Brown 'to slash spending bids'
GORDON Brown is reportedly to warn Cabinet colleagues that billions must be cut from their public spending bids - or the Government will risk politically dangerous tax increases.
Whitehall departments have until Monday to make their submissions in the comprehensive spending review. But the Treasury is already concerned about the extent to which departments' bids exceed cash in the kitty, the Sunday Times reported.
Tax revenues this year are down £7.2bn on previous projections, and by £9.9bn for next year. That's mainly due to a drop in revenues from corporation and income tax - a result of the global economic slowdown.
The Chancellor signalled in his pre-Budget report in November that he was prepared to raise tax to fund improvements to the National Health Service.
Brown is also proposing to shake up the way public spending is controlled. At present, all departmental spending is planned three years ahead and announced in a comprehensive spending review every two years. The only exceptions are the plans for transport and health, which are set out for the decade ahead.
But Brown has indicated he wants the planning period to change from three years to ten in certain areas of spending.
Analysts and Opposition MPs want to know exactly which aspects of expenditure will be covered by this change. They suspect that by planning over a longer timescale, the Chancellor may be able to fudge the figures when spending targets are missed. Mike Warburton, tax specialist at accountant Grant Thornton, warned: 'The trouble is that he can use the later years to hide all sorts of problems he would rather not face now.'
According to Treasury papers, this year's review, the third since Labour took office in 1997, will give ' consideration to the need to plan beyond the three-year horizons in specific areas'.
A Treasury spokesman said the proposal applied only where ten-year programmes already agreed for transport and the health service might affect a separate budget. There was no question of trying to delay tough spending choices far into the future.
Shadow Treasury Minister John Bercow accused the Government of hoping that improvements in other key public services could be postponed for a decade. 'Is this another way of pushing back targets into the future and refusing to take responsibility for reforming crumbling public services?' he said.
John Butler, economist at HSBC, said extending the scope of ten-year plans beyond health and transport might be a way of underlining the need for tax rises. 'There are more than just two high-profile branches of public service that need a lot more money,' he said.
Key figures for the public finances are due on Wednesday. These cover January, a critical month in which about 15% of all income tax and 20% of all corporation tax is paid. Analysts are expecting a Government surplus of about £2bn this year.
