Head of taxation
It’s very disappointing that HMRC’s budget was cut, although given that the Treasury had its budget cut by 33 per cent, maybe a 15 per cent cut isn’t as bad as it could have been. However, HMRC is a department that is having trouble even standing still, so any cut will hurt their ability to collect tax effectively. While an extra £900m to help crack down on evasion will be helpful it doesn’t make up for an overall cut. The Chancellor needed to spend money to save money in this case; making the cuts could actually cost the Treasury in the long run.
Senior policy adviser for small enterprises
The Chancellor didn’t speak about it specifically, but spending cuts could affect government procurement in a big way. Government procurement is worth over £60bn to SMEs (small or medium-sized enterprises) and despite the localist rhetoric, government procurement will have to be centralised or cut to achieve efficiency savings. This is crucial for SMEs as while 59 per cent of local procurement spending goes to SMEs, only 16 per cent of Whitehall spending does. Despite the government's intention to increase the share of SME procurement, we still estimate that SMEs could be shut out of £7bn worth of procurement. We won’t know the exact figure until individual departments announce more details. Neither, importantly, will the SMEs who will put off hiring and investment decisions until then.
Head of public sector
Achievability, accountability, and scrutiny are the key issues with the spending review. The Public Accounts Committee has already questioned how achievable these cuts are. As a rough comparison, only one third of the savings proposed by the 2005 Gershon Review were actually achievable. Scrapping some quangos may end up costing the Government: work will still have to be done by departments, while redundancy and pension payments wipe out short-run savings. Winding up the Audit Commission will cost £300m, for example.
Value for money is an issue too. Before the review, the Treasury circulated a document to guide departments’ spending settlements. Its value for money section contained a nine-question checklist. Of those nine, four were basically about removing spending from government control and getting it off the balance sheet. There was no detail on undertaking an actual cost/benefit review.