The Comprehensive Spending Review

Where the magic happens.
The Treasury Building, Westminster.

2007 Comprehensive Spending Review

The presentation contents:

• NI Public Expenditure System- Background
• UK Comprehensive Spending Review
• Context- Fiscal & Socio-Economic
• Comprehensive Spending Review in NI
• Devolved Assembly
• Equality & Consultation

NI Public Expenditure System- Background

• Funding for devolved functions in Northern Ireland comes mostly(over 90%) from the application of the Barnett Formula. The rest is made up of the Regional Rate, borrowing and Peace funding.
• UK Government’s approach to public expenditure is underpinned by the setting of the Fiscal Rules and the Code for Fiscal Stability.
• Public expenditure per head in NI is the highest of any part of the UK. It is higher across a wide range of public services, most notably agriculture, housing, public order and economic development. This is because NI has a more deprived population, with higher levels of economic inactivity, and is much more sparsely populated than anywhere else in the UK apart from Scotland.

UK Comprehensive Spending Review

• Spending Reviews set spending priorities for the next three years, and the coming Comprehensive Spending Review involves an even more fundamental examination of spending than previous CSRs.
• It will cover the financial years 2008/09, 2009/10 and 2010/11.
• Its stated objective ‘is to identify what further investments and reforms are needed to equip the UK for the global challenges of the decade ahead.’
• A ‘Review of the Future Role of the Third Sector in Social and Economic Regeneration’ is being carried out, but only covers England.
• Long term trends and cross-cutting challenges are being examined, eg demographics, climate change, globalisation.
• There will be an ambitious value for money programme to release resources.

Context- Fiscal & Socio-Economic

The UK’s fiscal position is more constrained than in previous years.

• Spending is expected to be lower than previously.
• As the population is ageing, there is more pressure on health and social services, and less on schools.

Comprehensive Spending Review in NI

Timetable:

• There is a need for significant savings. Efficiency reviews are underway across a range of services including health and social care, education, and social housing.
• Departments have been asked to identify a 3% efficiency saving across the CSR period, and must have plans produced by December.
• Administration spending is to be reduced.
• All money saved in NI will be retained in NI, and reallocated to priority frontline services. Allocating this will be a key issue for Ministers.

The 2005 budget identified four cross-cutting priorities:

1. Economic growth;
2. Public sector reform;
3. High quality public services; and
4. A society based on partnership, equality, inclusion and mutual respect.

The Secretary of State has set the following priorities for the CSR:

1. Children & Young People;
2. Anti Poverty and Social Exclusion;
3. Sustainable Development; and
4. A Shared Future.

Devolved Assembly

Under a Devolved Assembly, the same basic process will be followed, however, there may be some slippage on the timetable.

Equality & Consultation

Departments will begin developing spending proposals early in 2007, and the Secretary of State has encouraged them to discuss these with social partners, and focus on outcomes.

Consideration of equality, new TSN and good relations impacts will be fully mainstreamed into the Budget process, and it will follow EQIA procedures.

• A ‘Strategic Equality Stocktake’ will review existing programmes and identify areas for improvement to inform the CSR.
• Social inclusion and sustainable development impacts will be included.
• There will be initial consultation with key stakeholder groups regarding spending priorities over the CSR period.
• The draft Priorities & Budget document will be consulted on fully in Autumn 2007.