Whitehall’s spending wars will see winners and losers

The protected’ departments of health and defence will get a larger share, writes Andrew Grice, while others will struggle

-  Andrew Grice

There’s no respite for Rachel Reeves after her spring statement. As well as worrying whether Donald Trump’s tariffs will blow her economic strategy off course, the chancellor must now divide up a shrinking cake among Whitehall departments before her spending review concludes in June.

The Treasury hoped this process would be more harmonious than previous reviews, but it is not, as cabinet ministers fight hard to defend their budgets. The “protected” departments, health and defence, will get a larger share of the cake, so the slightly bigger cuts announced by Reeves on Wednesday will fall disproportionately on those whose budgets have not recovered since George Osborne’s austerity.

Housing and local government is already down 46 per cent on its 2009-10 level, while culture is down 38 per cent, work and pensions 29 per cent, environment 22 per cent, transport 20 per cent, and justice 19 per cent. Despite that, the Treasury has told these departments to model cuts of 5.7 per cent and 11.2 per cent over the three-year review period.

Several ministers tried but failed to persuade the chancellor to change her fiscal rules earlier this month. She doubled down on them this week, judging that the financial markets would not tolerate higher borrowing. Reeves will be relieved that the bond market dog did not bark, but her decision makes the spending review even more difficult.