Andrew Dilnot And Carl Emmerson: There are losers as well as winners in these plans

The 2002 Comprehensive Spending Review had very few surprises. In part, no doubt, this reflected extensive trailing, particularly on education. The Government had little choice but to allocate substantial increases to education, because so much had been made of the priority they gave to this area. Once the education spending had been added to the health service allocation announced at the time of the Budget, there was very little left over for everything else.

As a result of the review, education spending is poised to rise by 5 per cent a year in real terms between next April and March 2006. Many other "winners" were identified by the Chancellor, with transport, criminal justice and housing all about to receive an increase in the proportion of national income devoted to them.

So who lost? This is likely to depend on whether the overall spending envelope is as firm as the Treasury documentation claims. Alistair Darling, newly installed at the Ministry of Transport, will find that, after inflation, his budget will increase by a substantial 35 per cent between this year and next, but by an average of only 1.9 per cent over the following two years.

Unless this one-off increase is sufficient to improve the quality of transport, he may well decide to go knocking on the Treasury door for more funds. Much the same applies to Geoff Hoon and Patricia Hewitt, at Defence and Trade and Industry respectively, who have also been given very tight settlements for the two years from April 2004 to March 2006.

Another reason why the spending plans may eventually exceed those set out in the latest Treasury forecasts is the Government's commitment to reduce, and eventually to eliminate, child poverty. The current projections assume that the welfare system for low-income families with children will not increase in generosity beyond April 2004. Increases in benefits for non-working families with children will have to keep pace with growth in average incomes, or else these families will fall further below the poverty line.

Chancellors normally like to make sure that some department or activity does "win" when spending reviews or Budget statements happen, and in the last five years Gordon Brown has managed that trick again and again. But looking to the future, it may become more difficult to repeat that achievement. Until earlier this year, the Chancellor's assumptions about how fast the economy would grow, and how quickly tax revenue would rise, seemed to be pessimistic. That meant that whenever he stood up to talk about the economy he was able to assert that things had turned out better than expected, and so a little bit more money could be spent.

In the April Budget, Mr Brown increased his assumption regarding the growth which the economy can sustain to a level that now seems broadly correct, and made forecasts of tax revenue growth that seemed optimistic, but to a degree that was easy to defend. So when he stood up to deliver the spending review, there was no scope for saying that things were better than had been expected.

And although the autumn is a long way away, it is also less likely that he will be able to say at the time of the Pre-Budget Report, or the Budget next spring, that the economy has done better than he had hoped. The era of Gordon Brown as the bringer of nice public finance news may be drawing to an end. This is not to say that a year of slow growth now spells immediate trouble for the Chancellor, since he can quite reasonably say that if the decline in the economy is cyclical he should allow borrowing to rise to pay for public spending.

We have now had the third Comprehensive Spending Review. When they began, back in 1998, we heard a great deal about "fixed and firm three-year spending plans". That has not been the experience, with spending plans added to, often twice a year, at the Budget and the pre-Budget report. The spending reviews have become three-year floors for spending, rather than plans.

Another ambition of the shift to three-year plans was to move away from the old incentive for departments to spend all of their allocation before the end of the financial year, or risk losing the money for good. The idea of allowing money to be carried over from one year to the next seemed a good one, but departments surprised us by systematically failing to spend their full allocations. This leaves us with many of the same sorts of concerns about the new system as the old system, except that incentives are now most distorted in the period running up to each spending review, rather than at the end of each financial year.

Andrew Dilnot is the director of, and Carl Emmerson an economist with, the Institute for Fiscal Studies