Chancellor Rishi Sunak has outlined the government’s spending plans for the next financial year, focusing on the response to COVID-19, jobs, public services and infrastructure.
He warned that the UK’s ‘economic emergency has only just begun’ in the wake of the pandemic, and projected that unemployment could surge to 2.6 million by the middle of next year.
Here, Which? takes a look at the key announcements from today’s Spending Review.
What is the Spending Review?
The Chancellor Rishi Sunak has announced the government’s spending plans for the next financial year, which starts in April 2021.
Spending Reviews usually cover a three or four-year period to allow the government to make long-term plans, but the COVID-19 outbreak means this year’s announcement only covers April 2021 to April 2022.
In today’s speech, Mr Sunak outlined a series of key areas that the government will focus on, including the ongoing response to COVID-19, protecting jobs, housing and infrastructure and public services.
The Chancellor put the response to the COVID-19 crisis at the centre of his speech.
He said the government has so far spent £280bn in 2020 to help the country through the pandemic, and a further £55bn will be invested in 2021, including £2.6bn to the devolved administrations.
He said investment will be targeted at enhancing testing capacity, purchasing vaccines, increasing the supply of key medicines and purchasing and distributing personal protective equipment (PPE).
Income and job protection
The Chancellor said one of the government’s biggest priorities is to help lower-paid workers in the public sector, who have been disproportionately affected by the pandemic.
The main announcements around pay and job protections were as follows:
- The National Living Wage will increase to £8.91 an hour from April 2021 for workers aged 23 and over.
- Public sector workers earning less than £24,000 will be given pay increases of at least £250.
- Doctors, nurses and other NHS workers will get pay rises, but increases for other public sector workers will be paused.
- A fund of nearly £3bn will be provided to deliver a three-year ‘restart programme’ to help people who’ve been unemployed for more than a year find work.
Mr Sunak says strengthening public services by providing new hospitals, better schools and safer streets is one of the government’s biggest priorities.
- The core NHS budget will grow by £6.3bn in 2021-22 and the government will fund the biggest hospital building programme in a generation.
- The schools budget will be increased by £2.2bn in 2021-22. Further cash will be invested into lifelong learning, further education and funding the Holiday Activities and Food programme for disadvantaged children until the end of 2021.
- £400m will be invested to recruit 20,000 more police officers by 2023.
- Local authorities will have their spending power increased by 4.5%, including £3bn in COVID-19 support and £254m to tackle homelessness and rough sleeping.
Housing and infrastructure
Mr Sunak said £100bn in capital spending will be put towards infrastructure projects, marking a ‘once in generation’ investment.
- Nearly £20bn will be invested to support new housing from 2021-22, consisting of a new £7.1bn home building fund alongside the already-announced £12.2bn affordable homes programme.
- Over £58bn will be invested in road and rail services across the country.
- A £4bn ‘levelling up fund’ will be introduced for local councils, allowing them to bid for funding of up to £20m to fund local projects.
- £1.2bn will be invested in rolling out high-speed broadband in the hardest-to-reach areas of the UK.
Other key announcements
- £14.6bn will be invested into research and development to help the UK become a global leader in science and technology.
- £12.2bn will be invested in helping the UK research net zero emissions by 2050, including £92m to plant 30,000 hectares of trees.
- £4.7bn will be provided to the devolved administrations in Wales, Northern Ireland and Scotland in 2021-22.
- 0.5% of national income will be spent on overseas aid in 2021, rather than the original target of 0.7%.