Priorities for public spending

The recent period of higher public spending is coming to an end with tighter budgets expected over the next few years.  Total public spending is predicted to rise by just 2.2% a year on average over the three years of the forthcoming Comprehensive Spending Review, up to 2010-11.  Any spending increases are likely to be targeted at core services such as health and education.  The government also plans to align central and local government 3-year spending plans, and the last budget increased government commitment to 3-year funding proposals.

What are the implications?

  • Services that the government does not have a statutory obligation to provide may see a significant reduction in funding
  • Pressures on public spending are likely to lead to even higher expectations of efficiency and value for money and increased competition for available funds
  • Public perception that recent increased spending on public services has not led to improvements means that tax rises to increase spending are extremely unlikely. (See satisfaction with public services)
  • Recent economic decisions may lead to the government tightening their belt in the future in order to recover increased debts

Moving forward

Pressure on government spending means that VCOs will need to get better at understanding and demonstrating the true cost and value of their work if they are to be able to negotiate adequate funding in a competitive environment.   

  • How can your organisation develop its negotiating skills to improve your discussions with funders and potential funders?
  • Do you have good systems in place to assess your outcomes, and the broader value you create (social, economic and environmental)?

It is expected that future pressures on public finances will lead to a reduction in spending on public services.

  • What strategies can your organisation put in place now to manage potential future changes in funding?
  • Can you diversify your income sources to better secure your organisation's future income?

Being clear about what you offer commissioners could put you at a competitive advantage.

  • You may wish to think about your position in relation to other players – do you want to stay small and cover niche markets, or work towards targeting high volumes of clients to benefit from economies of scale?
  • Could working in partnership with other VCOs help you to secure funds in the future?

Want to know more?

Budget 2008 Summary

Published by: HM Treasury – a Government department

Date: 2008


What is it?A summary of Budget 2008 announced by the Chancellor Alistair Darling in March 2008.

How useful is this? This document provides a summary of the current UK Budget for the UK economy as a whole.

Other comments:

Turning off the spending tap

Published by: – an internet magazine of the public sector

Date: 2007

Format: Web

What is it? An article analysing the 2007 Budget and providing numbers and statistics for anticipated future public spending.

How useful is this? This provides a short but useful analysis and discusses the expectation that future public spending plans are much tighter than those of recent years.

Other comments: 

'We should not take the political situation for granted'

Published by: The Guardian – a left of centre newspaper

Date: 2007

Format: Web

What is it? An article outlining the government’s current relationship with the VCS and developments that may threaten VCOs’ stability.

How useful is this? The article discusses how VCOs will need to conduct their relationship with the government in the future, including potential changes in the funding environment.

Other comments:

Last updated at 14:59 Thu 09/Oct/08.


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