Pre-Budget Report 2009 - Treasury Contents

Examination of Witnesses (Question Numbers 300-319)


16 DECEMBER 2009

  Q300  Mr Fallon: You have estimates but you are not prepared to publish them?

  Mr Darling: The reason we do not is because up until now we have only published those estimates as part of our estimate of departmental spending and our AME spending over a three year period. We have not published them beyond that before now.

  Q301  Mr Fallon: `You have estimates but you are not prepared to share them with Parliament. Let us come to the spending. The note you have supplied to the Committee shows total managed expenditure for three years after next so you must have projections of the two constituent totals, Annually Managed Expenditure and the departmental spending total not the individual departments but the total. You must have current projections of those totals.

  Mr Darling: Inside the Treasury we have many, many projections. I was just going to come on to the next point, Mr Fallon, because I think it is an important one. What we have published in the PBR in terms of content and in terms of the range of figures has been the same as it was for the last ten or so years. I recognise that within this Committee, and therefore the House, and outside the House too, there is increasing interest in various forecast assumptions that we make. I want to strike a balance between ensuring that what we publish are figures that people can say, "Yes, that is what the Government is going to spend", whether it is on social security, whether it is on the expenditure of individual departments, and also giving people a fair idea of some of the uncertainty, some of the other figures that might be around. I have been reflecting on this for some time. I think there are areas probably where we need to go further, because it will probably inform the debate, and I am reflecting on how we can do that and I hope we can come to a conclusion on that fairly shortly. I know full well that you have asked for—you collectively—more information, you did so at yesterday's hearing, you have done so on previous occasions, and I am reflecting how best we can do that. What I think we need to do is to make sure that when we do publish figures people can see what exactly are those things that are fixed and decided upon and those things that are simply estimates of what we are doing.

  Q302  Mr Fallon: Chancellor, I did not ask you for decisions, I asked you for your projections because Table 12 of the Budget document of 21 April, the leaked document, showed the figures quite clearly, showed cuts in departmental totals of 4%, 1.8% and 3%. The real reason you are not sharing these figures with us is that they show you are going to cut public spending. You are not being frank with us, are you?

  Mr Darling: As I said to you, the Treasury does have forecasts and estimates for thousands of different bits of information and they are necessary to put together our overall forecasts. What we publish are the Departmental Expenditure Limits when they are fixed, we publish the AME forecasts—social security, debt interest and so on—when they are fixed, what we do not do though is publish every assumption, every estimate because that is not an indication of what the Government's policy is. You take that document you referred to, which you say therefore implies percentage cuts in each department, it does not because the Government has not yet decided on what expenditure will be in any department. We have not done the Spending Review or reached a Budget settlement for any department.

  Q303  Mr Fallon: Chancellor, we understand the difference between a projection and decision.

  Mr Darling: Good. I am glad about that.

  Q304  Mr Fallon: The Institute for Fiscal Studies have been able to calculate that in effect you are cutting public spending by an average of 3.2 per cent a year over those three years. Now they have been able to calculate that, why will you not admit it?

  Mr Darling: The IFS, and indeed anybody else, can make stylised assumptions because it depends on what they assume the Government actually does in relation to spending and can come up with a conclusion. My point to you is we have not yet decided on the individual Departmental Expenditure Limits, a point which you accept. In relation to spending as a whole, as I said the other day, we assume that spending overall is broadly flat. Within that I have said I want to protect some of the frontline services, which you know about, but in relation to what happens to other departments, we have set ourselves ambitious targets in terms of getting savings but I have said, and I said it in the Pre-Budget Report, that some programmes will have to be cut, some programmes will have to be delayed, some things will have to be reprioritised because we are going into an era where public spending will be much, much tighter than it has been over the last period. I have made no bones about that, I do not flinch from that but when people say, "Okay, so what does it mean in Department X or Y", no we have not done the Spending Review yet.

  Q305  Mr Fallon: I understand that, but you are trifling with the Committee when you are telling us that because you have the total managed expenditure total it is not possible to even provide your current projection for the two big totals, annually managed expenditure and the departmental total. You have admitted today you have those projections but you are not prepared to share them with Parliament. You are not being open about this.

  Mr Darling: I am being very open about it and about the fact that I come to a different conclusion from the one that you come to. What I am saying is that we cannot publish, because we have not done a Spending Review yet, our decisions in relation to those things. What we have done in Spending Reviews is to publish our decisions and people can judge us for good or ill as a result of that. I have always been clear. There is nothing new about this. Since the Treasury first set up shop it would have had the estimates and forecasts, but those do not necessarily translate themselves into being actual decisions.

