We note that public spending is projected to rise in real terms during the period from 2008-09 to 2010-11 as a wholethe period covered by the Comprehensive Spending Reviewat half the rate of growth provided for during the period covered by the four preceding Spending Reviews taken together. We note the crucial role of forecasts of Annually Managed Expenditure for the period up to 2010-11 in determining the total amount of resources available for allocation among departments consistent with the Total Managed Expenditure ceilings established in the 2007 Budget. We examine the possible fiscal constraints and conclude that the Government's freedom to increase public expenditure within Departmental Expenditure Limits beyond initial allocations while continuing to comply with its fiscal rules is likely to be more constrained than has been the case during much of the last decade.
The allocation of spending between departments
We recommend that the Government clarify its funding intentions with regard to the Home Office and the Ministry of Justice at an early stage and in advance of the final outcome of the Comprehensive Spending Review, stating clearly whether the new Departments will be bound by the combined totals agreed by the Home Office and the Department for Constitutional Affairs and providing a breakdown of the expenditure allocation between the Departments.
We note that, with the exception of the Department for Education and Skills, the early settlements have tended to be reached by departments which fared less well in the last Spending Review and so may have entered the current process with lower expectations. This suggests that many of the most challenging settlements lie ahead. Furthermore, all departments that have so far agreed settlements have done so at levels significantly below rates of growth provided for in the 2004 Spending Review settlements.
We note that the Government has set out targets for a highly ambitious value for money programme for the period covered by the Comprehensive Spending Review. We call for clarification on reporting requirements for that programme and for a clearer performance measurement framework, including a greater role for external audit of service quality than hitherto. We recommend that the Government ensure that a coherent framework for the verification and reporting of savings on a consistent basis is established.
Public Service Agreements, the national debate and the role of Parliament
We conclude that the Government has been too timid in taking forward the national debate on the Comprehensive Spending Review to which it committed itself as long ago as March 2006. We make recommendations designed to enhance public involvement and to encourage a dialogue between the Government and select committees of the House of Commons about Public Service Agreements, Departmental Strategic Objectives and the Government's emerging views on those past objectives which have been achieved and those supporting programmes from which spending is potentially available for reallocation.