MPs criticise ring-fencing of budgets

THE government’s decision to “ring fence” spending on health and international aid has been criticised by a group of influential MPs.

Before the election, David Cameron pledged to protect spending in real-terms on health and overseas aid, in a bid to soften the Tory party’s image.

But in a report released today, the Treasury Select Committee says the coalition’s decision to spare some departments from the axe could leave more deserving programmes without the appropriate funding.

Andrew Tyrie MP, chairman of the committee, said: “There has been a great deal of ring-fencing in the current spending review. The risk is that ring-fencing distorts spending priorities, particularly in a radical review such as this.”

“Ring-fencing may fulfil electoral promises. But ring-fencing can also lead to allocative problems across government as a whole,” the report concludes.

The MPs also warned that protected departments could avoid the efficiency measures that are taking place elsewhere in government, as back-office costs are slashed to protect front-line services as much as possible.

The use of the term “ringfencing” was also misleading, the MPs said, because the NHS budget was being used to fund other programmes, such as social care.

Meanwhile, the committee hit out at the previous government’s decision to wave through an aircraft carrier contract with BAE, which proved “unbreakable” because the cost of cancelling would have been higher than pressing ahead.

Tyrie said: “Successive governments have struggled to deal with an overcommitted defence budget. The Treasury should draw on the lessons from the seemingly ‘unbreakable’ carrier contract.”

While MPs welcomed the government’s decision to produce an analysis of how progressive the budget measures are, it warned that this was not necessarily an indication of their “fairness”.

“Whether or not the consolidation is fair is, and will remain, the subject of political debate and the Treasury Committee will continue to take evidence on it,” said Tyrie.