This time it’s different for George Osborne. There are no cuddly Lib Dems to use as his punchbag/conscience. He wants to be Prime Minister in five years’ time. And there’s a hell of a lot less left to cut. Oh, and he can’t raise taxes. So what are the politics that will shape the Chancellor’s Spending Review this year?
Here’s a few things to look out for:
Less of an economic crisis
The impetus for spending reductions is much harder to muster this time round. The UK is not at the same economic crisis point that it was in 2010, when the Chancellor had to kick off austerity for the last parliament. So the urgency hasn’t been there for departments to find savings (especially not as Osborne diluted his deficit reduction plan in the end anyway).
Inheriting from your own
There is no transition from Labour to a Tory-led government this time round, so none of those wishy-washy, profligate Labour plans for Tories to throw out and save money on. Of course, the usual scuffles between ministers remain (take the – now dropped – suggestion that Osborne was going to raid Iain Duncan Smith’s Universal Credit budget to plug his tax credit cuts gap), but it is harder all round for the new Secretaries of State in David Cameron’s cabinet to find and get rid of things in their departments they don’t like. This is because they would be undoing the work of a colleague or a policy implemented by their own party…
No Lib Dems left
…or by the Lib Dems, of course. In which case they would throw it out. Rumour has it that the mental health spending pledges made by the coalition, pushed for by the then Lib Dem health minister Norman Lamb, are under threat. “Public health and mental health are always the ones that get cut,” one policy expert close to the current government tells me. “Something always has to go.” This could have severe implications for the strains on social care providers that are already at breaking point from local government cuts, of which more are on the way. Universal free school meals – Nick Clegg’s rather flawed treat for the electorate – may also be on the way out. Apparently the Pupil Premium, also a Lib Dem policy, will be staying in by the skin of its teeth.
The Institute for Government has calculated that, as the Spending Review unfolds, the Tories have made 517 additional commitments for central government alone, on top of their manifesto pledges. How many of these can they quietly drop/postpone while hanging on to political credibility (eg. free school meals was a Tory manifesto pledge)? They had the benefit of making it up as they went along last time, due to the last-minute coalition agreement being the only thing they (sort of) had to stick to.
Looking to No 10
It was always assumed that Osborne would at some point want to move nextdoor, but now that’s a very real possibility and it’s not far off. So what does this change? Probably that he will be stricter about sticking to his deficit reduction target this time. He is looking to achieve a budget surplus by 2020. This means committing to hard and fast cuts when both the easy savings and tough reductions have already been made.