Select Committee on Treasury Sixth Report

1  Introduction

1. Decisions on the allocation of public money to particular departments and to priority areas for public spending are central to the political process. The 2007 Comprehensive Spending Review is of pivotal importance as the first overall allocation process for public spending since the last General Election—and quite possibly the last such review before the next General Election. This year's Review differs from previous Spending Reviews since 1998 in its scope, conduct and fiscal context. The period of operation of the new public spending regime introduced in 1998 has broadly coincided with a period of sustained, marked growth in public expenditure in real terms. The period up to 2010-11 will see much more constraint on public spending overall, with some departments facing substantial real terms reductions in spending. The new spending system has proved worthwhile up till now, but is about to face its greatest test.

2. Our main purposes in this Report are:

  • to set the 2007 Comprehensive Spending Review in context, particularly in relation to past Spending Re71views and the fiscal prospects for the period up to 2010-11;
  • to analyse what information is already available about the shape of the forthcoming spending settlement, including the role of efficiency objectives and the performance management framework; and
  • to make proposals about the continuing debate up to the announcement of the final outcome of the Review, including the role of the House of Commons in that debate, and about the reporting requirements for the Comprehensive Spending Review and beyond.

3. We announced our intention to conduct an inquiry into the Comprehensive Spending Review: emerging issues in July 2006 and invited written evidence. We subsequently extended the period for the submission of evidence. All written evidence received is published with this Report. We took oral evidence from the Rt Hon Stephen Timms MP, Chief Secretary to the Treasury, together with HM Treasury officials, on 30 January 2007. We are most grateful to all those who gave evidence, and to Professor David Heald of Sheffield University and Professor Colin Talbot of Manchester Business School for their specialist advice.

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Prepared 25 June 2007