Even by current British political standards, the events in the House of Commons yesterday were dramatic. A defection resulting in the Prime Minister losing his majority; a rebel alliance defeating the Government to seemingly take control of Brexit; and the whip removed from 21 Conservative MPs, including two former chancellors.
Nonetheless, amidst the political turmoil witnessed last night, the Chancellor of the Exchequer, Rt Hon Sajid Javid MP, has announced the Government’s spending plans for 2020-21.
The Chancellor struck an optimistic tone, championing the Government’s record for fiscal responsibility and declaring ‘the end of austerity’ – a promise first made by Theresa May back in October 2018.
For the first time since 2002 no department has had its budget cut, totting up a spending spree bill of £13.8bn, up 4.1 per cent in real terms.
Highlights from today’s announcements:
• Local government received its largest rise in spending power since 2010 with an extra £1.5bn for social care and £54m to tackle homelessness and rough sleeping.
• An additional £3.6bn for the New Towns Fund to help regenerate struggling high streets.
• A £6.2bn increase in NHS spending for frontline staff, additional training and new artificial intelligence technologies.
• £30m was allocated to the Department for Business, Energy and Industry Strategy to develop schemes that support the Government’s zero carbon commitments.
The Treasury will make an extra £2bn available to fund Brexit preparations in 2020/21. This is in addition to the £2.1bn already committed to preparing Britain for its departure from the EU.
As a result, the total spent on planning and delivering Britain’s exit from the EU since 2016 has risen to £8bn.
Local government and social care
Local government, a surprise winner from today’s announcements, will see the largest increase in spending since 2010, with £1.5bn for social care beginning next year. This is on top of the existing £2.5bn of social care grants.
Responding to today’s announcements, the Local Government Association welcomed the significant increase in funding.
£54m was given to tackle homelessness and rough sleeping, increasing the total funding to £422m. Housing charities, including Shelter, welcomed the new money but questioned the lack of any announcement on new homes.
The Chancellor announced a £6.2bn increase in funding to be invested in more doctors and nurses. An additional £2bn of new capital funding will be made available to upgrade 20 hospitals, and £250m for new artificial intelligence technology to improve the efficiency of the NHS.
The 5-year settlement for the NHS will be worth £33.9bn more per year by 2023-24.
The Royal College of Nursing (RCN) Chief Executive & General Secretary, Dame Donna Kinnair said: “After years of cutbacks, this announcement may start to put things right.”
But, despite the additional money, the RCN does not believe the Chancellor went far enough to stem the flow of nurses leaving the profession.
An extra £7.1bn spending on schools by 2022-23 which will see day-to-day funding rise in line with inflation and pupil numbers. Every secondary school will have funding equivalent to £5,000 per pupil, and each primary school to have £3,750 of funding per pupil.
Teachers starting salaries will rise to £30,000 and a Government contribution of £1.5bn will be made to teachers’ pensions in an attempt to attract more people into the profession.
A particular emphasis was also placed on further education, with a £400m increase for 16-19 education.
The Government has pledged an extra £750m in Home Office spending to fund the recruitment of 20,000 new police officers and a five per cent increase for the Ministry of Justice to support the creation of 10,000 more prison places.
The Department for Environment, Food and Rural Affairs will be given £432m in funding in order to improve air quality, biodiversity, the expansion of the Blue Belt programme and to help meet the Government’s net-zero emissions commitment by 2050.
Transport and infrastructure
The Chancellor spoke of an ‘infrastructure revolution’, kicking off with an extra £490 million for the Department for Transport to improve bus services, roads and railways, of which £200m will be used to transform bus services by introducing ultra-low emission buses.
Additional funding will be given to the Scottish, Welsh and Northern Irish governments to the tune of £1.2bn, £600m and £450m respectively.
An increase of £2.2 billion to the defence budget, a real term increase of 2.6 per cent, will see defence spending exceed the NATO target of 2 per cent.
Half a billion pounds was committed to celebrating the 2022 Commonwealth Games in Birmingham.
Today’s Spending Review represents a dramatic shift away from the fiscal conservatism of his predecessor and many economists believe this latest spree may break the Conservative’s own spending rules.
But, with the prospect of an election in the coming months, the Government is clearly attempting to move beyond a decade of austerity and towards a future global Britain.
Some will consider the Chancellor’s remarks as the foundation of a Conservative election manifesto and indeed, Shadow Chancellor, John McDonnell, labelled the announced increases in funding as “grubby electioneering”, pointing to the continued shortfalls in local authority, education and health spending.
Whether or not the Chancellor’s promise of a “decade of renewal” stands up to scrutiny will be a hot topic over the coming weeks, with more Brexit drama and early signs of an economic slowdown likely to dampen even the most optimistic outlooks.