Source: gov.uk
The UK Government will provide billions of pounds in the fight against coronavirus, deliver on the promises it has made to the British people and invest in the UK’s recovery, the Chancellor announced today.
- billions of pounds to help tackle Covid-19 next year
- increased funding to deliver stronger public services
- £100 billion capital spending including infrastructure to drive UK’s recovery and support jobs
Delivering the Spending Review, Rishi Sunak said his immediate priority was to protect people’s lives and livelihoods as the country continues to battle the outbreak – allocating £55 billion to tackle the virus next year.
He also set out how the government would deliver stronger public services – honouring the promises it made to the British people with core day-to-day departmental spending growing by £14.8 billion in cash terms next year compared to 2020/21. From 2019/20 levels, that is an average growth of 3.8% a year, the fastest rate in 15 years.
The Chancellor also announced how the government would deliver the next stages of its record investment plans in infrastructure to drive the UK’s recovery and level up for a greener, stronger future with £100 billion of capital spending next year and a £4 billion Levelling Up Fund.
Setting out the budgets for government departments and devolved administrations’ block grants for 2021/21, the Chancellor of the Exchequer Rishi Sunak said:
Today’s Spending Review delivers on the priorities of the British people. Our health emergency is not yet over, and the economic emergency has only just begun; so our immediate priority is to protect people’s lives and livelihoods.
But today’s Spending Review also delivers stronger public services – paying for new hospitals, better schools and safer streets. And it delivers a once-in-a-generation investment in infrastructure. Creating jobs, growing the economy, and increasing pride in the places people call home.
Covid-19 support
The Spending Review builds on the unprecedented action already provided to tackle the pandemic so far. It confirms an additional £38 billion for public services to continue to fight the pandemic this year, and a further £55 billion to departments to respond to Covid-19 next year, including £2.6 billion for the devolved administrations.
Investment targeted at controlling and suppressing the virus – and saving lives – includes funding to enhance testing capacity, purchase vaccines, increase supply of key Covid-19 medicines, and purchase and distribute PPE.
Targeted funding is also being provided to support vital public services to help them meet and recover from the challenges of Covid. This includes money to help the NHS recover and address delayed treatments, extra funding for local authorities, support for transport, and funding to help the justice system address backlogs.
Investing in public services and delivering promises
Delivering real-world improvements to the day-to-day services provided by public services is at the heart of the government’s vision to rebuild for a stronger future. The Spending Review delivers on the government’s promises to support a high quality, resilient healthcare system, level up education standards, continue tackling crime to keep people safe, and support local authorities in their efforts to serve local communities. This includes:
- A £6.3 billion cash increase in NHS spending in 2021-22, compared to 2020-1, as well as funding to invest in new diagnostic equipment, support training for the NHS workforce, refurbish and maintain infrastructure, and eradicate mental health dormitories. This is in addition to £3 billion of investment to support NHS recovery.
- A £2.2 billion uplift for the core schools’ budget in 2021-22 compared to 2020-21 levels of funding. In addition, the Spending Review will fund investment in Further Education, continue delivering opportunities for lifelong learning, and fund the Holiday Activities and Food programme to provide enriching activities and a healthy meal for disadvantaged children in the Easter, Summer and Christmas holidays in 2021.
- An additional £400 million to help recruit 20,000 additional police officers by 2023, with 6,000 new officers in 2021-22, £63 million to tackle economic crime, and £337m extra funding for the criminal justice system, along with establishing a world-leading Counter Terrorism Operations Centre.
- Increasing core spending power for local authorities by an estimated 4.5 per cent in cash terms, along with over £3 billion of additional Covid 19 support and an extra £254 million of funding to tackle homelessness and rough sleeping.
Throughout the pandemic the government have provided an unprecedented economic support package to protect and create jobs. The Spending Review builds on this by investing an additional £3.6 billion to build on commitments made in the Plan for Jobs.
This includes the new 3-year £2.9 billion Restart scheme to help more than one million unemployed people find work.
