The UK Spending Review takes a long but narrow view that sets us up for future problems

The BBC reported the UK Government’s Spending Review with the headline “Labour gambles on patience in an era of impatience” and complimented the Government’s approach as one that broke with the “short-termism” of too many politicians eyeing up their next election result but a deeper reading of the review shows that while the growth sectors marked in the budget are indeed unlikely to bring results for some years to come, the cost of pushing money into these sectors comes at the price of undermining their own goals.

“Defence” is a prime example of this. Keir Starmer is determined to allow Donald Trump to make policy for him with promises of increased military spending despite it being objectively one of the worsts ways to support the UK economy. Simultaneously, the Spending Review is promising cuts to the Foreign Office and Home Office which will mean that efforts to foster peace through diplomacy and through societal integration will be compromised. In effect, the UK is spending money to prepare for the “next war” while doing its best to ensure that that “next war” will actually happen to justify the money they spent building the bombs.

Similarly, while increased spending on healthcare is sorely needed amidst rising demand since the pandemic, the UK Government is cutting spending on the areas that most directly affect healthcare demand - housing, environment, and transport are all seeing real terms cuts and areas like energy are nearly flatlining with much of that budget being absorbed by expensive new nuclear projects rather than cleaner, cheaper and faster to deploy renewables. The result is that these cuts today will result in even greater healthcare demands further down the line.

The devolved budgets were promised a real-terms increase but the Scottish budget was increased by substantially less than the overall average increase across the entire Spending Review. This is largely a result of the “big ticket” increase items like the military not creating Barnett Consequentials, thus not passing spending over to the devolved budgets whereas cuts to areas like transport and the environment do. We do not yet know how the impact of devolved and reserved taxes will affect these spending promises and we don’t yet know if the changes to sectors that affect devolved spending will feed through - The Scottish Government is not obligated to “pass on” spending cuts or increases in devolved areas like housing and healthcare but there is often extreme political pressure for them to do so.

All of this shows that the UK’s “long-termism” is still decidedly one of tunnel vision and will set the UK up for more problems further down the road. For a future that takes both a long and a broad view of what constitutes a better nation for All of Us, see our book Sorted.