A spending review and a reset, evaluating the CSR

Written by Darren Mason, Account Director.

While Comprehensive Spending Reviews are always big moments within the life of a Parliament, where the Chancellor unveils the Government’s spending priorities for years to come; after 12 months of uncertainty and missteps, today’s CSR has taken on an totemic political role.

Previous adjustments to debt rules and the investment “Green Book” have allowed Reeves splash more than £113bn on additional capital spending, setting the direction of travel for the next 3 years.

To the surprise of no one, the bulk of additional cash has been allocated to two of the most ambitious Cabinet members – Health Secretary, Wes Streeting, and Deputy Prime Minister, Angela Rayner.

Labour strategists know re-election is dependent on voters experiencing tangible improvements to the health service, Reeves’ speech tied a strong NHS into the Government’s wider economic growth mission, drawing a dividing line with Labour’s political opponents. However, the Treasury’s largesse will have had strings attached: in return for an extra £29bn cash injection, HMT will have demanded productivity reforms.

While celebrating his CRS win, the Health Secretary may be wary of more challenging conversations ahead with the NHS workforce. Following the unceremonious axing of NHS England earlier in the year, all eyes will be on the forthcoming NHS 10 Year Plan to identify further, more controversial efficiencies.

While there are concerns about the perilous finances of many local authorities, the £39bn affordable housing investment is a clear win for Rayner, demonstrating Labour’s – and the Deputy Prime Minister’s – continued commitment to ambitious housing targets.

With so much political capital invested in a target which is not directly controlled by the Government, power is firmly in the hands of housing builders, developers, and mortgage providers, as demonstrated by HMT’s recent intervention blocking further environmental regulations for housing projects.

Celebrating the “biggest cash injection into social and affordable housing in 50 years”, Ministers will hope this figure is the big political takeaway from the Review.

Today was also a clear win for Ed Miliband. The Energy Secretary will have welcomed headline investments in nuclear power and carbon capture, reinforcing his vision of decarbonisation as an engine for opportunity and economic growth.

Labour has positioned today as a reset, asserting a clear direction and structure missing from its first year in Government. The upcoming Industrial Strategy and Infrastructure Plan will seek to provide further detailed definition, fleshing out the tactical delivery of today’s strategic overview.

However, the outlook for the Government remains challenging. Unprotected departments, including Education and Justice, still face severe real-terms cuts over the next four years, which threaten a drag upon the Government’s North Star mission of unlocking economic growth.

With mounting concerns from backbench MPs, an expensive U-turn on Winter Fuel Allowance, and the global uncertainty caused by President Trump, the likelihood of another difficult Budget increases.

This presents an opportunity to businesses with well-evidenced policy proposals for growth, while elevating the risk of a further damaging tax raid.

The Spending Review has reset the political narrative while firing the starting gun for the sprint to the Budget.