The 2015 Spending Review was pre-emptively billed as one of the most brutal in living memory, with talk of cuts of as much as 40 per cent in unprotected departments leading to rumours of pistols at dawn along the corridors of Whitehall.
As a result, the initial reaction to the Spending Review from many was simply a sigh of relief, with the Government having turned away from its attempts to cut tax credits and declined the controversial option of reducing police budgets.
Many of the most alarming rumours leaking out of Whitehall proved to be unfounded, including whispers that highly-esteemed funding pots like the Big Lottery Fund would face the Chancellor’s axe.
What’s more, this was all achieved without the Chancellor having to renege on his commitment to achieve a Budget surplus by 2020 thanks to new figures from the Office for Budgetary responsibility suggesting he had rather more room than previously expected.
With the red dust beginning to settle, however, the implications of the announcements the Chancellor made are beginning to come through.
The details on the Apprenticeship Levy have been met with what could be termed a mixed reaction, with the Federation of Small Businesses being one of the few bodies that welcomed the news.
As the Financial Times reported this morning, both the CBI and the Institute of Directors have condemned the plans as a “payroll tax” that would take £12bn from businesses.
Others noted that the Chancellor was beginning to whittle down “protected” funding allocations through the practice known as “tucking under” in Whitehall circles.
As the New Statesman noted, the announcement that “more aid will be administered by other government departments, drawing on their complementary skills” - a tactic which enabled the Government to make cuts to the seemingly protected Department for International Development.
Other surprise cuts included the seizure of government departments’ buildings. The Chancellor’s decision to set up a new body that would take ownership of government buildings and charge the departments market rates could see several lose far more funding than they expected.
The Chancellor was also able wax lyrical about protecting schools’ funding while simultaneously cutting £600m through eliminating the funding provided via the Education Services Grant.
The big debate, however, was over the extent to which the supposed reprieve for poorer families through the delay in cuts to tax credits actually meant they were better off.
In its Spending Review post mortem, the Institute for Fiscal Studies said that the transition to Universal Credit would see 2.6m families lose £1,600 a year.
In spite of these concerns, and the many more that will be voiced over the weekend as the analysis continues, the Chancellor can nevertheless claim this as a success. His tactic of talking tough and cutting softer has paid dividends yet again, with some deep cuts going unnoticed amid testimonies to his benevolence.
One loser from this review, however, could be the OBR. It has come under increasing scrutiny over its predictions for Government finances, with the Financial Times reporting that several leading economists had criticised the body for its generous predictions and for giving the Government a “free pass”.
If the credibility of the body comes into question, the Chancellor may come under increasing pressure from his backbenchers to make deeper cuts in order to meet his self-appointed spending targets.
Going forward, the body will need to work hard to protect its reputation if it is to remain effective as a tool for policymakers.