Spending review 2020: Rishi Sunak’s key points at a glance


Chancellor Rishi Sunak has laid out his plans for what the UK government will spend on health, education, transport and other public services next year.


Mr Sunak says the spending review comes as the coronavirus health emergency is not over and the economic emergency has only just begun.


The chancellor said he will prioritise jobs, businesses and public services.He added that the government is spending £280bn to get the country through Covid-19.


Growth and the public sector

Next year, the government will allocate an initial £18bn in response. There will be £3bn for the NHS, £2bn for keeping transport running, £3bn to local councils, and extra £250m to end rough sleeping.


The chancellor says forecasts from the Office for Budget Responsibility (OBR) show the economy will contract by 11.3% this year, the biggest decline in three centuries.


An estimated 1.3 million public sector workers will see their pay frozen in 2021-2


Most NHS workers and those earning less than £24,000 will still get increase.


Sunak says it will take until the end of 2022 for the economy to return to its pre-pandemic size.

GDP will grow by 5.5% next year, 6.6% in 2022, 2.3% in 2023, 1.7% in 2024 and 1.8% in 2025.


Unemployment is expected to reach 7.5% next spring, with 2.6 million people out of work.


In July, the OBR said its “central scenario” was for a 12.4% plunge in gross domestic product (GDP) this year. This compares with estimates made at the start of November from the Bank of England for an 11% fall in 2020.


Borrowing

  • In July, the OBR estimated a budget deficit – the gap between spending and tax income – of £322bn for 2020-21.

  • The OBR had previously estimated the national debt – the sum total of every budget deficit – of £2.2tn in 2020-21, or 104.1% of GDP.

  • Sunak says the budget deficit will be £394bn this year, or 19% of GDP – the highest level in peacetime.

  • Borrowing will remain at £164bn next year and remains at about £100bn for the remainder of the forecast.

Health and social care

  • £1bn to tackle treatment backlogs and enable delayed operations to go ahead

  • £500m for mental health services in England

  • £325m to replace ageing diagnostic equipment like MRI and CT scanners

  • £300m extra grant funding for councils for social care.

  • A total of £18bn to be spent on Covid testing, PPE and vaccines next year

  • Health budget in England to rise by £6bn, including an extra £3bn for the NHS to cope with Covid pressures


Infrastructure

  • The chancellor announces a new £4bn fund for “levelling up”, to which any local area can bid for the funding of local projects.

  • Sunak says investment in infrastructure will total £100bn next year, with plans to deliver the highest levels of sustained investment in 40 years.

  • He confirms plans to launch a new infrastructure bank, to be headquartered in the north of England.

Employment and businesses

  • £1.6bn for the Kickstart scheme to subsidise jobs for young people

  • £375m skills package, including £138m to provide Lifetime Skills Guarantee

  • A new £4.6bn package to help people back to work

  • £2.6bn for Restart scheme to support those out of work for 12 months

  • New £4bn "levelling up" fund to finance local infrastructure projects, like by-passes

The minimum wage - which has been rebranded as the National Living Wage - will increase by 2.2% - or 19p - to £8.91 an hour, with the rate extended to those aged 23 and over.


Other rates were also increased. From next April, 16 and 17 year-olds will see their pay go up to £4.62 per hour, from £4.55 today.


The UK is expected to borrow £393.5bn this financial year to help pay for economic relief measures.


Brexit

The OBR has said the "unresolved nature" of the negotiations between the UK and EU over a Brexit deal had "further clouded" the economic outlook.


It said failure to secure a deal would reduce the size of the UK economy by a further 2% in 2021, with permanent damage to growth and living standards in future years.


If there is no deal, the economy is not likely to return to size until the second half of 2023, while unemployment could peak at a higher rate of 8.3%.


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