  Q306  Mr Fallon: It sounds as if you were prepared to publish more information this time but, in fact, you were overruled by Number 10, is that right?

  Mr Darling: No, that is not right.

  Q307  Mr Fallon: Let us turn now to this issue of protection. You are protecting what you call frontline schools expenditure.

  Mr Darling: No, frontline services.

  Q308  Mr Fallon: It says here "frontline schools". Paragraph 6.28 of your own document: "to ensure cash funding for frontline schools rises in real terms". What is the definition of "frontline"?

  Mr Darling: What is being protected is the schools budget which is set out there. I appreciate what you say in a document, a school is a school is a school.

  Q309  Mr Fallon: No, I want to know what is frontline. Is it the delegated schools budget? Is it the total budget given to the local authority?

  Mr Darling: I see what you mean now. I was just making the point there is no such thing as a backline school or anything like that. A school is a school. Can I ask Andrew because Andrew has got the figures in front of him which will explain exactly what we are doing in the schools budget.

  Q310  Mr Fallon: Could you explain what is in the frontline?

  Mr Hudson: The judgment that is made for schools is that the resources will ensure near cash funding, to use the technical term, for the frontline rising by 0.7%. The sorts of things that will protect is it will enable every school to guarantee individually tailored education, including catch-up support for 7-11s who are falling behind, free childcare for 3-4 year olds and more for disadvantaged 2 year olds and, as the Chancellor stressed earlier on in the discussion, the September guarantee. We made an assessment of the sorts of objectives that we wanted to achieve and the funding necessary to deliver that is the 0.7% a year.

  Q311  Mr Fallon: What is at risk then? Are they central Government grants like, for example, the £83 million you are spending on the Schools Music Service, the £168 million on the Sports Strategy for Young People? These are the things that are now at risk.

  Mr Darling: No decisions have been made on those.

  Q312  Mr Fallon: But are they frontline or not?

  Mr Darling: Andrew has explained what is being protected.

  Q313  Mr Fallon: Is the Schools Music Service frontline? Let us have some answers.

  Mr Darling: I am just answering it. What Andrew Hudson was explaining is what is covered in the protection that is being offered either in terms of a real term increase or simply at inflation. As far as the rest of the Department for Education is concerned or, indeed, other departments we have not yet reached a decision because we have not settled the budgets of any departments.

  Q314  Mr Fallon: So what is at risk are, in fact, things like the Schools Music Service, the Sports Strategy, 28 million being spent on teenage pregnancy, the Children's Fund on Social Exclusion, the Children in Care Grant of 43 million. All of these programmes are actually not protected, they are at risk.

  Mr Darling: We have not fixed the budgets for any of these and we will decide upon that in due course.

  Q315  Ms Keeble: This was just a point about the options. You have said that you have not got the decisions but what we would like to see is the options.

  Mr Darling: How do you mean "the options"?

  Q316  Ms Keeble: If you have a number of projections as possibilities, if people can see what the options and the consequences are. You previously said you would not consider tackling old-age pensions but there must have been a decision about the pensioners' income.

  Mr Darling: Because we increased that.

  Q317  Ms Keeble: Exactly. It is about what the options are, what the costs are. These are unprecedented times for people and they rely on the services and it is about knowing what can happen, what it costs and what the options are. He calls them "forecasts", I call them "options".

  Mr Darling: It is up to whatever individual, whatever government, to decide what it thinks is a priority and what is a lesser priority and what it is not going to do any more of. There is no list of things that you consider and list of things you do not consider. Inevitably, every budget holder whether it is the total budget in my case or an individual department, ministers, have to make their minds up as to what is important. The same with tax, you have to decide what is the thing that is most important to you.

  Q318  John Thurso: Can I very quickly clear up one technical point. I had a very interesting exchange with Mr Richardson yesterday regarding the fact that accounts are in IFRS but that the Budget is done under Eurostat, which has the effect that PFI is accounted for differently in each. It was a very good technical explanation and I do not want to go into the technicalities. What I suggested, which is obviously a ministerial decision rather than anything else, is that it would be extremely helpful in future documents if there was a clear reconciliation between the two so we do not all have to scurry around doing the work. Would you be prepared to do that in the interests of transparency?

  Mr Darling: I will certainly consider it.

  John Thurso: Thank you.

  Mr Tyrie: How very generous!

  Q319  John Thurso: Half a step better than I expected.

  Mr Darling: It is all very uncertain.

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