- a commitment to eradicate child poverty, with a target to halve the number of children in relative
low-income households by 2010, on the way to eradicating child poverty by 2020; - increased resources for health, with health spending growing at an annual average of 7.2 per cent a
year in real terms between 2002-03 and 2007-8; - tackling crime, with spending on crime and justice £3.5 billion higher in 2007-08 than in 2004-05;
1.3. Global security and prosperity
To combat terrorism and create a safer, fairer world for all, spending priorities include:
- development spending increasing to nearly £6.5 billion in 2007-08, reaching a ratio of official
development assistance to Gross National Income of 0.47 per cent, the highest level since 1979; - resources to enable UK Armed Forces to respond to global threats, with defence spending growing
by, on average, 1.5% a year in real terms continuing the longest period of period of real terms
growth in planned defence expenditure since the 1980s; and - the resources necessary to ensure the UK is prepared for the threat from international terrorism,
with over £1 billion more for counter-terrorism by 2007-08, raising spending in this area to double
the pre 11th September 2001 level.
1.4. Better public services
To ensure excellent and efficient public services for all, spending priorities include:
- stretching efficiency targets, agreed for all departments, delivering over £20 billion a year of
efficiencies across the public sector by 2007-08, a gross reduction of over 84,000 civil service
posts and the relocation of 20,000 others out of London and the South East; - strengthens and refines the Public Service Agreement framework, with clear outcome-focused
national targets for further improvements in public services, developed in consultation with front-
line staff; and - devolves greater responsibility for delivery to local managers and the front line, confirming the
abolition of over 500 input and process targets.
2. Decision-making Process and Implementation
2.1. Experiences pre-1997
The planning and control of public expenditure is vital to ensure that public services demand equate with
supply and that available resources are used as efficiently and effectively as possible.
Pre-97 the Government operated a regime of annual public expenditure Surveys, which set spending
limits for departments for one year ahead. As these plans came up for renegotiation every year, a lot of
effort was put into bidding for resources rather than focussing on delivery. Additionally there was less
scope for longer-term planning. Participants therefore viewed them with scepticism and so neither the
Treasury nor departments could rely upon the plans to achieve either effective planning of, or control
over, expenditure.
In addition, an annuality rule was also in operation meaning that money not spent in one year could not
be carried over to the next. This encouraged departments to use up all their resources before the end of
the financial year. Figure 1 shows that on average in the past there has been a surge of spending at the