Gordon Brown is set to reveal this month the comprehensive spending review that outlines public spending for the next three years.
The spending review is the method by which the government sets the limits for all public spending.
It creates the targets that workers will be told they have no choice but to meet.
Treasury forecasts show planned public spending by the government will slow – from an average of 4 percent per year since 1999 to 2 percent per year until 2011.
Put simply, this means that Brown will demand yet more cuts in the civil service, health and education.
On Monday he warned, 'There will be no irresponsible relaxation of pay discipline in the public sector, no unfunded spending commitments, no unaffordable promises, no short-term giveaways.'
The OECD club of rich nations argued last week that in Britain 'there is a need to further reduce the government deficit, which will require much slower growth in government expenditure'.
The OECD also argued that more effort should be devoted to ensuring that publicly funded services provide what they call 'good value for money'.
Brown looks only too happy to comply – with plans for more privatisation and pay restraint across the public sector.
There is of course plenty of money in the economy – it's really a question of priorities.
Brown's review will include plans to spend public money on yet further reductions in both personal and business tax.
Meanwhile he is set to find more funds to increase the expenditure on defence.
Labour rules target housing
As Gordon Brown changed the rules last week to remove debate from Labour conferences, Labour MEP Michael Cashman singled out housing as the main reason for the changes.
The Labour leadership had been defeated over its housing plans at the party's 2004, 2005 and 2006 conferences.
Grassroots members and trade unions had successfully secured motions calling for a 'fourth option' of direct investment in council housing – something Brown has always opposed.
Announcing the changes that stop 'contemporary motions', Cashman said housing had 'come back time and time again in conference resolutions' and caused 'division after division after division'.
Some 17 constituency Labour parties had submitted motions to this year's conference supporting the 'fourth option' and despite some backroom manoeuvring, the issue couldn't be kept off the agenda. However, a composite motion reaffirming Labour conference support for the 'fourth option' was remitted as were all other motions at the conference.
Housing minster Yvette Cooper said in the debate, 'It is time for councils to be able to build new council housing again too.' But she also stressed, 'We must be responsible and we must keep within our budgets.'
It is still unclear how the vague promises of house building and more privatisation in the government's Green Paper will pan out. But it seems certain that more campaigning will be essential to secure the future of council housing.