Home / Business / Spending review: The game has changed but not the rules

Spending review: The game has changed but not the rules

Sajid Javid

An unusual flurry of drama from the Treasury, that department better known for the staid crunching of numbers, saw Chancellor Sajid Javid’s much-touted speech, in which he was to set out his vision for the economy, cancelled at short notice.

Instead, the instruction was to stand by for the spending review next week. The idea is to get the spending plans out of the way, so that the focus can be on Brexit.

That, of course, is the official line, but the speculation is that this is the precursor to a snap election, a touting of sweeteners for voters in the form of extra cash for areas such as health, education and policing.

Boris Johnson was elected by party members on the back of a list of spending intentions (and tax cuts). That list was sparse on detail, but some estimates put the total cost at north of £30bn. How much of the former are likely to be delivered next Wednesday?

Mr Javid says there’ll be no blank cheque. Instead, this chancellor – who’ll have been in the post just six weeks come the spending review – appears to be borrowing his predecessor Philip Hammond’s playbook.

That chancellor first told me back in April that if a Brexit deal hadn’t been struck by the autumn, it’d be sensible to lay out plans for just one year, not the usual three, in case extra funds needed to be used to support the economy in the event of a no-deal.

Choices and priorities

Mr Hammond’s successor is not only doing that, but also sticking to the existing borrowing rules.

In the short term, that primarily means limiting the deficit to below 2% of GDP, after adjusting for the ups and downs of the economic cycle up to 2021, with an eye to eliminating the deficit altogether by 2025.

That means Mr Javid can afford to borrow a bit more to spend. He has up to £15bn of such “headroom” up to 2021 (down from an earlier £27bn, because of changes in the way student loans are accounted for).

Given the question marks over the path of Brexit, he probably won’t use it all. And it won’t be enough to cover the prime minister’s wishlist: areas such as defence and culture may not get much of a look in.

An emphasis on “choices” and “priorities” again suggests that Mr Javid is sticking to the Hammond script and emphasising fiscal responsibility. But there’s still enough to spend and he will inevitably claim to be ending austerity – although there’s a way to go to reverse all the cuts in real terms of recent years.

However, for the big picture, his vision for the economy, we’ll have to wait until the Budget, which may not happen until late autumn. It is only then that we’ll get updated forecasts from the Office for Budget Responsibility on the state of the economy and the public purse.

There’s speculation abound that No 10 was behind the decision to ditch the chancellor’s speech and bring forward the spending review.

But that doesn’t mean the prime minister is calling all the shots. The game has changed, but the rules No 11 is playing by seem to remain very much the same – for now.

About Oluwadamilare Funsho

Check Also

India e-cigarettes: Ban announced to prevent youth ‘epidemic’

An executive order had been approved banning vaping products because of their impact on young …

15 comments

  1. Hi, I do think this is a great website. I stumbledupon it 😉
    I may come back yet again since i have saved as a favorite it.
    Money and freedom is the best way to change, may you be rich and continue
    to guide others. Hello! Someone in my Myspace group shared this site with us so I came
    to take a look. I’m definitely loving the information. I’m bookmarking and will be tweeting
    this to my followers! Wonderful blog and fantastic design. I’ve been browsing online more than three hours lately, yet I by no means found any fascinating article like yours.

    It’s beautiful price sufficient for me. In my opinion, if all site owners and bloggers made
    just right content as you probably did, the web will likely be a lot more helpful
    than ever before. http://house.com/

  2. Thank you for posting this awesome article. I’m a long time reader but I’ve never
    been compelled to leave a comment. I subscribed to your blog and shared this on my Facebook.

    Thanks again for a great article! https://www.ecoleesthetiquenf.ca/a-propos/

  3. Greetings! Very helpful advice in this particular article!
    It is the little changes that make the most important changes.
    Many thanks for sharing!| I really love your website..
    Very nice colors & theme. Did you create this web
    site yourself? Please reply back as I?m trying to create my own personal blog and want to find out where you got this from or exactly what the theme
    is named.
    Appreciate it! https://clindoeilmontreal.ca/services/

  4. Hurrah, that’s what I was looking for, what a data!
    existing here at this website, thanks admin of this website.

  5. I’m impressed, I must say. Seldom do I encounter a blog that’s both equally educative and
    engaging, and let me tell you, you have hit the nail on the head.
    The issue is an issue that not enough folks are speaking intelligently about.
    Now i’m very happy that I came across this during my hunt for something concerning this.

  6. Greetings, I believe your site could possibly be having browser compatibility issues.
    When I look at your site in Safari, it looks fine however when opening in Internet
    Explorer, it has some overlapping issues.
    I merely wanted to give you a quick heads up! Other than that, wonderful blog! https://ultrascoot.com/speedometer-chrome-white-analog-km-h-only.html

  7. I have read this post and if I could I desire to suggest you few interesting things or advice.
    Perhaps you can write next articles referring to
    this article. I want to read even more things about it! https://demenagement-montroyal.com

  8. What a fantastic post! This is so chock full of useful information I can’t wait to dig deep and start utilizing the resources you have given me.
    Your exuberance is refreshing. Thanks for a great article! https://www.lescaledetente.com

  9. Everyone loves what you guys tend to be up too. https://www.reiva.us

  10. I?m curious to find out what blog system you happen to be
    utilizing? I?m experiencing some small security
    problems with my latest website and I?d like to find something more
    risk-free. Do you have any suggestions? https://www.miniexcavationrbeaudet.com

  11. Wow, this article is nice, my younger sister is analyzing such
    things, therefore I am going to
    inform her. https://www.podiatreleduc.ca

  12. Ahaa, its fastidious dialogue on
    the topic of this article at this place at
    this website, I have read all that, so now me also commenting at
    this place. https://formationmatieresdangereuses.com

  13. I like it whenever people get together and share ideas.
    Great website, continue the good work! http://www.uniquedirectory.co.uk/index.php?title=User:RomaineVillarrea

  14. Wow, this paragraph is fastidious, my younger sister is
    analyzing these kinds of
    things, therefore I am going to
    inform her. https://www.physiobalance.ca

Leave a Reply