In a speech given at Canary Wharf, outlining Labour’s plans for the economy, Balls said a Labour government would carry out a “root and branch review” of all government spending in its first year in office, which would ask questions such as: “Does it really make sense to have separate costly management and bureaucracy for so many separate government departments, agencies, fire services and police forces - the same number as when this government came into office - all with separate leadership structures and separate specialist teams?”
The review would be informed by “detailed departmental reviews” which the Labour shadow team will carry out over the next year, said Balls, and would cover spending in all departments – including any which Labour decides to ring-fence – and annually managed expenditure.
The zero-based review will consider issues such as whether to merge the four agencies which provide motoring services, or to require industries to pay more towards the costs of regulators.
It would also ask whether it is right to have a separate company delivering High Speed 2 “when we already have Network Rail, which after all is responsible for rail infrastructure,” and whether the UK needs “more admirals than ships and more officers in our forces than our international counterparts at a time when frontline armed forces are under pressure”.
Balls said four principles will guide the review: using public money more efficiently; using departmental budgets to support growth; ensuring “fairness and consumer choice in service delivery” and prioritising preventative spending such as in early years or troubled families support “where spending now saves billions in the future”.
He said that his party would need to draft its manifesto on the “basis of falling departmental spending”, claiming that “It will take years to sort out George Osborne's fiscal mess”.
“Because of the overall financial situation we inherit, and the need to look ruthlessly at every pound we spend, the relentless focus of my shadow cabinet colleagues must be on how to re-prioritise money within and between budgets for current spending, rather than coming to me with proposals for any additional spending,” he said.