The Spending Review has to be seen in context

Look back to 2010.

There is a risk that the Chancellor’s Spending Review is seen in isolation, but to appreciate the potential effects of some of the latest austerity measures announced by George Osborne, you have to look back to 2010.

There is a ticking time bomb of public sector cuts that have yet to be implemented from when they were announced early in the Coalition’s life. The full impact of the austerity measures have yet to be felt by households in Britain. However, the cuts of £11.5billion announced in the latest Spending Review for 2015-16, in addition to those from 2010, will be felt with full force when they are eventually implemented. The protection of critical front-line services can no longer be guaranteed. No one knows yet what the impact the cuts will be and yet Chancellor’s scythe keeps slicing away.

There were few surprises when it came to Departmental Expenditure Limits (DEL). Though there were some sweeteners in there, such as the welcomed emphasis on capital spending to stimulate growth, in reality that increase in capital spending looks good only on paper. When taken along with the wide-spread cuts to departments and local government, the extra money is nothing more than shuffling the deckchairs around.

There will come a point where the Government can’t cut the DEL budget anymore and public services will suffer. Front-line services are already at breaking point. ACCA’s current research Developing strategic financial leadership highlights that directors of finance in local government feel confident that they have delivered all that was asked to date, but are less confident about the future and the next 10 years. There is a general lack of a long term strategy for public services.

Where there were positives in the Chancellor’s review was in the pooling of health and social care budgets for the elderly. This has been a long time coming and will allow greater flexibility and efficiency of service provision.

The Chancellor also took a step in the right direction with the annually managed expenditure (AME) budget, which totals £350 billion, over half of public expenditure. AME has for too long not been actively managed and controlled. The emphasis has been on ‘hands off’ management for too many years. So the cap is good move but with the caveat that limits and caps are notoriously broken. So perhaps with that in mind, the Chancellor took the safety measure of a wider role and powers for the Office of Budget Responsibility, in particular its trigger of an early warning signal and monitor expenditure. 

However, the Chancellor didn’t go far enough and missed further opportunities to take a more structural look at AME and review the drivers behind the budget headings and how they interrelate. The lack of a long term strategic review is evident. The cap is a short-term fix. There needs to be a longer term perspective that goes beyond the short term political cycle.

Other countries, such as the US and Australia, have long term fiscal strategies that encompass 50 years or more. Here in the UK, we seem wedded to the immediate future. There was no consideration as to whether the AME budgets should be devolved, exploration of the impact new policy initiatives would have on AME, or any focus on what the impact that further joint working by government departments might have.

There needs to be more emphasis on whole life costing – cradle to the grave, across all public spending, not just AME. Perhaps then we will get a clearer understanding of the true cost of what public expenditure should be, rather than have a demand-led welfare system.

It seemed unusual and illogical to makes cuts in the Treasury where financial leadership is needed most. Managing public expenditure needs more, not less expertise. While setting an example might seem like the right gesture, government needs stronger financial leadership at a time of on-going cuts and greater financial management.

All in all, the Chancellor made some positive movements to getting public expenditure under control, but the potential impact of back logged cuts from 2010 on top of some of these announcements today, as well as his reluctance to take a radical approach to tackling annual managed expenditure, outweigh those positives.

George Osborne. Photograph: Getty Images

ACCA Head of Public Sector

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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