The government will complete a Comprehensive Spending Review by July that will boost average departmental budgets by around 2.8% a year in real terms, Rishi Sunak has said.
The chancellor announced the review in the Budget today. It will set resource spending totals to the end of 2023-24, and capital budgets to 2024-25.
The Treasury Red Book, published today, set out more details of how plans for public spending will be assessed though the process in the months ahead. It indicated that departments' funding submissions will be judged according to their impact on the government’s levelling-up agenda, and pledged a greater link between funding and outcomes.
According to the Red Book, total revenue spending by ministries – which is known as department expenditure limits and the main way day-to-day spending is measured – will grow from £330.4bn in 2019-20 to £435.5bn in 2024-25, a 3.3% cash terms increase. CSR allocations will only cover the period up to 2023-24, when the DEL figure will be £417.6bn.
The capital budget across government will grow from £71.1bn to £112.8bn over the same five-year period, a 6.9% increase.
In the Budget speech, Sunak said his overall spending plans has been described by the Office for Budget Responsibility as “the largest sustained fiscal boost for thirty years”.
He added: “Next year, day-to-day departmental spending will grow at the fastest rate in fifteen years.
“Over the spending review period, it's set to grow at the fastest rate since 2004: an average growth rate in real terms of 2.8%, twice as fast as the economy.
“That means that by the end of the parliament [in 2024], day-to-day spending on public services will be £100bn higher in cash terms than it is today.”
The Red Book revealed that the Treasury will prioritise four policy areas in the spending round: levelling up economic opportunity across the country by investing in infrastructure, innovation and people; improving outcomes in public services; strengthening the UK’s place in the world; and reducing carbon emissions and improving the natural environment.
Public value framework key to CSR
According to the document, there will also be a renewed focused on outcomes from government spending. A new public value framework will require departments to link their spending proposals to the outcomes they intend to achieve.
The framework was first proposed by former No.10 Delivery Unit chief Sir Michael Barber in November 2017. A revised version published by the Treasury last March said departments must answer a series of questions about projects and programmes to ensure they achieve value for money.
Currently, departments are expected to use the framework in their single departmental plans. While the Red Book made no mention of SDPs, it said departments must link spending plans “to the outcomes they intend to achieve as part of a new public value framework”.
The government is also developing new metrics to measure progress against the four priority areas set out in the framework.
“Assessment of spending’s impact on these priority outcomes will be central to making spending decisions at the CSR. These priority outcomes and metrics will be published as part of the CSR and will include cross-cutting outcomes in areas where closer working between departments could help achieve better results.”
Departments will also be required to produce plans to improve evaluation of their own performance.
“This will lead to more evidence-based allocation of public funding and better outcomes in the long term,” according to the Treasury.
“These reforms will ensure that spending decisions are based on the delivery of outcomes and will put the UK at the forefront of international approaches to driving public value. This will help the government provide world-class public services and the best value for taxpayers’ money.”
There is also a pledge to “build on the lessons of previous spending reviews and ensure that policy issues are considered across departmental boundaries to maximise the effectiveness and value for money of government spending”.
Today's Budget set out the first allocations to the shared outcomes fund, which will pilot new approaches to supporting adults with complex needs. This fund, which was established with little fanfare in the one-year Spending Round in 2019, will test collaborative ways of working across the public sector, and could be opened up to different policy areas in future.
The July review will be accompanied by the published conclusions of the Integrated Security, Defence, Development and Diplomacy Review, announced earlier this month. Details of the plan to replace the Common Agricultural Policy and EU structural funds will also be published in the summer.