited to these events, to make sure that they
represent a wide spectrum of expertise and viewpoints. Invitees
will include members of think tanks and interested groups,
academics, representatives of local government, business and trade
unions, and public sector experts and watchdogs such as the Audit Commission.
Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to
public.enquiries@hmtreasury.gsi.gov.uk
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