Spending review 2013



Total spending will continue to fall
Total public spending is expected to fall by 2.7 per cent between 2010-11 and 2017-18, according to the Office for Budget Responsibility. Around 0.5 percentage points of the fall on this measure is due to take place between 2015-16 and 2017-18, with 2.2 points before then. This limited decline masks a very large drop in capital expenditure and much higher spending on pensions and interest. Today’s spending review is expected to cut some current spending in 2015-16 and increase capital expenditure to compensate for it.

NHS and schools are protected
Whitehall departments account for half of total spending. Osborne has confirmed that the healthcare, schools and international aid budgets – together responsible for more than half of Whitehall spending – will be exempt from the £11.5bn of cuts in 2015-16.

Eight per cent cuts elsewhere
To make up the slack most other departments will have to accept average cuts of eight per cent for 2015-16, on top of average 19 per cent cuts announced in 2010.

Infrastructure cash on way
The Treasury intends to announce billions of pounds for infrastructure projects such as widening the A14 road and a new bridge over the Mersey.


Heseltine misses out
Lord Heseltine called for a massive devolution of central government funding to local areas in this year’s Treasury-commissioned report. But his pleas appear to have fallen on deaf ears and only a few billion will be allocated to the projects.

Inter-department trades
Some departments have been attempting to get around ringfences by attempting to carve money for relevant projects out of the healthcare or schools budgets. We will find out whether any succeeded.

London transport cuts
Mayor Boris Johnson has been lobbying hard against suggestions that billions could be cut from Transport for London post-Olympics.

More cuts signalled
Osborne could hint at future cuts to other budgets in order to keep deficit reduction plan on track.


Labour’s challenge
Labour has promised to stick to today’s spending plans if they win in 2015 in an attempt to regain economic credibility. But this sits uncomfortably with the party’s anti-austerity stance.

Pensions debate
Only half of government spending is covered by Whitehall departments. The rest is known as annually managed expenditure – largely state pensions – and whether to cut this will be a key debate at the next election.

Coalition battles
This spending review sets the tone for the 2015 general election, when the Conservatives and Lib Dems will be attempting to gain credit for either protecting or cutting certain budgets. This time Vince Cable held out until the very last minute to agree a deal and Nick Clegg vetoed Michael Gove’s plan to cut nursery education.