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banner Friday, 14 July, 2000, 10:32 GMT 11:32 UK
What is the CSR?

The CSR sets the agenda for public spending
The Comprehensive Spending Review is a Labour innovation designed to set out clearly the government's public spending priorities over the next three years.

As such it holds massive importance, not just in terms of what government departments are able to spend but also for the direction of the government's political strategy, particularly in what is now the run up to the election.

What is the CSR?
It fixes spending plans for three years
CSR's take place every two years
This CSR will set limits from 2001-2004
The first CSR took place in 1998
In the first CSR in 1998 the chancellor clearly put health and education at the top of his agenda. This year, they are likely to be winners again, alongside transport.

The CSR statement itself is biannual, and is made by Chancellor Gordon Brown. In the days following his statement individual government departments will set out the details of what the CSR means for them.

But the chancellor's annual Budget statements can either update or pre-empt the spending review, as did the last Budget which announced an average increase on health spending of 6.1% over the next three years.

Why change the system?

Mr Brown described the main thrust of this new way of managing public finances in 1998: "The first innovation of the CSR is to move from the short-termism of the annual cycle and to draw up public expenditure plans not on a one-year basis but on a three-year basis."

Critics of the one-year strategy argued that it contributed to a damaging 'boom and bust' cycle of spending.

For example health spending would tend to soar whenever there was a beds crisis, only to be slashed again when government debt grew.

The CSR seeks to break this circle by setting out long-term aims and objectives.

But it is important to bear in mind that only half of all government spending will be covered by these three-year spending targets.

The remainder is still being planned on an annual basis.

The long-term approach also has an advantage in that it lets the chancellor concentrate on investment, which he says has suffered in recent years.

This focus underlies the majority of the changes announced to date, such as the need to distinguish between current and capital spending, while having three-year spending targets creates more certainty for investment.

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See also:

14 Jul 98 | Spending review
More cash for schools and hospitals
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