A Guide to the 2020 Spending Review
This year’s Spending Review 2020, which covers just one financial year due to the economic uncertainty caused by the coronavirus (COVID-19) pandemic, was delivered by the Chancellor of the Exchequer, Rishi Sunak, to Parliament on 25 November 2020.
It takes place in extremely challenging circumstances. The immense economic uncertainty associated with COVID-19, and the looming end of the Brexit transition period, makes this an extraordinarily difficult time to be formulating public spending plans.
The Chancellor’s opening comments announced that the ‘Spending Review delivers on the priorities of the British people. Our health emergency is not yet over. And our economic emergency has only just begun. So our immediate priority is to protect people’s lives and livelihoods.’
Mr Sunak commented that the Spending Review 2020 prioritises funding to support the Government’s response to COVID-19, invest in the UK’s recovery and deliver on promises to the British people. It sets departmental budgets for 2021/22 and devolved administrations’ block grants for the same period, confirming that core day-to-day spending – that is, before taking into account COVID-19 spending – will grow at an average of 3.8% a year in real terms from 2019/20 to 2021/22.
The COVID-19 pandemic, the Chancellor says, has caused exceptional hardship for individuals, families and businesses across the UK. The Office for Budget Responsibility’s (OBR) forecast expects Gross Domestic Product (GDP) to shrink by 11.3% in 2020.
Mr Sunak confirmed an additional £38 billion for public services to continue to fight the pandemic this year, bringing total support for public services to £113 billion in 2020/21, and total spending on the COVID-19 response this year to over £280 billion.
The Chancellor announced that the Spending Review 2020 will provide a further £55 billion of support for the public service response to COVID-19 during 2021. This funding is targeted to control and suppress the virus, increase support to public services, and support jobs and businesses.
Next year, as a result of the Spending Review 2020, £100 billion of capital spending has been allocated to help kick-start growth and support jobs. Mr Sunak commented that this investment will level up opportunity across all regions of the UK to ensure that the recovery supports everyone, no matter where they live.
Building on the increased investment next year, Spending Review 2020 goes further to maintain momentum on key infrastructure projects with select multi-year settlements. The Chancellor announced this includes targeted investment to deliver a green industrial revolution, tackle climate change and support hundreds of thousands of jobs.
In our Spending Review 2020 guide which you can read by clicking here, we reveal the key announcements.
If you would like to review what action you may need to take to keep you, your family and your business on track – or if you have any further questions – please contact us.