Policy

Government spending

Issue

Controlling spending is what any well-run organisation should be doing as a matter of course and with an annual budget of over £700 billion, the government should have the most effective spending control possible.

We must also make sure we are spending people’s money responsibly and providing value for money.

Actions

In the 2013 Spending Round we announced the following actions:

  • £11.5 billion of savings from departmental resource budgets in 2015 to 2016, enabling an additional £3 billion to be invested in capital projects
  • a long-term plan for capital investment to 2020 and beyond, including how £100 billion of infrastructure investment will be allocated over the next Parliament
  • the introduction of a cap on welfare spending to ensure that welfare remains affordable
  • at least £5 billion further efficiency savings in 2015 to 2016

At Budget 2013 we announced a cap on total welfare spending for 2015 to 2016 onwards. This means that if spending is forecast to exceed the limit, savings will have to be found. It will apply to welfare spending with some exceptions, including the state pension, bringing in over £100 billion of spending under new controls.

This builds on the following actions:

  • the deficit reduction plan is firmly on track, with the deficit reduced by a third in the three years since 2009 to 2010
  • departmental spending plans for 2016 to 2017 and 2017 to 2018 will continue to fall at the same rate as those years covered by the Spending Review 2010 and Spending Round 2013
  • departments, devolved administrations, and their arms-length bodies are now required to monitor and manage information about spending more effectively and improve the skills needed to deliver their spending plans
  • we are providing incentives to departments that manage public money well - those with good financial management will be given more freedom while those with bad management will be subject to more Treasury control
  • a wide number of reforms have been put in place to help deliver the necessary savings in a way that protects the quality of public services, including in the NHS
  • ongoing pay restraint for public sector workers

Background

With the largest budget deficit in the UK’s peacetime history, reducing the deficit is one of the government’s most urgent priorities. Find out more about the government’s plans to reduce the deficit.

Chancellor of the Exchequer George Osborne made a series of announcements on spending taxpayers’ money responsibly in the Spending Review 2010, Autumn Statement 2012, Budget 2012 and Spending Round 2013.