The Treasury has several ways of disaggregating general government spending, by department and by function being the two most obvious.

This government has established a public sector spending review process that is negotiated between the Treasury and the spending departments every three years, the last of which was completed in October 2007 and covered the period 2008-11. Chancellor Alistair Darling has delayed the next Review until after the next general election.

In Table 10.4: Public Sector Expenditure on Services government spending on services is broken down by main function. This spending of almost £600 billion accounts for 96% of the £618 billion of Total Managed Expenditure.

It is apparent from the table that three items dominate the spending, and together account for two thirds of the total, social protection, health and education. Some of this will be directly affected by the recession, such as the unemployment benefit element of social protection.

In addition, health spending could also be affected as well as other social benefits such as housing and income support. This illustrates clearly how little room for manoeuvre the authorities have to make serious inroads into public sector spending.

It is also apparent that at a time when the economy weakens, trends in government tax receipts and spending move in opposite directions and in the current recession this has happened on an unprecedented scale.

In his 2009 Budget, Mr Darling announced a deficit of £175 billion, the first time the UK government has had a funding gap in excess of £100 billion.

This government is committed to improving the quality of public sector services and has announced substantial increases in spending, on health and education in particular, funded partly by increases in National Insurance Contributions.

The policymakers are aware, however, that paying the same people more money to do the same jobs the same way will not necessarily lead to a raising of standards. The Chancellor has, therefore, set some measurable targets that must be achieved in each part of the public services to justify the larger expenditures, another novel twist to a traditional government activity.