Building back better
The Spending review announces the next phase of the government’s infrastructure revolution with £100 billion of capital expenditure next year, to kickstart growth and support hundreds of thousands of jobs. It gives multi-year funding certainty for select projects – such as school and hospital rebuilding, housing and transport schemes – and targets additional investment in areas which will improve the UK’s competitiveness in the long-term, backing new investments in cutting-edge research and clean energy sources, investing in a greener future by delivering against the Prime Minister’s ten-point plan for climate change.
The Chancellor also set out plans to further the levelling up agenda by launching a new £4 billion Levelling Up Fund that will invest in local infrastructure that has a visible impact on people and their communities and will support economic recovery. A refreshed Green Book will also better link projects and programmes to Government objectives, including on levelling up and Net Zero.
This is supported by the new National Infrastructure Strategy outlining the government’s long-term vision for infrastructure investment, and a new UK infrastructure bank – headquartered in the north of England – to work with the private sector to finance major new investment projects across the UK. And to ensure that Government policies that have the most impact on levelling-up are created by those living in communities outside of London and the South East, the Treasury will set up its Northern headquarters next year. This is part of a wider work that will see thousands of civil servants move to the regions and nations of the UK.
To help people with their finances, the Chancellor also announced an increase in the National Living Wage, by 2.2% to £8.91 an hour from April 2021, likely benefiting around two million of the lowest paid. Alongside that, 2.1 million public sector workers who earn below the median wage of £24,000 will be guaranteed a pay rise of at least £250. And to help businesses, the business rates multiplier will be frozen in 2021-22, saving businesses in England £575 million over the next five years.
The Spending Review also strengthens the UK’s place in the world as open and outward-looking, leading in solving the world’s toughest problems. The UK will spend the equivalent of 0.5% of national income as overseas aid in 2021. The Spending Review therefore provides £10 billion of Official Development Assistance (ODA) in 2021-22. This will ensure the UK remains one of the largest overseas aid donors in the world. And to provide security not just for the UK but also around the world, the Chancellor also confirmed the announcement made by the Prime Minister which will see over £24 billion of investment in defence, the biggest sustained increase in 30 years.
To find out more, click here
“This spending review comes at a critical time as business communities are fighting for survival in the midst of the coronavirus pandemic.
“The launch of the National Infrastructure Strategy is an important step in overcoming the longstanding infrastructure deficit. We’ve spent long enough discussing infrastructure projects – it’s now time to focus on delivery.
“Measures to help people return to work at this challenging time will help limit long-term unemployment but Government must waste no time in putting these plans into action. Government and business will need to work together to re-train and re-skill the UK workforce. Investment in the Kickstart Scheme, in which Chambers are playing a leading role, and the launch of the Restart scheme, will be critical in helping to achieve that.
“With an uncertain winter ahead, the government will need to maintain an open mind on providing further support to businesses struggling to survive. As we look to rebuild and renew local and national economies, businesses will also need further significant incentives for investment in people, productivity and the planet.”
Detailed response from our policy experts:
Responding to the Chancellor’s spending review, Arjun Heir, Herefordshire & Worcestershire Chamber of Commerce Policy Executive, said:
“The economy is currently facing significant challenges due to Coronavirus and Brexit, however we welcome the chancellor’s spending review to help kickstart the economy and help the economy survive through the worst pandemic in over a century. The investment made available by the chancellor will help businesses survive throughout the pandemic and raise investment in much needed infrastructure projects around the country.’’
Commenting on the launch of the National Infrastructure Strategy, James Martin, Director of Policy at the BCC, said:
“The launch of a national strategy is an important step in overcoming the longstanding infrastructure deficit. The transition to net zero and levelling up across the UK will require ambitious and sustained action to transform our transport, energy and digital networks.
“The introduction of a UK infrastructure bank may significantly aid the transition to net zero if it has the necessary capital base to leverage the private sector finance needed to deliver transformational levels of infrastructure investment.
