George Osborne positioned himself as a reforming Chancellor in his Spending Review 2103 today. However, the detail of the review itself suggests slow incrementalism rather than radical reform. Current departmental spending (‘resource DEL’) will be slightly less in cash terms in 2017-18 than it is in 2013-14 – a real terms cut. So the state will be spending less on services. This is to be expected given the economic and fiscal environment. However, what is remarkable is that the state will still look very similar in 2018 to the state George Osborne inherited in 2010.
The austerity agenda has been clear. The reform agenda is far less so. The state is meaner (though not much smaller as a consequence of increased interest payments) but it is still the same fundamental machine that it was in 2010. This is missing a big trick – fundamental reform would mean that there is much greater impact on growth, jobs, business, and services even in a tight fiscal environment.
The Chancellor has tentatively engaged in reform in a few areas but in a very underwhelming fashion:
i) Health and social care budgets are to be further merged – but only £3.8billion of a combined budget well in excess of £100billion.
ii) Local spending on growth is to be brought into a ‘single pot’ – but only £2billion of such spending (jobs, skills, regeneration, business support, infrastructure, innovation) when Michael Heseltine suggested a £49billion single pot to be distributed locally and sub-regionally in his growth review. By merging these budgets in this way, real local innovation through networked provision could be unleashed with the pot driving better collaboration. The last government’s Total Place strategy outlined how, in Leicester and Leicestershire, there were 450 face-to-face access points for service users, 65 call centres, all at a cost of £15 million per year.
iii) The welfare measures of a seven day job search period prior to receiving benefits and additional job interviews while claiming benefits are worth a few hundred million of savings. Yet, the myriad of welfare to work and skills investment schemes remain fragmented. The major reform of the system is the Universal Credit which is a tidying up exercise as much as anything else. Again, the Total Place strategy found 120 projects or programmes delivered by 50 providers across 12 funding streams to help people into work in… Lewisham.
iv) The Whitehall structure – leaner and meaner for sure – is almost exactly the same as when the Coalition came into office, albeit with an addition of an Office of the Deputy Prime Minister. Do we really need four separate departments of transport, business/innovation/skills, environment and climate change, and environment, food, and rural affairs? Surely education should be brought together with adult skills and higher education? Is there really no scope for merging the Foreign Office and International Development? And why do we still have separate Welsh, Northern Irish and Scottish offices?
None of this is a debate about austerity. It is a debate about effectiveness. There is a sense that the Chancellor has got more efficiency out of the system and spending squeezes have driven that. However, he has not gone for the sort of fundamental structural reform that could unleash even greater value for £750billion or so of public spending.
I’ll leave others to debate the growth and fairness impacts of this Spending Review - the Chancellor's two other stated objectives. On the reform front, this Spending Review has fallen a long way short as have the various previous financial, fiscal and economic statements.
With the notable exception of health and social care where Labour does seem to be willing to be bolder in merging budgets as a driver for fundamental reform, Labour has also chosen to focus on the fiscal envelope rather than reform. There is an open political opportunity here for anyone who wants to take it. But it will mean central government letting go. That is clearly a scary prospect. Both parties talk reform, localism, and 'bang for buck' but no-one has yet been willing to bite the bullet. That means unnecessary waste and blunted impact - this compunds the negative impact of the fiscal and economic environment.
Anthony Painter is Director, Independent review of the Police Federation. His twitter feed is @anthonypainter.