Special Correspondent, LONDON (CWBN)_Chancellor of the Exchequer Rishi Sunak will be expected to outline tens of billions of pounds of expenditure in the UK’s departmental budget. The Spending Review ranges from fixing potholes to buying warships.
The review will, by and large, cover departmental budgets for the fiscal year starting in April and it will also deal with longer-term programs in Defense, Health-care, Education and Infrastructure.
Spending Review
Spending Reviews are done occasionally and could be for a period of between one and five years.
The reviews primarily cover day-to-day spending on wages and administration, as well as infrastructure investments such as roads, schools and hospitals. Decisions would be made regarding about 50% of total government spending. Areas which aren’t covered typically include welfare payments, pensions and debt interest.
Taxes
Unlike in budgets, Spending Reviews do not change or impose new taxes. Instead, they outline the state of public finances – the national debt now surpasses 100% of the GDP for the first time since the 1960s. Sunak will outline how he proposes to bridge the deficit.
The Office for Budget Responsibility will make its forecasts, expanding on what Sunak on Sunday explained as “the enormous strain and stress” on the economy. The forecasts would show the GDP reduction around 11% this year, a record level reduction unheard of in over 300 years, while the budget deficit reaching up to 400 billion pounds ($534 billion), a peacetime record.
Prioritised areas
Fighting the pandemic is topmost among the priorities outlined – it was announced on Monday that the nation’s testing and tracing capacities are to be increased with an additional 7 billion pounds of funding allocated, and 3 billion pounds of new funding is being allocated for the National Health Service (NHS) to deal with the resulting pressures. The range of measures taken includes a backlog of routine surgeries, scans and cancer treatment.
With three vaccine companies coming out with positive results, a mass national programme will require funding. Massive programmes to support businesses and workers with substantial grants, loans and wage payments have also been outlined.
Has UK returned to austerity?
The past decade was noticeably dominated by a series of austerity measures and policies under former Prime Minister David Cameron and his chancellor, George Osborne. They copiously reduced spending in some government departments and either froze or imposed a ceiling on wages for public-sector workers. Sunak and Prime Minister Boris Johnson have promised there won’t be a return to that era of austerity.
“What you will see is an increase in the government spending on day-to-day public services,” Sunak told Sky News on Sunday, explaining that it is “significant.” He assured the public that most departments will have their budgets “rolled over.”
However, the duo has refused to dismiss reports that they plan to reduce spending on overseas aid to 0.5% of the gross national income from the original 0.7%. The prospect of reducing overseas aid, which has created discontent among the Conservative Party backbenchers, has prompted several former ministers to express their worst fears – that the UK’s international reputation and influence will diminish.
What are the effects on the public sector?
Sources indicate that Sunak is planning to restrain public sector pay, which now incurs over 200 billion pounds a year. This would entail either a freeze or ceiling on raises. However, the changes would exclude health care workers.
The Government’s Green measures
PM Johnson declared a 10-point plan to reduce carbon emissions to “net zero” by 2050. The 12 billion-pound plan incorporated about 4 billion pounds worth of new promises; 500 million pounds to develop hydrogen as a fuel, 200 million pounds for carbon capture and storage, and another 525 million pounds for nuclear power.
The government promised 1.3 billion pounds to curb transport emissions. The funds will be allocated to install charging points for electric vehicles, 582 million pounds in grants for zero or ultra-low emissions vehicle purchases, and a billion pounds to make buildings more energy-efficient.
Some of the additional measures include;
4.3 billion pounds of new funding to ease the unemployed back into work
2.2 billion pounds for schools in the coming year
1.5 billion pounds for further education colleges
3.7 billion pounds for hospitals
4 billion pounds for prisons
220 million pounds for the borders and immigration system
There will be more funding for police recruitments (20,000 by 2023), nurses (50,000), and “tens of millions” of pounds are being put aside to set up a new Counter-Terrorism Operations Centre. There are 275 million pounds allocated towards financing the criminal justice system, which includes addressing court backlogs.
Edited by Kaveesha Fernando
