Our Summary of the Spending Review

We have published a summary of the key announcements in the Chancellor’s Spending Review yesterday.  Despite speculation and a stark forecast from the Office for Budget Responsibility (OBR), Mr Sunak made no announcements about tax increases. His main focus was spending to boost the economy, support jobs and businesses, and invest in infrastructure.

View or download our summary of the 2020 Spending Review here.

The OBR reported that the UK economy is expected to shrink by 11.3% in 2020 – the largest annual fall since the Great Frost of 1709 – and total borrowing in 2020/21 will reach an estimated £394 billion. This is, of course, due to the pandemic support measures and includes additional public services spending of an extra £38 billion over the rest of 2020/21. Total spending on the response to Covid-19 this year will come to over £280 billion.

Looking ahead, Mr Sunak outlined a raft of fresh support spending, including capital investment in 2021/22 of £100 billion and a new employment support fund of £2.9 billion over three years for the long-term unemployed.

Other key measures include:

• An increase to the National Living Wage for those aged 23 or over by 2.2% from £8.72 an hour to £8.91 an hour from April 2021.
• A public sector pay pause in 2021/22 except for NHS workers and lowest paid workers earning under £24,000.
• A new National Infrastructure Strategy based around economic recovery, levelling up and meeting the UK’s net zero emissions target by 2050. It will be supported by a new infrastructure bank based in the north of England.
• Local authorities’ core spending power will rise by an estimated 4.5% in cash terms in 2021/22, with additional powers to increase council tax bills and raise funds for social care. •    Over £250 million additional funding to help end rough sleeping.
• The business rates multiplier will be frozen in 2021/22, saving businesses in England £575 million over the next five years and the government is considering business rates reliefs.
• Overseas aid will be cut from 0.7% of gross national income down to 0.5% in 2021.

We hope you find our summary useful and of interest.

View or download our summary of the 2020 Spending Review here.

If you have any questions please get in touch with your dedicated partner or contact us.