The following letter from Dr Roy Spendlove (Miscellaneous Projects) to Dame Lucy Doolittle (Director of Unit for co-ordinating cross cutting initiatives and partnerships)has come into my possession. It shows latest civil service thinking on the cuts.
I felt it was time I reported to you on the progress we are making in explaining the realities of public spending to the new Ministers and the Treasury. As you appreciate, many official colleagues felt the spending envelope was too tight and would require various adjustments, programme by programme.
The government as a whole wisely signed up to presenting the £90 billion a year cash increase in current spending over the five years as a large cut. As Ministers are now finding out, the cash increase will entail substantial and difficult reductions in various areas, and some redundancies. The demands for cash for the EU budget, the Euro loans, overseas aid, health reform and benefit reform will eat up what extra cash is available.
Ministers have now accepted that they were too hasty in considering the sale of forest leases. The new work on protecting biodiversity and woodland access may require an additional estimate for the Forestry Commission. Ministers also accepted that it made no sense to be too parsimonious on school sport facilities, and have revised that measure.
At Work and Pensions they have accepted advice to delay the reform of benefits until 2013, and to implement it over the election years 2013-17 assuming a 2015 election. This we felt would ensure moderation in implementation, and leave time for the large computerisation programme it entails. . Ministers have also opted for a guarantee that there will be no cash losers, which means we need to budget for the higher costs of change accordingly.
At Defence Ministers agree that in order to meet the tough totals there do need to be redundancies, rather than relying on natural wastage. Officials pointed out that if you rely on leavers you do not necessarily keep the structure of forces you want. This does entail more difficult decisions and higher cost. The email sackings were an unfortunate error which highlighted the difficulties of the spending policy.
Ministers have decided to put some more money into charities and the Big Society, following the insensitive decision by many Councils to cut their grants to worthwhile causes as part of their response to the spending squeeze. The government willingly advanced a substantial sum to Ireland, which equalled the budget savings for 2010-11, reminding Ministers how events can alter strategies very quickly.
We should warn Ministers that the health reforms also require substantial new computer systems to make them work. The new purchasing consortia need to provide professional back-up to the GPs and need to be properly staffed and tasked. The GPs will not take kindly to these changes if they feel preparation has been poor, or budgets pinched, not allowing them the full support they will need to take on these new areas of activity. I am sure Ministers will come round to the view that it is worthwhile spending more here to bring about a better outcome.
I will of course alert you to any other areas of potential trouble before they arise. The more we look at it, the more we feel the settlement was unrealistically tight and may in later years need to be relaxed. Given the limits placed on the budgets there will be further issues that arise that entail unpopular decisions. As we have seen with the forests, lobby groups are strong and active, so we need to be ever vigilant. There remain issues over the 2013 reduction of Child Benefit that could be worthwhile revisiting soon. I do hope you can get these messages over to the Treasury.