Downing Street Says » Spending Review

Asked how the Government would be able to reassure people that their views would be taken into account, the PMS said that the Government’s approach was to be open and consultative about this; there was recognition around the Cabinet table that this was a significant challenge and it was important to take the country with us. Today we were setting out the process that would take place on the spending review, so we could start the consultative process as soon as possible.

Asked if any figures were being announced today, the PMS said that there weren’t any figures being published today. Today’s announcement was about the process we would go through for the spending review. There would be a Budget in a couple of weeks time, which would set the overall amount of spending that would take place, consistent with our fiscal objectives. The spending review itself would be the process by which we made choices as to where and how we would spend money, and where we would stop spending money. Today’s announcement related to how we went about that process.

Put that the Treasury under the last Government did not accept the IFS interpretation of its spending objections, the PMS said that this morning the Chancellor had simply been setting out what the IFS calculation was.

Asked what the Prime Minister thought about Fitch’s comments regarding the Government needing to take fiscal consolidation, the PMS said that what Fitch had been saying about fiscal consolidation was in line with what the Government had been saying. We were very clear that we would do what we needed to do to tackle the deficit.

Put that Fitch had questioned the idea of loading the bulk of tightening on spending, the PMS said that he had not seen the full report from Fitch, but the Prime Minister had been clear that the bulk of the consolidation should come on the spending side. There was considerable international evidence that successful consolidations were based around spending restraint. In terms of growth it was important that we got a sustained private sector recovery, and dealing with the deficit would allow interest rates to remain lower for longer.

Put that this Government said that it had left a golden economic legacy to the previous Government after a fiscal consolidation of 50-50 and that they were now talking about 80-20, the PMS that the Government had talked about the bulk coming from spending consolidation. International evidence showed that successful consolidations tended to be those where the bulk of the consolidation came on the spending side.

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» Tuesday, June 8, 2010

Spending Review

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