The madness of ring-fencing government spending.

As ministers trooped one by one into George Osborne’s office last week for negotiations over the Spending Review, most looked pretty grim, steeling themselves against news of cuts to come. But three more cheerful figures stood out: the Secretaries of State for Health, Education and International Development. Their budgets, which between them account for more than a third of public spending, have been ring-fenced, with the result that the Chancellor is left scratching around elsewhere to hit his target of reducing spending by £11.5 billion.

And although £11.5 billion sounds like a lot of money, in the context of what’s needed, it is a pitifully small gesture. Three years after an ‘austerity budget’, the government is not overspending by just £11.5 billion a year; it is splurging nearly £130 billion a year more than it receives in revenue. The scale of the problem should be far too great for any budget to be ring-fenced, let alone the budgets of Health and Education — two of the biggest-spending departments.