The Chancellor Rishi Sunak delivered his Spending Review to the House of Commons this lunchtime. The Spending Review is a more low key event than the budget and the things that really interest us – like who will end up paying more tax and how much – aren’t part of the Spending Review.
What we do know is that we will be paying for the unprecedented government borrowing for many years to come.
For anyone who was still in any doubt about the grave state of the economy, Rishi Sunak was clear that the UK’s “economic emergency” had “only just begun”, with the government expected to borrow £394bn this year. In fact, the UK has seen the largest fall in economic output for 300 years.
Mr Sunak predicted that unemployment will rise to 2.6 million by the middle of next year – up from the current figure of 1.62 million.
Two of the big announcements today were that public sector pay would be frozen, except for the lowest paid. Nurses, doctors and other NHS staff will receive a pay rise.
The chancellor also said spending on overseas aid, as a proportion of national income, would be 0.5% in 2021-22 – down from the 0.7% currently set in law.
The Spending Review confirmed that the government will spend a further £55bn next year as part of a package of measures to support the recovery. This includes billions of pounds to help people find jobs.
In terms of financial services Mr Sunak announced £519m of funding in 2021-22 to support the continued delivery of COVID-19 loans, including paying for the 12-month interest free period on the BBLS and the CBILS.
There was also an additional £56.5m in 2021-22 to support the vitality and entrepreneurship of the UK by expanding the British Business Bank’s Start-Up Loans to meet the increase in demand and support entrepreneurs to start and grow their business.
He announced a freeze of the business rates multiplier in 2021-22, saving businesses in England £575m over the next five years.
Mr Sunak said he was also considering options for further COVID-19 related support through business rates reliefs and HMT will outline plans for 2021-22 reliefs in the New Year and we will bring you the details as soon as they are announced.