Rishi Sunak made a statement today, announcing the outcomes of the Government’s Comprehensive Spending Review. As well as ensuring a strong focus on public health and Covid the Government’s focus is upon protecting livelihoods (creating jobs), supporting business and protecting public services.
The OBR forecast for this year shows a predicted 11% decrease in the size of the economy this year before returning to growth in subsequent years. It is unlikely that we will return to pre-Covid economy levels before Qtr 4 in 2022. Against this backdrop, Government is borrowing significant levels of funding running a significant current deficit.
Against that backdrop, the Chancellor made a series of announcements. These include:
- A freeze on public sector pay increases for a number of public sector employees – focusing any increases on NHS workers and those in low paid positions
- 8% increase in day to day Government Department spending in 2021/22
- Ongoing investment in NHS fabric; estate and capital items
- Additional £1bn of funding for Health and Social Care
- A UK Shared Prosperity Funding with pilot programmes in 2021/22 rising to £1.8 bn a year as EU funding tapers off – this will focus on regional development (including skills)
- £24bn increase in defence spending over four years
- £100bn capital investment planned in 2021/22
- £7.1bn new homebuilding programme and increased investment in digital infrastructure alongside a 10 point plan for a low carbon / green economy
- A new levelling up fund of £4bn to support the levelling up agenda adopting a place-based model for use over the next four years
With specific reference to employment, education and skills the Chancellor announced:
- School budget increased by £2.2bn and expansion of new school building programme
- £3bn Restart programme for over 1m people (unemployed for 12m +) to get back into work to be managed by DWP to counter increases in unemployment
- £1.5 bn to improve College / FE facilities
- £0.5bn to boost Traineeships, Apprenticeships and Sector Work Based Academy initiatives
- An extension of Apprenticeship employer financial incentives to end of March 21.
To help fund these changes, the Government is clearly borrowing more and making cuts in some areas such as Overseas Aid (DFID budget to fall from 0.7% to 0.5% of total Government budget)
It would appear that the Government is planning significant investment in employment, education and skills but, at this point, the investment seems to be more focused on unemployment and pre-16 programmes. Whilst there are some welcome announcements it is disappointing that programmes such as Apprenticeships have not been prioritised more as they are a great vehicle for both creating jobs and improving skills
As more detail emerges, we shall, of course, circulate it.