COMPREHENSIVE SPENDING REVIEW

A video discussion between Prof Abhinay Muthoo, Prof Wyn Grant and David Elmes

There are still significant unanswerable questions regarding how the Comprehensive Spending Review will change the nature of the UK economy. The half million job losses, for example, which have been forecast in the public sector are expected to result in a similar number in the private sector - but will the private sector also be able to create jobs for this number of people?

Prof Abhinay Muthoo from the Department of Economics, Prof Wyn Grant from the Department of Politics and International Studies, and David Elmes, Director of the Global Energy MBA at Warwick Business School, got together to talk through some of the specifics in the Government’s Comprehensive Spending Review.

Prof Muthoo highlights that the proposals are based on the assumption that as the global economy starts to recover, the UK private sector will be given a boost that will inevitably result in job creation. He questions, however, whether the right incentives or the right policy instruments to ensure such job creation have been built into this review. Furthermore, does this mean that we are now relying on the global economy to re-energise the domestic economy or can the UK private sector take the initiative?

David Elmes argues that it is not possible to answer these questions as the situation for businesses has not yet been made clear. Historically a smaller state, which is the effective result of these cuts, goes along with a deregulated private sector, but the coalition have not made their intentions explicit in this regard. For job creation to happen it is essential that business are given the freedom to make long term investment.

It is going to take time before the motivations for the imminent changes are fully understood. Prof Wyn Grant states that the decision to cut university funding, for example, is not just about saving money but a fundamental policy shift. Marketing higher education, shifting the cost to the individual benefactor is, inevitably, going to reduce the number of people who can afford the privilege of a university degree. It is not necessarily the poorest that will feel this cut the most, however, as bursary provision for this group is planned, but the lower middle classes who may struggle to meet the financial burden if fees rise to the £7,000 level.

Finally, the government has stepped back from the ‘low carbon’ agenda; they are supporting a few flagship projects while withdrawing support from many more. David Elmes explains that this move was to be expected but the government has been criticised for ‘picking winners’ - supporting projects that will be easy to spin as success stories, but to a very limited degree, while letting more ambitious projects, demanding large investments, go.

Prof Wyn Grant is a graduate of the universities of Leicester, Strathclyde and Exeter. He joined the department in 1971 and was chair of department from 1990 to 1997. He is a member of the Population and Diseases Research Group in the Department of Biological Sciences and teaches at Warwick HRI, Wellesbourne. For the past five years, Prof Grant's research has been principally with Biological Scientists. He is now appearing regularly on Radio Scilly's sports show from 5 to 6 on Fridays, available online at Scilly.

Prof Abhinay Muthoo has published research papers on a variety of topics in several top economics journals such as the Review of Economic Studies, The Economic Journal and the Journal of Development Economics. In 1999 he published a book with Cambridge University Press on the subject of bargaining. The book has been well received, and he is currently working on a second edition. Prof Muthoo's current research interests include the role of political institutions on economic performance, the economics of the family, conflict and bargaining, development economics and game theory.

David has joined WBS as Academic Director for the Warwick Global Energy MBA after more than 20 years working in the energy and management consulting industries. He has previously worked at BP, and for CapGemini where he was Vice President for the UK Energy, Utilities & Chemicals team. More recently he was at Schlumberger as Vice President & Director in the team who created the firm's management consulting arm, Schlumberger Business Consulting. David's focus is on the development and implementation of changes that transform a company's performance including the changes in organisation, culture, capabilities, and performance management that enable and sustain new ways of working in ever-changing circumstances.