The Chancellor Rishi Sunak delivered his Spending Review on 25 November, setting out government plans for the economy and spending. The headlines were that said the government is set to borrow a record £394bn this year, the economy will suffer a significant contraction in 2020 – and beyond – and unemployment will reach 2.6m.
General economic position
- The Office for Budget Responsibility predicts that the economy will contract this year by 11.3%.
- The UK economy will be around 3% smaller than expected in the March Budget.
- Unemployment is expected to rise to a peak of 7.5% – or 2.6m people – in the second quarter of next year.
- Departmental spending will increase by 3.8% to £540bn.
- The National Living Wage will rise by 2.2% to £8.91 per hour.
- The government will spend £2.9bn on a Restart employment scheme.
- The Government is publishing a new Infrastructure Strategy and setting up an Infrastructure bank.
- A £4bn ‘Leveling-Up’ Fund is to be established and managed by the Treasury, Department for Transport and MHCLG.
Further coronavirus support
- £519 million 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.
- Business rates multiplier will be frozen in 2021-22.
- The government is also considering options for further COVID-19 related support through business rates reliefs. In order to ensure that any decisions best meet the evolving challenges presented by Covid-19, the government will outline plans for 2021-22 reliefs in the New Year.
- Additional £56.5 million in 2021-22 for British Business Bank’s Start-Up Loans.
- New £2.9 billion Restart programme that will provide intensive and tailored support to over one million unemployed people and help them find work, with approximately £0.4 billion of funding in 2021-22.
- A new National Infrastructure Strategy (NIS), outlining the government’s longer-term vision for transforming UK infrastructure and plans to create a new infrastructure bank to catalyse private investment in infrastructure projects across the UK.
- A refreshed Green Book.
- The implementation of recommendations made by the Project Speed taskforce to enable faster and smarter delivery of projects across the government’s infrastructure portfolio.
Levelling Up Fund
- Launching a new Levelling Up Fund worth £4 billion for England, that will attract up to £0.8 billion funding for Scotland, Wales and Northern Ireland in the usual way. This will invest in local infrastructure that has a visible impact on people and their communities and will support economic recovery. Moving away from a fragmented landscape with multiple funding streams, this new cross-departmental Fund for England will invest in a broad range of high value local projects up to £20 million, or more by exception, including bypasses and other local road schemes, bus lanes, railway station upgrades, regenerating eyesores, upgrading town centres and community infrastructure, and local arts and culture.
It will be open to all local areas in England and prioritise bids to drive growth and regeneration in places in need, those facing particular challenges, and areas that have received less government investment in recent years. SR20 makes available up to £600 million in 2021-22. The government will publish a prospectus for the fund and launch the first round of competitions in the New Year
Shared Prosperity Fund
- To help local areas prepare over 2021-22 for the introduction of the UKSPF, the government will provide additional funding to support communities to pilot programmes and new approaches. This additional funding will be delivered UK-wide, using the new financial assistance powers in the UK Internal Market Bill. Further details will be published in the New Year.
- DCMS’s settlement is a 2.3% increase in core resource funding in 2021-22. There will be investment in the rollout of gigabit-capable broadband across the UK and a resilient 5G network.