Main spending departments Department for Education Department of Health Department for Transport Department for Communities and Local Government Department for Business, Innovation and Skills Home Office Ministry of Justice Ministry of Defence Foreign and Commonwealth Office Department for International Development Department of Energy and Climate Change Department for Environment Food and Rural Affairs Department for Culture, Media and Sport Department for Work and Pensions Her Majesty’s Revenue and Customs Cabinet Office

Top spending departments Department BUDGET (£ billion) Health108.4 Education56.3 Defence25.2 Communities and Local Government 28.4 Business, Innovation and Skills 16.7 Source: HM Treasury, Comprehensive Spending Review 2010

Treasury objectives Provide funds for all government activities Limit expenditure to acceptable limits Maintain control over departmental budgets Input into departments’ policy decisions Keep expenditure within the bounds of the possible Avoid excessive taxation (but also maintain necessary levels of taxation) Maintain funding balance between departments

Departmental objectives Fulfil service commitments Achieve targets set by minister/cabinet/PM Show it is vigorously pursuing policies More spending = more effectiveness Maintain (or increase) funding levels as far as possible Compete with other departments

Common interests Maintain government’s reputation for competence Deliver effective services Maintain government’s reputation for financial responsibility Keep costs within reasonable bounds Keep taxes as low as possible

Causes of tension Departments believe Treasury sees everything in terms of money Treasury believes departments don’t understand financial constraints Departments believe other departments are over-funded Overspending and underspending

Departmental underspend “The FCO is heading for an underspend and wants to get money out of the door. If we spend money in this financial year on a one-off basis then we can have at least £1m. “In the past, it would have been marketing, but Cabinet Office restrictions may make that difficult.” – Sir Andrew Cahn, chief executive of UK Trade and Investment. The Guardian, 6 January 2011.

Accommodation between Treasury and Departments: ‘Negotiated discretion’ - Colin Thain and Maurice Wright, The Treasury and Whitehall: the Planning and Control of Public Expenditure, (Oxford: Clarendon Press, 1995).

Thatcher & Major’s reforms of public service provision ‘Next Steps’: the creation of executive agencies  Improving Management in Government: The Next Steps (Report by Sir Robin Ibbs, 1987) New layer of government Marketization of service delivery

New Labour: new direction Blair vs Brown rivalry  Greater role for Treasury in setting policy agendas Prescriptive management of public policy ‘Joined up policy’  e.g. Social Exclusion Unit

Labour innovations Comprehensive Spending Review  Not that comprehensive, since defence spending is set by a separate Strategic Defence Review!  But the first time co-ordinated spending plans had been agreed for several years into the future by the Treasury Public Service Agreements  Between departments and Treasury  ‘New objectives and measurable efficiency targets’  Gets away from measuring success by levels of spending  Overseen by Cabinet Committee (chaired by Chancellor)

PSA examples Increase by 500,000 by 2004 the number of people experiencing the arts. Reverse the long-term decline in the number of farmland birds by 2020 “as measured annually against underlying trends”. Enable 17% of household waste to be recycled or composted by April Improve Britain’s contribution to world peace, to be measured “by a reduction in the number of people whose lives are affected by violent conflict and by a reduction in potential sources of future conflict, where the UK can make a significant contribution ”.

“We are concerned that the Treasury as an institution has recently begun to exert too much influence over policy areas which are properly the business of other departments and that this is not necessarily in the best interests of the Treasury or the Government as a whole.” - Third Report of the House of Commons Treasury Select Committee, , HC73 (London: The Stationery Office, 2001).

Coalition government Abolition of PSAs Retreat from Treasury control of policy... … but constrained by NHS spending decision … … and restricted by austerity measures