1The 2015 Spending Review
1.The 2015 Spending Review, launched on 21 July 2015, continues the policies pursued by the previous Coalition government to eliminate the UK’s budget deficit. The Government now aims not just to break even but to convert the deficit into a surplus by 2019-20, and it estimates that “consolidation measures” in the form of approximately £37 billion of spending reductions will be required. The 2015 Summer Budget set out specific plans for savings in certain areas: £12 billion from welfare reform and £5 billion from reducing tax avoidance and non-compliance, and imbalances in the tax system.1
2.The Spending Review process which is currently under way will identify the scale of savings required from Government departments in order to achieve the remaining £20 billion in “consolidation”. Accordingly, departments have been asked to set out how they would respond to two scenarios: savings of 25% and of 40% from the resource budget in real terms by 2019–20. These figures would be cumulative and could for instance be achieved by making new savings of 7% of the resource budget in each of the four years covered by the Review. The Foreign Secretary submitted a letter to the Treasury on 4 September, modelling cuts;2 but we note press reports that the Foreign and Commonwealth Office (FCO) was one of a number of departments which had “refused” to submit to the Treasury plans “to cut their departments by as much as 40 per cent”.3
3.Ministerial discussions on departmental settlements are currently under way, and the Cabinet will be invited to sign off ministerial decisions in November. We note that the Public Expenditure (PEX) Committee has been re-established to advise Cabinet on the high-level decisions that will need to be taken in the Spending Review.4 The FCO is not represented on the full Cabinet Committee or on the Public Expenditure (Efficiency) sub-Committee, whose role is “to consider issues relating to efficiency, asset sales and public sector pay and pensions”.5
4.The results of the 2015 Spending Review will be published on 25 November 2015.6
5.This report is intended as a contribution to the decision-making process currently under way between the FCO and the Treasury.
1 A country that lives within its means, Spending Review 2015, July 2015, Cm 9112
2 Evidence from the Permanent Under-Secretary, 15 September 2015, Q2
3 Daily Telegraph, 13 October 2015, http://www.telegraph.co.uk/news/politics/11927855/Ministers-resist-cuts-to-their-departments.html
4 A country that lives within its means: Spending Review 2015, July 2015, Cm 9112, paragraph 4.9
5 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/433440/150608_Committee_list_for_publication.pdf
6 A country that lives within its means, Spending Review 2015, page 20
© Parliamentary copyright 2015
Prepared 22 October 2015