The Fabian Commission on Future Spending Choices asked me for some ideas about the public spending process in the UK and here are my suggestions for reform:
1) Put [3 yearly] Spending Reviews (SRs) on a statutory basis to cement their role in the spending process (and stop governments messing around with the timings unless an emergency).
[SRs have varied in length from 2 to 3 years in practice and 3 to 4 years in intent. I’m open as to which precise cycle we adopt, but would suggest 3 years].
2) Include performance and efficiency objectives within the SRs.
3) Require the publication of a clear Fiscal Plan alongside the SR, including a set of Fiscal Rules and a clear taxation strategy for the next [3 years].
4) Require the publication – alongside the new draft SR – of the government’s evaluation of the last one, including an independent assessment by the Parliamentary Budget Office (see below).
5) Include in the SR legislation a requirement to publish draft plans for public consultation, to be organised through the Select Committees of Parliament.
6) Have a vote of the House of Commons on the final Spending and Fiscal Plans.
7) Remove the convention that finance bills cannot be amended and require the Chancellor to show how annual budget bills implement, or deviate from, the 3 year Spending and Fiscal Plans.
8) Create a Parliamentary Budget Office, along the lines of the USA’s CBO, and subsume the OBR into it. Mandate and resource it to carry out independent assessments of major spending plans, policy changes and proposals, including from Opposition parties as well as government. Give it a role supporting Select Committee’s and independence to initiate its own studies.
9) Change reporting requirements so that government departments have to report clearly against SR objectives, plans and performance.
10) Introduce a set of Standards for Public Performance Reporting (including so-called efficiency gains) that applies to all public bodies (see my White Paper on this).
So there’s a few ideas – all comments, as usual, welcome.