The next Spending Review will launch before the Summer recess and will cover three years of spending, provided a Brexit deal is agreed, chancellor Philip Hammond has confirmed.
In his Spring Statement this afternoon, Hammond said the review would conclude alongside the Autumn Budget and would have a particular focus on ensuring value for money.
He also unveiled a revised version of the public value framework, which governments use to benchmark the effectiveness of their spending, as well as guidance on how to use it. The document, published today, sets out a series of revisions including a reduction in the number of questions used to determine value for money in a given programme, and restructuring the framework and reworking some of its language to make it a "clearer and more intuitive tool".
The original framework was based in on the findings of a 2017 review by former No 10 Delivery Unit head Sir Michael Barber in 2017, which said the government needed a new way to understand value in public spending. The review was the basis of a pilot project, which has informed today's changes, Hammond said.
In his statement, Hammond said that having announced an injection of funds for the NHS last summer, the government now needed to address wider departmental spending for the upcoming three years, adding that he was sticking to plans for an average 1.2% annual real terms increase in public services in the Spending Review set out in the Budget last year, compared to real terms cuts of 3% annually and 1.3% at the 2010 and 2015 Spending Reviews respectively.
“So I can confirm today that assuming a Brexit deal is agreed over the next few weeks, and the uncertainty that is hanging over our economy is lifted, I intend to launch a full, three-year Spending Review before the Summer recess, to be concluded alongside an Autumn Budget,” he told parliament.
“It will set departmental budgets beyond the NHS to reflect the public’s priorities between areas like social care, local government, schools, police, defence and the environment.
“And it will maximise value for taxpayers’ money in public services with a renewed focus on delivering high-quality outcomes.”
Hammond also repeated his much-contested claim that if the UK leaves the EU with a deal, it will bring about a “deal dividend”: an economic boost from increased business investment, and a fiscal boost from a reduction in the minimum fiscal headroom once the risk of a no-deal Brexit has been removed.
Securing a withdrawal agreement with the EU would “give us as a nation real choices as we use the Spending Review to decide how much of this ‘deal dividend’ we can prudently release, and how we can share it between increased spending on public services, capital investment in Britain’s future prosperity and keeping taxes low, while always continuing to keep our debt falling”, he said.
As with the past three Spending Reviews, this year’s will include a zero-based review of capital spending for each publicly-funded programme and project to ensure “the maximum return for the country”, according to documents published alongside the speech.
Hammond did not say what the Spending Review would look like if the UK leaves the Brexit without a deal. However, he did add: “Leaving with no deal would mean significant disruption in the short and medium term, and a smaller, less prosperous economy than if we leave in the long term.”