The Government needs strong budgetary systems to be able to control and manage public spending and to provide high quality public services that offer value for money to the taxpayer. Departmental spending is approved by Parliament in the annual budget process based on the multi-year budgets set in the spending review. The 2010 Spending Review set a four-year spending total for each department. The Spending Review focused on reducing public spending and delivering the coalition Government's programme.
The Treasury managed the Spending Review by collating bids from departments and challenging submissions. The process built on the experience of previous CSRs and was better managed. However, we continue to have concerns about the capacity of the Treasury to effectively challenge departments, and Government continues to take some decisions which will not ensure best value for money.
Departments and the Treasury failed to take a longer term view on spending, making cuts in those budgets that were easiest to cut. For instance, whilst Treasury improved assessment processes to be able to rank capital projects, the overall level of capital investment was cut from (£57 billion in 2009/10 to a planned £41 billion in 2014/15. Resource expenditure as a whole will increase in nominal terms, albeit at a much slower rate. These decisions may not have been the best to meet the Government's growth objectives.
There were gaps in data which made it difficult to compare options or benchmark spending proposals. There were no incentives for departments to collaborate on cross-government issues. There was no evidence of clear thinking on how one decision to save money in one budget area might lead to an increase in expenditure elsewhere. There was also evidence of game-playing.
Decisions on where to spend or cut rest with Ministers and cannot be divorced from the political process. But these decisions need to be informed by rational analysis. Officials must do more to provide Ministers with reliable and comparable information to help them weigh up the effect of different spending options. The Committee welcomed the Treasury's commitment to follow up the National Audit Office's recommendations for improvement. The Treasury will need to implement the findings of this report in time for its next spending review.
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Treasury and the Head of the Civil Service, who also represents the Department of Communities and Local Government.