Ministers aren’t just getting ready for March’s Budget: they’re also trying to work out a ‘budget setting process’ for 2015/16. The content of that slimmed-down departmental spending review formed the discussion at today’s Cabinet meeting, with George Osborne and Danny Alexander leading.

It’s not clear when this spending review will be announced, other than that it will take place in the first half of 2013. But the discussion centred around that old chestnut, the ‘difficult decisions’. The Prime Minister’s official spokesman said:

‘They set out that there was going to be a budget setting process for 15/16 in the first half of this year that the treasury will set out more on that process in due course. One of the things they were underlining ahead of that was the importance of departments continuing to and stepping up their engagement with the Treasury and the Efficiency and Reform Group.’

The efficiency and reform group could recommend further savings to be made in terms of a department’s operations, such as sharing services with another ministry. This already started under the 2010 Comprehensive Spending Review.

According to the spokesman, there was no disagreement around the table from ministers arguing that they couldn’t cut any more from their departments. He said:

‘There was agreement around the Cabinet table that though the decisions that we are going to have to take are difficult, they will have to be made.’

His focus in briefing the discussion was on ‘back office services and functions’, but the spokesman refused to rule out further frontline cuts. He continued to repeat that there will ‘have to be difficult decisions’, and also referred to further reform of public services ‘so you can achieve… more with less’.

Though ministers might be resigned to the fact that jostling for protection in this review might not work, there could be another sort of jostling: to be the exemplary department. Remember that in the 2012 Autumn Statement, Michael Gove was rewarded for his cutting prowess at the Education department with extra capital funding. Others might hope that if they are able to show similar results, they could reap similar rewards.

The other thing to look out for is that in spite of this universal nodding of heads about difficult decisions, if there are more cuts to frontline services in the offing, it will present the two Coalition parties with an opportunity for some public point-scoring about who-prevented-which-cuts for the financial year when the next general election will take place.

Tags: Danny Alexander, George Osborne, Spending review, UK politics