The spending review did not end in the way most people expected. When Cameron’s top team gathered around the Chequers table on Sunday to tuck in to roast lamb and Yorkshire puddings, there was virtually no talk of squeezing out extra savings to balance the books. They had money to spare.
This was not the impression given to the rest of the cabinet, or indeed the BBC. But the truth was that the Treasury was sitting on a small cash-pile. After agreeing all the big budgets, there was £1bn or more left in the emergency fund for the quad — Cameron, Clegg, Osborne and Alexander — to distribute.
“They went from the horsemen of the apocalypse to Father Christmas overnight,” said one official close to the final days of the spending negotiation.
This back of the sofa discovery is a feature of spending rounds. The Treasury always set cautious targets so there is some flexibility at the end. But how Cameron handled the mini windfall is revealing. It gives us an insight into both his priorities and the methods he used to bluff the BBC into paying for the World Service.
1) Who benefited from the surplus cash?
Given all the fuss made over the defence settlement, you’d think the prime minister would grab the chance to give the MoD a better deal. After all, Cameron is a strong supporter of the forces. But, for whatever reason, Liam Fox’s department was not seen as deserving.
The great beneficiary was Vince Cable. His settlement was reopened in order to put almost £400m into the science budget, which spared it from an even bigger cut. The theory in Westminster is that it was partly a reward for Vince playing it straight through the negotiations and taking a big political hit on fees.
There were other winners too that I’m trying to pin down. Transport schemes? Child benefit for 16-19 year olds?
2) Was Mark Thompson suckered into paying for the World Service?
The ambush on the BBC was planned a long time ago. The coalition knew any hint of talks would leak so left it to the end of the process. Various threats were made to Thompson, including off-loading the cost of free TV licences for pensioners. But behind all of them was a implicit and at times explicit warning that there was no money left in Whitehall. That, of course, wasn’t quite the situation.
On Monday, while Thompson thought he was helping the Treasury meet a funding gap, Cameron et al were handing out surplus cash. It is hard to avoid the conclusion that he was bluffed.
Jim Pickard
Kiran Stacey