Learning to live with public expenditure: Politics and budgeting in Britain since 1976

Budgetary reform in the U.K. since the International Monetary Fund intervention under a Labour government in 1976 has been prompted by a new conventional wisdom that public expenditure was too high, and consequently, ‘corwed out’ private sector investment. Although this belief became widespread in western democracies, in Britain it developed relatively early and was closely linked to the wider debate about Britain’s relative economic decline. The first section of this article reviews the main reforms of the budgetary process which these concerns prompted. In the second section the authors note that, despite the political concern with reducing public expenditure in the 1980s, success has been limited and priority is now the improvement of the underlying control and evaluation mechanisms in government spending. In practice, the main policy activity of the Thatcher administrations was on gaining ‘value for money’ from existing expenditure. These developments are discussed and the likelihood of success considered. The nature of the present annual budgetary cycle is described as are the most recent developments designed to finally gain some form of effective expenditure control.