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Spending Round 2019 in a nutshell

Posted on 3rd October 2019 by Phil Ainley MCIM

Spending Round 2019

Chancellor, Sajid Javid is poised to deliver the Autumn Budget (date still to be announced) within weeks as Brexit draws closer to its October 31st deadline.

He delivered the Spending Round early in September with bold plans to rejuvenate the fortunes of the United Kingdom economy and our overall welfare and quality of life.

The Spending Round sets out the Government’s spending plans for 2020-21 and funds the people’s priorities, including: high quality and readily accessible healthcare, schools and colleges that deliver superb education, and reducing crime and ensuring the safety of us all.

It also provides some financial certainty for government departments and devolved administrations to focus on delivering Brexit on October 31st. A full multi-year spending review will be delivered in 2020, which will depend on the Brexit outcome.

 

Reduced borrowing allows for increased spending

Since 2010 the government has reduced its borrowing to 1.1% of Gross Domestic Product (GDP), which enables the government to spend more on the UK’s public services in a more sustainable way.

Fiscal rules dictate that the structural deficit stays below 2% of GDP in 2020-21 and ensuring debt continues to fall as a % of GDP. This helps to ensure the public finances are sustainable and the government retains the capacity to respond to global economic challenges.

As with all spending plans and priorities, difficult choices need to be made as to where the spending is needed the most and where it can provide the greatest benefit to the people.

On a positive note, this is the first year since 2002 that no department has faced a cut to its day-to-day budget.

The Spending Round marks a new focus on the positive outcomes the government plans to deliver, which will be further developed in the Spending Review in 2020.

 

Key points at a glance from Spending Round 2019

Brexit

  • £2bn announced for Brexit delivery next year, including more support for business readiness and preparation for Britain’s ports in light of a no-deal Brexit.
  • The Treasury to work closely with the Bank of England to coordinate a fiscal and monetary response for the UK economy.

Spending

  • Day-to-day spending to increase by £13.8bn next year.
  • £1.7bn to be added to capital spending.
  • Fastest planned growth in day-to-day departmental spending in 15 years.

Local Authorities

Education

  • School spending to increase by £7.1bn over the next three years.
  • Allocations to increase for schools including: £5,000 per student for secondary schools and £3,750 per pupil for primary schools.
  • Additional £700m made available to support children with special education needs.
  • Starting salaries for Teachers to rise to £30,000 by 2022-23.
  • £400m increase in further education funding next year.

Policing

  • £750m next year to fund the first year of the government’s plan to recruitment 20,000 new police officers.
  • £45m made available immediately to get 2,000 officers in place by the end of March 2020.
  • Funding doubled to protect places of worship, which will help to further protect religious and minority communities.
  • 5% real-terms increase (a value that has been adjusted to take into account the effects of inflation) in budget for the Ministry of Justice as well as an extra £80m for the Crown Prosecution Service (cps).

The Environment

  • Government infrastructure strategy review to be published later this year for which extra money will be earmarked.
  • £432m extra funding for the Department for Environment, Food and Rural Affairs for climate issues.

Transport

  • £200m+ made available to transform the UK’s bus services. This will include trialing on-demand services and funding for low-emission buses.

Health

  • NHS spending to increase by £6.2bn next year.
  • £210m for frontline NHS staff.
  • More investment in training and professional development for doctors and nurses.
  • £2bn+ of capital funding starting with an upgrade to 20 hospitals this year and £250m for AI technology.

Defence

 

Other

During the Conservatory Party Conference, we heard of the plans to inject extra cash into hospitals, schools and the police as well as plans to raise the national minimum wage for adult workers to £10.50 per hour by 2024.

This poses a couple of questions:

  1. Where is that money coming from? This detail was not clarified in the Chancellors announcement.
  2. How much will the rise from £8.21 to £10.50 actually be worth against the rising costs of living and the prices of goods and services in 5 years’ time?

The Chancellor also announced he will lower the age threshold for those who qualify from 25 to 21.

Other funding pledges included £25bn for road projects and £5bn for digital infrastructure.

 

The detailed Spending Round document can be read online at www.gov.uk


Sources for this article include:

www.gov.uk

www.theguardian.com

www.bbc.co.uk

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