Due to the economic uncertainty caused by the COVID-19 pandemic, the Chancellor abandoned plans for a long-term Comprehensive Spending Review (which would have allocated departmental spending for the next three years) in favour on a one-year spending review, allocating funding to government departments for the year from March 2021. The economic forecast, produced by the independent Office for Budget Responsibility, made for grim reading. The UK is facing a 11.3 per cent economic contraction – the largest for three hundred years and the worst hit of the G7 (the seven largest economies). A failure to get a grip on the virus and testing has made a bad situation even worse.
See here for useful information on the detail of the Spending Review.
The cut to the aid budget (from 0.7 per cent of the UK’s GDP to 0.5 per cent) is short-sighted and pernicious. There was no additional money to remove dangerous cladding from leasehold flats – only a repeated reminder of the money already allocated for this work. The increases announced for schools do not keep up with costs in the sector. Public sector pay is frozen except for the lowest-paid, and for nurses and doctors. Not only is this a further blow after years of wage freezes and restraint but it also stores up problems for the future (as we have seen in the past, for example, with ambulance workers whose pay levels were having an impact on recruitment and retention). This was not a Budget, so we still don’t know what tax changes lie ahead as the bills for COVID-19 keep on rolling in.
I challenged the Chancellor over local government funding and the decision to finance hard-hit local authorities largely through increases in council tax (see here). I’m also working with frontbench Labour colleagues to press the Government over its plans for a public sector pay freeze, cuts to Universal Credit, and the slashing of the international aid budget. See here to read Labour’s Shadow Chancellor, Anneliese Dodds, calling out the Government over these plans.