In case you were finding 2020 politics a bit underwhelming, with the small matters of a resurgent COVID-19, Brexit negotiations, and the day-to-day warfare of Westminster raging on, there is a Spending Review to add to the mix.
While it isn’t making many headlines, the Comprehensive Spending Review (scheduled for November) is a hugely important political event and Field were privileged to host an expert virtual panel to discuss it earlier this week. Our panel was a mixture of the Government’s friends and foes: former politicians and policy experts, comprising of the former Labour Chief Secretary to the Treasury Liam Byrne MP, Centre for Policy Studies Director and 2019 Tory manifesto co-author Robert Colvile, and Chief Economist at the Institute for Government Gemma Tetlow.
These panellists came from very different perspectives, but one thing that was striking about the discussion was the level of agreement on some important issues. There was no one predicting, or advocating, deep spending cuts at this stage, and certainly not compared to the last Comprehensive Spending Review back in 2015. However, cuts of some level are inevitable. As Colvile pointed out, even before COVID-19, the process of asking Departments what they can cut had begun. But there will also be investment, with a particular emphasis on capital spending to create jobs in areas that need to be ‘levelled up.’
The general acceptance from the panel that the middle ground is the right ground was illuminating, and it pointed to an interesting trend emerging in modern politics. Adversarial politics has reigned on issues like Brexit, Government conduct and competence. However, on economic ideology, a weird consensus is starting to emerge: we have a Tory Government happy to spend, and Labour moving back into the ideological centre-ground as well. The panel acknowledged that a level of consensus is emerging, although Tetlow and Colvile both pointed out that the Treasury may not be in on this consensus and will be trying hard to make the numbers add up, while Number 10 may feel that the time to worry about balancing the books is much later.
In terms of which departments our panel expect to be winners and losers, Tetlow argued that she doesn’t think health and education will feel much pain, and also does not expect to see a big review or overhaul of welfare. Colville speculated that this could be a repeat of the Cameron era, with the NHS ringfenced at the expense of other public services. There was also discussion of the Government’s ambitious net-zero commitments, and the need for them to start putting their money where their mouth is on achieving this. If the central theme of the Comprehensive Spending Review becomes creating jobs in a fragile economy, expect particular emphasis on green jobs. And if those green jobs are somewhere in the North, expect a particularly particular emphasis on them.
But the overriding feeling of our panel, and probably of our audience too, was that this is a bloody tough time to be doing a Spending Review. In order to review spending you first need to know how much you have, and right now, the economy is on a COVID-19 fuelled rollercoaster. Assumptions about our wealth will be based on questions we don’t have the answers to yet, such as, ‘when are we getting a vaccine?’ and ‘will there be another lockdown?’ And if that wasn’t enough, there might be a no-deal Brexit a couple months after the Review is announced. What would they do in that case? Rip it up and start again?
Liam Byrne MP went the furthest here and argued that it would be ‘mad’ to even do a Spending Review right now. And it may indeed be slightly mad, but the Government have been very clear that it is happening. Rather than no Spending Review at all, it is likely we will see a Spending Review with some ‘fuzziness’ as Colvile called it. Commitments might be vague where they can be, and there will be fudge. But however difficult it is to account for every penny right now, the Spending Review will still set a very important direction of travel, and as such, it should be understood as an important event in the life of this Government.