The Spending Review is 12 days away. Occasional Westminster watchers will want to tune into the Chancellor’s Autumn Statement as it won’t just be departmental spending cuts that will be announced, it will be the start of what the reimagined state looks like: smaller, ‘more affordable.’
Bruised and battered by the tax credits saga, Osborne needs to get his leadership show back on the road. And to do that he needs to impose his authority on the Cabinet. Announcing CSR deals with the first four Government departments was all about heaping pressure on the remaining ones. Osborne has his sights on two in particular: Iain Duncan Smith’s welfare budget and the MOD’s habitually over-spent defence budget. The Chancellor’s request for IDS to cut welfare spending harder to pay for mitigation measures to offset the cutting of tax credits isn’t overly popular at DWP. Osborne and IDS are having an increasingly prickly relationship and as the Government’s top spending department feathers will continue to be ruffled ahead of the CSR.
Trident may be splitting Labour apart but it risks being split off from the MOD too. If it is true that Osborne is demanding that the Treasury runs the procurement for the new Trident submarines instead of the MOD it will be a further land grab for 1 Horse Guards and a full on defeat for the Admirals over at Main Building. When you’re about to commit £40bn you want to know it is not going to overspend and few people, despite the spin, believe the MOD has the skills or the will to stay on budget. Could this be the Chancellor’s price for backing the PM’s largest spending item of this Parliament?
With the economic outlook not as rosy as it once was, Osborne will be looking at other tricks to shrink the deficit and present on track figures. Privatising the Government stake in housing associations was floated today, privatising more police services mid-week and further restrictions on young people claiming any welfare touted too. What is for certain is that the Tories plan not just to cut the state but to fundamentally reshape it.