The Comprehensive Spending Review – what to expect

Chancellor George Osborne shares the latest round of cuts and spending plans in the Autumn Statement and Comprehensive Spending Review today. ACE's Olly Johnson outlines what to look out for.

To a sector that is forever in need of consistent government policy, Labour Chancellor Gordon Brown’s introduction of Comprehensive Spending Reviews in 1998 was a positive step. The CSRs set five-year departmental budgets while the previous system meant they could change annually, creating uncertainty.

This year the newer format of the review might turn out to be silver lining in the otherwise murky cloud of departmental budget cuts. The expectation is that unprotected departments (notably often the ones that are important to the success of the infrastructure sector such as BIS, DCLG, DfT and parts of the Department of Education that deal with vocational training) will face deeper cuts.

The Chancellor has opted to combine the CSR with the Autumn Statement. The Autumn Statement consists of general economic projections and an update on the Government’s taxation and spending plans. As a result of the combination of these two announcements, the Chancellor seems to have endowed himself with a carte blanche to announce virtually anything. 

Much has been made of this in the media during the run up to the announcement and when it is considered that this CSR will decide how almost £4 trillion of taxpayers’ money will be spent, it is easy to see why. As such, ACE has prepared a comprehensive guide to the infrastructure sector on what could be announced. 

The central plank of the Conservative Party’s message to the UK has been that it will eliminate the deficit and balance the books, while protecting the budgets of certain key departments, namely Health and International Development. Since 2010 this means there have been cuts of varying sizes across Whitehall, for example:

  • Business, Innovation, and Skills – 18.4%;
  • Environment, Food, and Rural Affairs – 29.9%;
  • Transport – 13.4%;
  • Communities and Local Government -51%.

With the promise to protect Health and International Development remaining, plus further pledges to hit a target of 2% of GDP on defence and to protect education spending on school children, the Chancellor’s room for manoeuvre is curtailed. Hence in the Summer, he told non-protected departments to prepare two scenarios, involving cuts of 25% and 40% in the CSR. It appears that the former will be the more likely outcome for most.

The process took in more than just government departments, with Treasury requesting input from a wide range of stakeholders, including ACE. In our response, we respectfully submitted that the Chancellor should:

  1. Protect capital expenditure and continue to spend on infrastructure to drive the economic recovery and boost productivity;
  2. Assume a more strategic approach with CSRs, seeking greater cross-party support to ensure more certainty;
  3. Consider longer spending cycles for departments with responsibility for long-term infrastructure investment;
  4. Increase regional and local authorities’ ability to increase and retain more of the funds raised through local charges;
  5. Ensure spending on apprentices is protected and that the quality of schemes is high and consistent.

Things to look out for in today's statement include:

The Northern Powerhouse

The Northern Powerhouse is an initiative that is supported by ACE in principle. Several matters need to be resolved to achieve market certainty, however. The CSR must deliver a devolution package that does more than simply burden local authorities with inconvenient cuts that Whitehall would otherwise have to perform. Instead, devolution to Manchester, Sheffield, the North East, Tees Valley, and now Liverpool and the West Midlands, must be earnest and backed by funding.

Chief among funding streams that should be prioritised is that for transport. London, for example, will receive about £1,000 more per capita than the regions that make up the Northern Powerhouse, something that must be addressed. Certainty is key and government rhetoric to be backed up in this spending review with hard cash.


ACE was encouraged by the Government’s decision to proceed with plans to provide capacity on Britain’s railway network through HS2. While it has been almost three years since the introduction of the High Speed Rail Bill, it is progressing well through the committee stage. The CSR provides the Government with the opportunity to make a further clear commitment to the programme, increasing market certainty, and even speeding up the delivery. Again, ACE finds the vision for such improved rail infrastructure positive, if somewhat slow to come into full view.


London faces as much uncertainty as the North as the CSR approaches. Firstly, like all unprotected central government departments, the Department for Transport (DfT) can expect budget cuts, which could be in the order of about 30%. This change could have a significant impact on Transport for London (TfL), which derives 23% of its income from a combination of local and central government funding.

London faces further uncertainty over Crossrail 2, a programme that is overwhelmingly supported by Londoners and will deliver economic benefits to the capital and surrounding regions. Fears that early project funding will not be provided must be allayed to ensure certainty and prevent delays.


Although the UK can boast more rooms per person than ever before, we face a significant housing crisis. A forthcoming ACE report will lay the blame for stalls in an expansion of the housing stock at the door of three issues: planning inefficiency, skills shortages and land supply problems. These issues are particularly pronounced in London and the South East.

Again, the Government’s statements on this matter have been encouraging. The Housing and Planning Bill has attempted to tackle the planning and supply issues by granting automatic planning permission to brownfield sites and imposing a duty on councils to provide 200,000 discounted starter homes.

These positive gestures, however, will not be followed through without a cohesive and wide-ranging rethink of the skills shortage. Any CSR announcements that will reassure engineering and construction firms that they will have access to the trained staff needed to meet ambitious government housebuilding targets would be welcome.

Airport expansion

We have now had the recommendations of The Davies Commission, which was to expand Heathrow, adding a third runway to the nation’s flagship airport. The Commission felt this option presented the best option, delivering the highest number of jobs, the greatest amount of connectivity, and increase in prosperity compared to its competitors. A firm decision on this has failed to materialise, however, despite the ever-increasing losses to the economy the UK faces from a lack of runway capacity in the South East.

Whether or not the conclusion of the Davies Commission is accepted, what remains clear is that Britain needs a decisive verdict from the Government to direct future investment. We would hope to see the CSR clearly allocate funding for the initial phase of some form of airport expansion. This will reassure the market that plans for extra airport capacity will be well underway by the end of the parliament. Such information would prove enlightening for ACE members and the British public.


If the Government is to deliver on its ambitious plans for the UK’s infrastructure networks, the workforce must be fully equipped in terms of skills and manpower. It is possible that, with retirement and growth in workload, almost 1m new engineers will be needed by the end of the decade. Much of the responsibility for filling this gap will fall at the feet of the industry, through earlier engagement and better careers advice for school children, for instance.

Measures are being considered by the Government as well, including an Apprenticeship Levy that was consulted on over the summer. Further details must be forthcoming in the CSR, however, including the size of company subject to the levy, the amount that will be levied, and how it will interact with existing industry levies such the CITB Construction Levy.

Further information

ACE’s submission to the CSR process:

ACE’s submission on Apprenticeship Levy:

Olly Johnson is a Policy Executive at  Association for Consultancy and Engineering

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