Spending Review to look only at 2021/22
The Spending Review’s intended remit was to cover the rest of this Parliament, but instead it has been announced that it will cover just the 2021/22 period. The decision has been made to allow for flexibility around Coronavirus support, and at a time of bitter rows with local leaders around the country.
The focus will be on prioritising the response to Covid-19, setting department’s resource and capital budgets for the period, alongside the Devolved Administration’s block grants for the same period.
The Treasury announcement has said the Spending Review will build on the Covid-19 support already provided and focus on three areas:
- Providing departments with the certainty they need to tackle Covid-19 and deliver the Plan for Jobs to support employment;
- Giving vital public services enhanced support to continue to fight against the virus alongside delivering first class frontline services; and
- Investing in infrastructure to deliver ambitious plans to unite and level up the country, drive economic recovery and Build Back Better.
The exact date for the review has not been publicised as yet, but is expected towards the end of November.
Figures from the Office for National Statistics (ONS) showed national Debt hit a new record of 32.06 trillion in September as a result of increase government borrowings to fund the coronavirus response. Borrowings for the month was £36.1 billion, up on the same month last year by £28.4 billion.
Despite the high level of borrowings the Bank of England expects the jobless rate, currently 4.5%, will reach 7.5% by the end of the year.
Rishi Sunak said ‘I’ve been clear that our enduring priority is to protect as many jobs and businesses as possible through this pandemic, which is the fiscally responsible thing to do. Through our comprehensive Plan for Jobs we’re protecting, supporting and creating millions of jobs across the country.’
He went on to say ‘Over time and as the economy recovers, the government will take the necessary steps to ensure the long-term health of the public finances.’ This has been taken by some reporters to mean that taxes will need to rise in the future as a result of the increased borrowing levels.