“The renewed commitment to some major projects will be warmly welcomed by business communities because they can see the tangible business, economic and reputational benefits that will come from these investments. We’ve spent long enough discussing about infrastructure projects – it’s now time to focus on delivery.”
Commenting on the changes to the Green Book, Suren Thiru, Head of Economics at the BCC, said:
“We are pleased that the chancellor listened to our call to amend the Green Book approach to appraisal of public investments which in its current form can be a roadblock to important local and regional infrastructure programmes. Businesses will want to see these changes implements as soon as possible to ensure that urgently needed infrastructure investment is delivered across all parts of the UK.”
Commenting on the launch of the UK Shared Prosperity Fund, Suren Thiru, Head of Economics at the BCC, said:
“The launch of UK Shared Prosperity Fund is long-overdue and significant unanswered questions remain. Business communities will now require more detail on how the scheme will operate and how the new fund will avoid damaging cliff edges in existing local economic development and business support schemes.
“The government must work closely with business on the determining key features of the new fund, including a commitment to maximise local autonomy, business voice and economic growth. Chambers of Commerce across the UK stand ready to support the pilot schemes and help develop proposals further once published.”
Commenting on the launch of the Levelling-Up Fund, Hannah Essex, Co-Executive Director at the BCC, said:
“Concerted Government action will be needed to tackle the long-standing gaps in infrastructure, skills and access to finance which have stopped growth in many areas of the country.
“The launch of Levelling Up Fund is a welcome start, but with such an acute infrastructure deficit in many areas of the country further steps are likely to be needed to ensure that funding meets the needs of communities throughout the UK.
“Government will need to provide clarity about the criteria for the fund and how it will be allocated, avoiding unnecessary bidding wars between communities. The views of local businesses must form a key part of the decision-making process.”
Commenting on the latest forecasts by the Office for Budget Responsibility, Suren Thiru, Head of Economics at the BCC, said:
“The OBR’s latest outlook underscores the devastating impact of coronavirus on the UK economy with output not expected to return to pre-pandemic levels until the end of 2022. The downgrade to the OBR’s forecast for business investment is a particular concern, as weak investment levels significantly limit the UK’s productivity and growth trajectory.
“Even with a mass vaccine rollout, the deep economic scarring from the pandemic, including high unemployment, rising debt levels & weak investment, may mean that the road back to pre-crisis output levels is longer than the OBR currently predicts.
“The OBR’s latest forecast highlights significant fiscal challenges facing the UK and the need for the Chancellor to remain flexible to business need in the difficult months ahead. However, the temptation to start fiscal consolidation too early must be resisted to avoid extending the economic pain from Covid. Instead, the focus must be on boosting economic activity to sustainably grow the UK’s tax base.”
Commenting on changes to apprenticeships, Hannah Essex, Co-Executive Director at the BCC, said:
“Chamber businesses have long campaigned to ensure the skills system, including apprenticeships, has the flexibility and ambition to deliver the skilled workforce our economy so desperately needs. Small and medium sized businesses, in particular, often feel like their needs are not met. Innovative solutions that bring business and training closer together will help bridge some of the gap that currently exists.
“Some of the flexibilities introduced to apprenticeships are a welcome first step. Front-loading apprenticeship training makes sense in the current climate and creating Apprenticeship Training Agencies will mean that many more firms can participate in apprenticeship schemes.
“However, there are still other areas where the Government should go further, including flexibility around the use of the levy and the arbitrary 24-month expiration date for the fund.”
Commenting on those who have fallen through gaps in government support, Hannah Essex, Co-Executive Director at the BCC, said:
“Despite the Chancellor’s announcement, there are still many businesses and individuals who have, through no fault of their own, been unable to access any government support since the start of the pandemic and will require support if we are to avoid significant increases in unemployment and business failures.”
Useful Links
- To find out what financial support your business can access, click here
- For the latest coronavirus business support, visit our Hub here.
- For weekly updates, support and resources just for businesses, sign up to our Coronavirus Business Support Newsletter here.
- Check how many cases there are in your area here.