Dear chief secretary,
Congratulations on your appointment.
You arrive with about six weeks to go before the announcement of the Spending Review in the 27 October budget. Because all the figures are now checked by the Office for Budget Responsibility, you actually have less time, though this approach makes for better government.
The overall position is very tight, but you start from the advantage that the total for public spending has already been released by the chancellor.
Coming up fast is the party conference. As hurdles go, this is a water jump for the Treasury: if you’re not careful, any remaining room for manoeuvre will disappear through fresh pledges. So you can encourage ministers talk about services, but not about sums of money, even implicitly. It was pressure at the 1987 conference that turned the phased introduction of the poll tax into an overnight leap, with disastrous consequences.
The room for manoeuvre is very limited already. Of the big programmes, the NHS budget is already set. So is the defence budget, with more big increases baked in. The pressure to spend more on schools was very apparent in the summer. With welfare, you’ve warded off one risk on the triple lock, but are under pressure on Universal Credit. The pre-pandemic pressures on courts, prisons, cladding etc haven’t gone away, and there are plenty of new ones.
The good news is that you have a strong team in the Treasury to support you. They will be very sharp, and ready to work as hard as it takes over the coming weeks. And contrary to popular opinion, certainly in my day, they got out and about, to build up knowledge of the services they work on.
The review can easily take on a life of its own, and both ministers and officials can find that the “battles” become so absorbing that you lose sight of the real goal of delivering the best public services that the country can afford. So as an ex-insider who’s now more concerned with the impact on services for homelessness, health, and housing, here’s what I think is important.
- Do follow through on the commitment in last year’s review to focus hard on outcomes, and on the evidence about how these can be delivered.
- Do get the money out there: the three-year plans need to be passed down to delivery bodies as soon as possible.
- Do leave some latitude for local initiatives: the things that give most bang for the buck on youth work or community development can’t be planned centrally.
- Don’t acquiesce to something nobody thinks can be delivered: it will cost more in the end and cause a load of grief.
- Don’t have too many small pots of money for local organisations to bid for: they take up disproportionate time and effort on both sides. Decide what you can afford, set out the desired outcomes, and trust local people to deliver.
- Don’t make assumptions about attitudes of colleagues – spending reviews can turn political friends into adversaries, and the ministers who are most hawkish about spending in the abstract often have a blind spot where their own department is concerned.
Finally, do follow through on the commitment to better evaluation. The next review will come round sooner than anyone thinks and knowing what the spending has achieved will make for even better decisions next time.
Andrew Hudson is a former Director General of Public Services at HM Treasury. He now chairs the Centre for Homelessness Impact