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Spending Review
SR2002/Ove
15 July 2002
Chancellor Gordon Brown today announced the outcome of the 2002 Spending Review, setting out the Government's priorities for the next three years, and, on a foundation of economic stability, reaffirming its commitment to delivering strong and efficient public services that deliver greater opportunity and security not just for some but for all.
Following the record increases in NHS spending in the Budget, the Chancellor announced substantial increases to education spending of 6 per cent a year for the next three years, after inflation, matched by reform to secure better results for pupils right across the country. Through this new investment, the Spending Review seeks to remove the barriers which prevent people from realising their full potential, and ensure that, as a country, we make the most of new opportunities in the global economy.
The Chancellor also announced significant new resources to build stronger, more secure communities through investing in crime and regeneration, to ensure greater productivity and prosperity through investing in transport and housing, and to tackle the insecurities of today's world through investing in defence, foreign affairs, and international development.
Despite the uncertainties in the global economy, the platform of economic stability in the UK - strong public finances, low unemployment, inflation under control, low interest rates, and a reduced national debt - has made possible this increased investment in Britain's public services while meeting the Government's two fiscal rules. Spending on public services will rise by £24 billion in 2003-04, £40 billion in 2004-05, and £61 billion in 2005-06; an average growth of 5¼ per cent a year after inflation. Of the £61 billion of additional spending in 2005-06, three-quarters will go to the Government's key priorities of education, health, transport, housing and the fight against crime. Public investment is set to rise to 2% of GDP by 2005-06, to a level of £25 million - five times higher than in 1996-97.
The 2002 Spending Review focuses around the following key priority areas:
The Government is releasing resources to key priority areas:
Details of all departmental settlements are published today in the White Paper "Opportunity and Security for All: Investing in a fairer, more enterprising Britain". In each area of public service delivery, the Government is tying resources to reform and results. Demanding targets have been set for each department, with independent audit and inspection to monitor progress and power being devolved from the centre to frontline staff, giving them the power and flexibility to deliver.
The 2002 Spending Review is the first review to be wholly undertaken under a resource budgeting framework, rather than a cash based system. Resource accounting and budgeting accounts for the full economic costs of providing services, and ensures that the Government properly captures the full economic costs of its investments whilst incentivising departments to manage their assets wisely.
1. The 2002 Spending Review White Paper "Opportunity and Security for All: Investing in a fairer, more enterprising Britain" contains details of all key announcements and settlements.
2. The Government conducted a comprehensive review of public services - the Comprehensive Spending Review - in 1998. The 2000 Spending Review built on this by setting targets and allocating resources for the three years to 2003-04. The 2002 Spending Review revises these plans for 2003-04 and outlines new plans for 2004-05 and 2005-06.
3. For further details on the 2002 Spending Review, or for other press notices, follow the links on this web site. General press enquiries should be directed to the Treasury press office on 020 7270 5238, or to the relevant government department press office.
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