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 2012-13 BUDGET(£ billion)

Health 108.4

Education 56.3

Defence 25.2

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, 1976-1993 (Oxford: Clarendon Press, 1995).

Thatcher & Major’s reforms ofpublic 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 2004.

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, 2000-2001, 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