John McTernan: The dash for cash has begun and each department will be fighting to present the best case

Published on Thursday 9 September 2010 21:56

IN THE early days of 1997, Treasury officials pored over the welfare budget looking for cuts. In one meeting, Alistair Darling, then chief secretary, came up with a tortured interpretation of one sentence in the manifesto to prove a cut wouldn't break a pledge.

Harriet Harman dismissed him with a tart remark: "I can't believe your officials have persuaded you to say that with a straight face." Darling swiftly turned the page on his briefing document.

Similar conversations are going on across Whitehall in the run up to the Coalition's Comprehensive Spending Review (CSR). Treasury officials are producing Jesuitical interpretations of promises made by David Cameron and Nick Clegg. "Minister, we can honour your committment to keep the Winter Fuel Payment and free bus travel. We just start paying it a little later – say age 90?"

What do we know about the current CSR, apart from the fact it will involve "hard choices"? First, everything that's not nailed down is for sale. And if it is nailed down an innovative offer will still be considered. Smart private sector companies have scoured the Government Asset Register and are already in departments talking about how to take things off their hands – for mutual profit, of course.

Second, that the nature of the Coalition is producing some new problems. In normal spending rounds the Cabinet ministers involved have been long term colleagues and, for better or worse, have deep personal and political relationships. Today we have Danny Alexander, a Lib Dem Chief Secretary, working with a Tory Chancellor, to cut departments with ministers who were, until months ago, opponents.

Whitehall insiders say that this has paradoxically led to Alexander being tougher on Lib Dems Vince Cable and Chris Huhne than on others, in order to prove that he is "more Catholic than the Pope". This partly explains why Treasury sources are so complimentary about Alexander. "Increasingly impressive," they say, for which read: "Fully compliant with standard Treasury analysis."

What's the best advice for spending ministers? Old Westminster hands advise new ministers not to settle too early. There's been the usual Treasury offer of better terms for those who agree their budgets soon.

If you believe that your head must button up the back. Some of the best deals are done right at the end of the process. Also, get your allies out on manoeuvres. Far better for the Police Federation to spell out the dire consequences of spending cuts than for the Home Secretary and her officials to wave shrouds.

Finally, don't even start with spend-to-save proposals – the argument that if only Treasury gave you more money now you could save them much more in the long run. They are all at it behind the scenes mounting cases novel to them but well-known to Treasury. Ultimately, this will be a great game of poker with rewards for the best players rather than the strongest hands.