George Osborne

The Spending Review pickle

Do Ministers really know what the cuts they agree to will do to people?

I doubt local government leaders wore a smile when reading that Secretary of State for Communities and Local Government, Eric Pickles, had  settled early in the Spending Review, agreeing to cuts of between 8% and 10% for 2015/6. All departments have now reached an agreement with the Treasury – though some of the biggest spenders took things right to the wire, with Vince Cable’s Business Department finally bringing the round to a conclusion.

We’d all like to think that before Eric offered up these savings there was a great deal of activity in his department to work out the implications of such action: models that show the impact of different degrees of cuts on councils, complex formulas that try to trace what cuts of this scale mean for ordinary people who depend on council services, that sort of thing.

However, I somehow doubt much of this occurred. For various reasons, local government is seen as a sector that you can cut with almost no push back. Where is the lobby calling for ring fencing of council budgets? Where are the arguments about the fact that councils’ work forces have been squeezed harder than almost any other part of the public sector? Where are the brownie points for having made astonishing degrees of cuts so far whilst successfully trying to minimise disruption to local residents? Where are the national politicians defending council staff and leaders, countering the common rhetoric that they are a waste of space—or worse, paper pushers with their noses in the trough?

But it’s not just the Local government Department. Whitehall Departments rarely think about cuts in the way one might expect. A spending review is partly a game between Treasury and spending departments, so Departments usually suggest that certain options are just not possible, and that others—those their ministers favour—would be almost painless. In my experience, these preferences were very rarely driven by detailed analysis; it was more often the Treasury that tried to work out what genuinely offered best value for money and what would happen if certain cuts took place. In deciding their position, Cabinet Ministers will have considered this to an extent, but they will have thought about how their stance will affect their Party and their standing within it (and in Cabinet) much more than they will the micro details. There were always exceptions and maybe things have changed a bit now—but I doubt it.

Tactically, the Treasury aim of getting some Departments to settle early and then expose this very publicly seems a slightly strange thing to do—and I say this as one who has been involved on both sides of the debate during many years as a civil servant and then as an adviser. I would have gone for getting the smaller departments to gang up on the politically sensitive ones with a mixture of peer and political pressure. They would worry that their cuts could be much worse than 8-10% if the big spending Departments did not play ball—ring fence or no ring fence.

But this is, in many ways, besides the point. It is no comfort to those at the receiving end of cuts to know that they are partly the product of game playing and posturing. And yet while we put our spending totals together from such a top-down perspective, there is a degree of inevitability about this. It’s not the best way to run a brewery but it is what we have to put up with at present. 

This is an edited version of an article that appeared in the MJ (‘Caught in a game of tactics’).