Key takeaways from the Spending Review
Against the backdrop of extraordinary scenes in parliament over the past few days, the new Chancellor delivered the results of the one-year spending review – how much money government departments are getting for 2020/21. The already slim-lined spending review (which is normally over five years) was thus even lower-key. The Treasury had trailed a lot of spending announcements before Sajid Javid even stood up.
So, what did we see for business?
- Education and skills: We saw a huge boost for schools, with a £2.6bn increase for schools and a £400m increase for colleges in 2020/21. It should also be noted that the Chancellor decided to announce school funding for the next three years, rather than just the one-year period. In 2021-22, funding levels will be increased by £4.8bn and by 2022-23 they will be increased by £7.8bn compared to 2019-20 funding levels
- Regional policy: There was a focus on strengthening local economies, with a spending boost for the Towns Fund with £3.6bn and some regional transport announcements including funding for the Manchester-Leeds rail link
- Global Britain: We saw a boost to the UK’s international presence with additional funding for the UK’s diplomatic services and the GREAT campaign, the government campaign to showcase the best of what the UK has to offer across the world
- An end to austerity: The Chancellor announced that after nearly a decade of some government departments seeing cuts to their budget all departments will see an increase at least in line with inflation, with a fair few departments even expected to see a real term increase
- Fiscal rules: A commitment to change the fiscal rules, which have dictated the government’s decision making in Autumn Budgets and Spending Reviews for the past decade and are in need of a refresh given they were targeting 2020/21
- Infrastructure strategy: The Chancellor did announce there would be a new infrastructure strategy later in the autumn, which should also include announcements on how the UK can meet the net-zero emissions target. One to keep an eye out for and a live opportunity to shape government thinking.
What next?
As with everything at the moment, the fiscal events calendar is very much dependent on what happens in parliament, whether we have a general election and how or when we leave the European Union. The CBI has been working on potential taxation and regulatory measures for a Budget, whenever that may be.