I was pleased to hear this morning that my Parliamentary question on where the money is coming from to build the new homes has been followed up by the media, only to discover the Communities Department has not identified the cuts to pay for the houses.
On The Today programme on Monday morning Mr Mandelson said that there could be reductions in the budgets of Transport and the Home Office. Later briefing told us the cuts were to come in the Communities and Local Government department.
As some of you have pointed out, none of this should come as a surprise. The announcement on new homes may be spin, and may not result in the extra “planned” spending any time soon. Alternatively, there could be extra spending and the increase will be lost amidst the giddy escalation of the deficit. Why worry about £1500 m you might ask when they are printing £125 billion?
So why do I go on about it? Because at some point government in this country has to get some discipline into public spending. The rules are simple. If the government wishes to spend more on something, it has to spend less on something else. That requires two decisions which need to be reported to Parliament. You shouldn’t just report the increase without reporting the decrease as well and in the same amount of detail. Or if the government wishes to increase its borrowing stilll further we need to be told that and debate the wisdom of yet more on the never never.
The government is in disarray over whether to have a “Comprehensive” Spending review or not. We are due one, and were promised one. Mr Mandelson yesterday told us the Chancellor had decided against one. When MPs sought confirmation of this in the Commons yesterday the Prime Minister told us it was a “matter for the Chancellor”. As the Chancellor was on the front bench at the time, it would have been an easy task for the PM to ask Mr Darling what his decision was.
Constitutionally, something as important as a thorough review of spending and future budget levels should be a matter for the whole cabinet, a decision taken by them under the chairmanship of the PM on the advice of the Chancellor. Under the rules of collective government, even if a spending review is the Chancellor’s sole decision, any Minister should know the Chancellor’s answer and give it when asked.
I can only conclude they are having a big row about shelving a spending review. The argument that all their economic forecasts are likely to be wrong so they cannot have one is bizarre. The Treasury has often made wrong forecasts in the past but has still recognised the need to set out how much it plans to spend and borrow. It is especially important to guide markets on this issue today, given the high level of the deficit. If markets think this government do not care how large the deficit is after 2010 it will make raising the money they need even more difficult.