Something else to watch out for is whether Whitehall departments raid their investment budgets to pay for pay rises. Analysis of this year’s data alone shows that £907m was transferred from Department for Health capital budgets to day-to-day spending to plug a black hole that emerged in the wake of strikes, and to cover a series of pay deals and extra spending on technology. That is £907m less spent on the upkeep on the NHS estate.
The Ministry of Justice also raided £191m of investment spending to “alleviate budgetary pressures”, while the environment and education departments switched £270m and £250m respectively from investment budgets to day-to-day spending.
“It can only be done with the Treasury’s explicit permission,” says Ms Tetlow. But there clearly have been periods when it’s been done significantly by quite a few departments.
While this may prompt concern that this pattern will continue, Ms Tetlow points out that Reeves’s new borrowing rule will require her to balance the books excluding investment spending, which will constrain her ability to fiddle the figures.
A Treasury source said there were only “limited cases in which a switch from capital to resource budgets may be considered”.
Still, the temptation will always be there.
“I think that there always has been, and probably always will be, a temptation to use spending for day-to-day purposes rather than capital, because people notice day-to-day spending in the form of frontline workers more than they notice capital spending,” Ms Tetlow says.
“But I think we’ve had such a long period of low capital spending particularly in public services, that we’re now at a point where some of those problems are really quite apparent and are starting to undermine the performance of some services like the NHS.”
A Treasury spokesman said: “This is a new Government doing things differently. We are focused on improving the delivery of capital projects exactly so that we reduce underspends and maximise the benefits of investment.
“This includes plans to launch the new National Infrastructure and Service Transformation Authority to tackle delays in major infrastructure development.”