Three things that the CSR postponement leaves unanswered

 

Today’s announcement from the Chancellor that the multi-year spending settlement is being pushed back to next year with an interim one year 2021/22 carry over budget for departments leaves a number of questions unanswered beyond the pure government finance allocations. I explore three areas here around what this means for the wider government agenda and internal functioning in terms of competition, security and reform.

  1. Competition

If increasing the competitive base of the UK through ‘levelling up’, aggressive Industrial Policy, picking winners, undertaking infrastructure investments and reskilling Britain’s young for the future of work was a hallmark of the new Britain’s Place in the World policy, doing this through a one year settlement is nigh on impossible. The Chancellor’s statement today makes clear that there will be some multi-year settlements for Building Back Better yet this lacks certainty and will the much awaited National Infrastructure Strategy, ‘Project Speed’ and the promised green energy revolution fall into these multi-year settlements? If so, which departments will get these and if not, what will be in the economic recovery settlement for the next year? Flagship policies announced by the Prime Minister in his ‘reset’ conference speech of a few weeks’ ago now look to be in some difficulty. It is hard to see a strong multi-year delivery programme bearing fruit in those constrained circumstances. What this in all likelihood means is that there will be more discretionary spending driven from HM Treasury, No10 and the Cabinet Office on a shorter-term basis and acts as a strong further centralising of power force in this government’s operations. This offers both threats and opportunities to those seeking to engage with government and requires a laser focus on the art of the possible in these constrained times. And that is to say nothing of the internal competition that this has thrown up between No10 and No11 with the Chancellor clearly confident enough to force the Prime Minister to this position and strengthen his King across the water claims…

  1. Security

The much vaunted Integrated Review (IR) of defence, foreign policy and security now seems to be left high and dry. A key focus of the IR had been to link the once in a decade review of defence and security capability to the CSR in order that policy, capability needs and spending were intrinsically linked. The IR was also predicated on being holistic and covering everything from international trade to international development and from terrorism to soft power cultural values. The theory would have been that this could create the conditions for a genuine shift in the UK’s approach to its national interest and to emerging threats through using new technologies, implementing the new Integrated Operating Concept 2025, renewing alliances and building new engagement platforms around the world. Again, this cannot happen on a one year basis. The IR will still go ahead but it will either have to be implemented in a piecemeal fashion this year or it will have to wait until later next year to as part of the wider CSR process. In the meantime, difficult decisions have to made on immediate capabilities which may have to be fudged while larger strategic anchor programmes will have to be further postponed, with the knock on impacts this also has on industry and on the UK specialist skills base in these areas. That’s before Brexit further changes the dynamic on 1 January 2021. Defence chiefs may have to hold their nerve now and fight harder than ever in what is always a fraught MOD-HMT relationship in order not to lose the hard work done to date.

  1. Reform

The CSR should have been a totemic moment for the government that both allowed it to move beyond the short termism of Covid and really cement the agenda on which it won so handsomely in December 2019. They seem like simpler days now and quite clearly the post-Covid world is some way off. Regardless, the CSR could have been a platform on which the government’s long-term agenda was built on. It would have been followed by a reshuffle in all likelihood that would have put the government on a clearer path of delivery. A reshuffle may still take place after the one year settlement in November but it will take place on different territory and will have to be focused around Covid recovery and Build Back Better rather than the fundamentals of creating a science superpower that renews Britain’s economic, social and international standing as Team Boris at one point hoped it would. The civil service reform programme that is looking both at performance and delivery but also structures and uses of technology relies on a longer-term strategic framework in order to be successful and impactful. Civil service reform is the Holy Grail of disruptive governments since time immemorial but as the life of this Parliament moves on, long-term funding settlements that would support machinery of government changes become harder and internal opposition to change grows (see Lord Sedwill’s blindside against reform today) then this gets ever harder. If Gramsci said cultural change is as important as political change, a creed this administration seems to have adopted, then without a proper horizon in which to operate, short-termism will not do. But short-termism and centralised power is what we now live with and will do for some time yet.

These are the true legacies of a seemingly administrative budgeting decision.