The Spending Review is set to hit us this Wednesday, and we need to be braced for bad news. George Osborne will combine it with his Autumn Statement, and give what is expected to be a long list of cuts and more bad news.
The Spending Review isn't an annual thing. In contrast to the annual Budget, it's supposed to be more long-term, and offer us a view of the next five years. It was a Gordon Brown invention back in 1989, and was originally intended to stop the knee jerk policies of previous Budgets. The last time we had one of these was back in 2013.
What can we expect?
The spending review will delve into the budgets of each government department, and outline the cuts. This year we can expect deep and painful cuts all round, as Osborne struggles to cut the deficit. There have already been reports of robust discussions with the Department of Work and Pensions and the Home Secretary - who have found more cuts difficult to manage. In all there's expected to be £20 billion slashed from the Budget.
The Department of Work and Pensions is set for more pain. The failure of Osborne's plans to axe tax credits was initially expected to result in billions coming from elsewhere in the welfare budget, but the rumour mill seems to indicate that not all of the money will be found here. Having said that, we can expect some significant and painful cuts from the DWP.
There have been rumours of 25% cuts to police budgets - which would see thousands of jobs go. The Justice Department may also face cuts - and lose more prison spaces. The Foreign Office may lose HQ staff and embassies. There will be even more cuts for the Arts. Defra is expected to lose about a third of its budget; and there's likely to be a raft of cuts to the business, innovation and skills department - which will see offices cut and quangos closed.
Health is supposedly protected, but health inflation means in real terms, there's less money to go around. Likewise, education is theoretically protected, but spending on buildings and equipment has fallen
The Autumn Statement, meanwhile, is more like a Budget. We get a report on how the economy is doing, and how Osborne is doing in hitting his targets. We also get a raft of different spending and tax announcements that were previously the preserve of the Budget.
He's hemmed in a little by pledges not to deal with things like Tax and National insurance until next year - when he has finished consulting on it. Likewise, major changes to pensions will have to wait for consultation to end. He could try to claw back tax currently saved by salary sacrifice schemes, and he could also slash some of the tax breaks on everything from transport to childcare. These would save him some significant sums, but would be very unpopular.
Of course, one of the things Osborne has always been keen on is the opportunity to pull a rabbit out of a hat. We've had surprises in the shape of Help to Buy ISAs, the living wage and stamp duty reform. There are those who suggest Osborne cannot afford his rabbits this Autumn, but it wouldn't be safe to rule them out just yet.