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Thu, 22 October 2020

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Rishi Sunak warns of 'tough choices' ahead as he launches spending review

Rishi Sunak warns of 'tough choices' ahead as he launches spending review

Chancellor Rishi Sunak (Credit: PA)

4 min read

Rishi Sunak has warned there will be "tough choices" ahead as he launched his 2020 spending review, with a focus on strengthening the UK's recovery from the coronavirus pandemic.

It will set out Government departments' resource budgets from 2021-24 and capital budgets up to 2025, and is set to publish in the autumn. 

The Chancellor's announcement comes as public sector finance data from the Office for National Statistics (ONS) revealed the Government borrowed twice as much in the first quarter of this year as it did in the whole of 2019, as ministers struggled to deal with the impact of Covid-19. 

The spending review will prioritise jobs and skills, "improving outcomes" in public services, supporting the NHS and cutting crime. 

The Chancellor also pledged to stick to Boris Johnson's 'levelling up' election pledge "across all nations and regions of the country by investing in infrastructure, innovation and people".

But he warned of "tough choices" ahead, asking departments to identify opportunities to save cash and cut costs, as well as provide evidence they are delivering the government’s priorities.

"The first phase of our economic response to coronavirus was about safeguarding employment as far as possible. Our goal in the second phase is to protect, create and support jobs and we set out our plan to achieve this two weeks ago," Mr Sunak said.

"The Comprehensive Spending Review is our opportunity to deliver on the third phase of our recovery plan – where we will honour the commitments made in the March Budget to rebuild, level up and invest in people."

ONS statistics show borrowing soared to £127.9bn between April and June this year, up by more than £103.9bn on the same period last year, and hit the highest April to June total since records began in 1993.

Debt meanwhile soared to its highest level since March 1961, rising to 99.6% of UK gross domestic product — an increase of 18.9% compared to the same time last year.

Bridget Phillipson, shadow chief secretary to the Treasury, said the choices made by the Chancellor in the autumn would determine whether society was able to "rise to the challenges ahead".

She added: "The Chancellor has a chance to set a course for our economy to build a future that works for everyone, delivers growth across the country, and rebuilds the vital public services we all rely on. He must take it."

The Labour MP said the Government should not implement more public spending cuts.

"In particular, the government faces choices about public services and the pay of public servants.  We have all seen what happens when vital services are cut to the bone, and frontline workers have proved their worth thousands of times over in this crisis," she added. 

"We need a proper settlement and proper investment to build resilient public services for the future."

Cllr James Jamieson, Chairman of the Local Government Association, said councils across the country "urgently need certainty" about how local services will be funded from next year and beyond, after authorities warned of a budget black hole of more than £10bn.

“Securing the long-term sustainability of local services must be the top priority. It also needs to place emphasis on communities and place by properly enshrining long term, locally-led investment in the economy and infrastructure," he added.

“With the right funding and freedoms, councils can provide local services which communities rely on and grasp the opportunity to address the stark inequalities the COVID-19 pandemic has exposed, develop a green recovery, address skills gaps and rebuild the economy so that it benefits everyone.”

But Ben Zaranko, research economist at the Institute for Fiscal Studies, said the Chancellor appeared to have "opened the door to a less generous funding settlement for public services than the one he committed to in March".

He added: "Given the large amounts already promised for priority areas like the NHS, schools and police, and Rishi Sunak’s emphasis on the need for 'tough choices', another round of budget cuts for other, lower priority departments is a very real possibility."

 

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