The recent Spending Review did not involve a genuine zero-based evaluation of government spending. While additional funding was allocated to the NHS, overall spending on other public services was constrained. There is skepticism about the effectiveness of increased health spending given current productivity issues. To reduce spending effectively, government reforms and staffing cuts may be necessary, although this message appears unheeded. Defence is set to receive substantial capital investment, but the shift of funding away from London raises concerns about economic efficacy. The Review also failed to address the fiscal challenges, hinting at potential tax increases ahead.
Given the recent lack of productivity in the health service, this extra money could easily be wasted.
To spend less, government must do less - and employ fewer people. It isn't clear that message has got through.
Trying to shift capex from London and the south-east to other regions might be smart politics, but may also reduce the economic return.
This Spending Review did nothing to address the supposed 'fiscal black hole' that exists against the Chancellor's fiscal rules.
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