The last government held a multi year spending review setting out spending plans for the 3 years 2022-3 to 2024-5. They would have held another this autumn to set 2025-6 to 2027-8. The absence of plans from next year means the new government can set out new plans without needing to amend old ones.
The government has decided it cannot deliver a 3 year spending plan this year, delaying it until spring 2025. Budget 2024 therefore needs to set out a one year spending plan for 2025-6 pending the longer term plan. The budget as always will also review progress with this year’s spending against plan, a plan set by the outgoing government.
The government has chosen to have a row about the adequacy of provision for this year. Their alleged £22 bn overrun of spending includes £11 bn of extra pay largely brought on by their choice to put pay up by much more than inflation which the original estimates allowed for. The second big item is more than £6 bn extra for migrants, in part the result of illegal crossings going up this summer as the new government scrapped Rwanda and struggled to control numbers. The original overall budget did include a contingency fund as there are often overspends in year.
Press reports say Cabinet Ministers are angry that Treasury Ministers are asking them to consider reductions in spending to offset increases they wish to make. This is a normal process undertaken by past Labour as well as Conservative governments. It is important Treasury challenges spending streams. Total public spending has surged from £852 bn in 2018-19 to £1226 bn this year, a rise well ahead of inflation. Any budget for next year needs to start by reviewing what all that money is spent on, why public service productivity has fallen and whether some of it like Bank and railway losses is avoidable.
Too many Labour Ministers think increasing public spending is a good. Delivering more and better public service in NHS and schools is a good. Doing it more efficiently at lower cost is better. When I go into a shop I do not want to know they have just spent more on running the shop. I want great products at good prices.