Spending Review 2015: How to protect the UK in an age of austerity

SMF Chief Economist Nida Broughton examines the options the Chancellor could look at to protect counter-terrorism and policing.

It’s a few days to go until the Chancellor’s Spending Review and arguments have erupted about how much we have to spend on security and policing. Some reports suggest that the latter might see a budget cut of 20%. According to a letter sent by a senior police officer to Theresa May, the Home Secretary, the cuts that are expected to be announced next week will “reduce very significantly” the UK’s ability to respond to a Paris-style attack. Conservative MPs have also expressed concern, as has the Shadow Home Secretary, Andy Burnham, who said that budget cuts of over 10% would be “dangerous”.

The Chancellor has a difficult challenge on his hands this Autumn. He is aiming to eliminate borrowing and run a surplus by 2019-20 – a feat rarely achieved by previous Governments. At the same time, he is constrained on all sides by promises to protect some areas and spend more in others. The NHS, schools, international aid and defence are all to receive either greater protection than other departments, or see their spending rise. That means that “unprotected” areas, such as the Home Office, which puts £4 billion a year into policing, have to take on the burden of cuts to make up for spending growth in other areas, and allow George Osborne’s deficit target to be met.

Yet it is a rather difficult time to be announcing substantial cuts to policing, to say the least. Is there a way out for George Osborne next week? An area to watch closely is the Government’s commitment to meet NATO’s target of spending 2% of GDP on defence between now and 2020. In 2015-16, the total spend came to 2.1% of GDP, or just over £39 billion. If that goes up in line with GDP, that could mean defence spending goes up by around £4 billion in real terms. Even if the Government chooses to just scrape by on its NATO commitment and keep spending at 2% of GDP, that would still mean a real terms increase of around £2 billion.

On the surface of it, that just means more money for defence and less for everything else, including policing. But there is another option: change the definition of “defence”. The Government has already shown willingness to do this. To hit its 2% NATO target this year, it has included several items that were previously not counted as defence – including war pensions and contributions to UN peacekeeping missions. In the Summer Budget, there was a suggestion that spending by intelligence agencies might be included in the target in the future. NATO would need to agree to it, but another option would be to include some policing activity – activity that relates to counter-terrorism for example. In fact, analysis by RUSI shows that the Government would most likely need to add in extra elements such as this just to stay on track to meet its NATO commitment. Depending on the specific decisions within any newly formed “defence” budget, there might even be room for spending rises in some areas.

This may well be what lies behind commitments by Government to protect counter-terrorism policing. Essentially the Government has to spend more on defence to meet its international commitments. The best way of doing that whilst still hitting deficit targets is to make “defence” do more. The challenge for policing is whether it can pull off a similar trick: take more for counter-terrorism policing and find ways of reallocating resources so as to maintain its current capabilities.

And expect more of this next week: redefining existing commitments and ring-fences will make the Chancellor’s task less daunting than it looks now.


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