For all the preceding rhetoric, it is very clear that no ‘zero-based’ review of government spending actually took place for this Spending Review.
Instead it was a familiar story – more money for the NHS and a squeeze on day-to-day spending elsewhere.
It remains to be seen whether more health spending will produce better outcomes. Given the recent lack of productivity in the health service, this extra money could easily be wasted.
As for the rest of government, spending restraint is welcome but it needs to be accompanied by public service reform. To spend less, government must do less – and employ fewer people. It isn’t clear that message has got through.
Defence is getting the lion’s share of increased capital spending. Elsewhere, trying to shift capex from London and the south-east to other regions might be smart politics, but may also reduce the economic return such spending produces. Crucially, this Spending Review did nothing to address the supposed ‘fiscal black hole’ that exists against the Chancellor’s fiscal rules. So we should brace ourselves for tax increases in the Autumn, and a Summer of speculation over exactly where they will fall.
