Spending Review 2020: what it means for you
If you’ve been busy steering your business through the latest lockdown, it may have slipped your mind that the Chancellor was due to reveal the Spending Review 2020 today.
But sure enough, Rishi Sunak was at the despatch box earlier to announce his latest budgetary plans.
You can read the government’s own take on the Spending Review here, but to save you wading through it we’ve summarised the key points that will be of most interest to THP Clients.
What’s in the Spending Review 2020
The three broad themes of the Spending Review 2020 were:
- Increased funding to tackle COVID-19
- More money for public services
- £100 capital spending – including infrastructure spending – to help the UK’s recovery and to support jobs.
We’ll take these themes one by one and explain what’s new.
An extra £38 billion will be invested in fighting the coronavirus pandemic this year. A further £55 billion will be added next year.
The money will go on:
- Increased COVID-19 testing
- Vaccine purchases
- A larger supply of COVID-19 medication
Some of the money will also go to the NHS to help it address delayed treatments. There’ll also be funding for local authorities, transport and the justice system (which also has backlogs)
Public service investment
There will be a £6.3 billion increase in NHS spending in 2021-22, a £2.2 billion uplift to the core schools’ budget, £400 million to recruit 20,000 more police officers, £63 million to tackle economic crime and £337 million for the criminal justice system. Core spending power will be increased by an estimated 4.5 per cent.
Capital spending and jobs
In terms of jobs, the outlook is mixed.
- Firstly, public sector pay will largely be frozen next year, except for 1 million NHS doctors and nurses.
- Secondly, 2.1 million public sector workers who earn below the median wage of £24,000 will get a pay rise of at least £250.
- Thirdly, a 3-year Restart scheme to help unemployed people into work will get £2.9 billion.
- Lastly, from April 2021, the National Living Wage will increase 2.2% to £8.91 per hour.
One snippet of good news for some of our clients concerns business rates. The business rates multiplier will be frozen in 2021-22, helping firms to save on this overhead.
Capital spending involves investment in transport, research and development (R&D), NHS infrastructure and diagnostics equipment and digital infrastructure. The latter will receive £260 million to improve rural 4G coverage, local Full Fibre Networks and 5G programmes.
Other key points from Spending Review 2020
While much of the Spending Review didn’t focus on detail that will be important to businesses on a day-to-day basis, the following points are worth noting.
- The economy is projected to contract by 11.3% this year. On the positive side, the it should reach its pre-pandemic size by the end of 2022. Next year it should grow by 5.5%, offering many businesses a glimmer of hope.
- A new infrastructure bank, based in the north of England, will be set up.
- A new ‘levelling-up’ fund will receive £4 billion. Any local area will be able to bid for funding for local projects.
Overall, the Spending Review contained few surprises – a number of the announcements had been trailed for days beforehand. However, we will be looking closely at the detail and will let our clients know if there are significant changes they should know about.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.