By Cameron Marshall
Throughout the pandemic crisis, Rishi Sunak has become known as the ‘whatever it takes’ Chancellor, willing to do everything in his power to retain people’s jobs and incomes. However, there have always been concerns that this level of spending would come back to b
ite him in the end.
In a statement in Parliament last week, the Chancellor set out his Spending Review, briefing the British people on the state of our economy and the state of our governments public finances. They don’t look good. In fact, the UK economy is expected to shrink by 11.3% this year, the largest fall for more than 300 years. You may ask: ‘but how does this affect the average person?’ Well, the economy is the absolute core of our society, it is what provides us with our jobs and livelihoods, without which it is not possible to live off our own backs. Unemployment is expected to reach 7.5% next spring, with a staggering 2.6 million people out of work. This is a shocking statistic, but the lives of those who will struggle severely as a result of this mass unemployment can often be lost beneath the big numbers.
So what is the government doing in these tough economic times to protect people’s livelihoods? The Chancellor announced a number of new schemes in the Spending Review including a new £4.6bn package to help people back to work as well as a £2.6bn Restart scheme to support those out of work for 12 months and a £1.6bn Kickstart scheme to subsidise jobs for young people specifically. Labour have crit
icised the schemes, saying that they will only work if the jobs are there in the first place. However, the government can hardly wave a magic wand and create jobs for everyone. Subsidising jobs is the best we can get.
Investing in the North of England has been a key message from this government in the past year, but has not been backed up by action until now. The Chancellor announced a new £4bn "levelling up" fund to finance local infrastructure projects as well as a new UK infrastructure bank to be established in the North of England. It is absolutely imperative that the government delivers for the people who put their trust in them in the Election a year ago and this investment has been widely welcomed in the North, especially by the Conservative MPs whose seats could depend on it in four years! Another big regional investment included a £4.7bn cash increase for the devolved administrations in Scotland, Wales and Northern Ireland, to affirm this government’s dedication to serving the whole Union.
The investment doesn’t stop there though. A total of £18bn is to be spent on Covid testing, PPE and vaccines in 2021 and the Department for Health and Social Care budget in England is to rise by £6bn, including an extra £3bn for the NHS to cope with Covid pressures. £1bn will be spent on tackling treatment backlogs and enabling delayed operations to go ahead whilst £500m will go to mental health services in England, a small investment that will mean a lot to people during these challenging times.
There’s increased investment into education, with schools in
England getting £2.2bn, representing a massive 2.2% increase per pupil. There’s increased investment into transport, with £2bn in subsidies for the rail network. There’s increased investment into local government, with £3bn in extra funding for local authorities, representing a 4.5% increase in spending power and councils will get £250m to tackle rough sleeping. A big crowd pleaser will also be the increased investment into justice and law enforcement. There will be £4bn over the next four years to provide 18,000 new prison places and more than £400m to recruit 6,000 new police officers by the end of 2022, on course to hit 20,000 new police o
fficers by the next election. And all of that is without mentioning the colossal but rather controversial £16.5bn investment into our defence forces, creating 40,000 jobs over the next four years. This funding boost is long overdue, yet many say that it comes at the wrong time.
Those are a lot of big figures to take in and you come out of it wondering how on Earth the government plan to pay for this, especially bearing in mind that borrowing is forecast to hit £394bn this year, equivalent to 19% of the UK’s GDP, the highest ever in peacetime. Well, an estimated 1.3 million public sector workers will see their pay frozen in 2021-22, a move that has been criticised by many, although it does not even compare with the suffering experienced by many private sector workers who have tried to keep the economy moving throughout the pandemic. Luckily, this is something the majority of our public sector heroes appear to appreciate.
Despite the freeze, more than two million earning less than £24,000 a year will still get a minimum £250 increase, meaning more than a million doctors, nurses and other NHS workers will also see a rise. It’s also worth noting here that the National Living wage will rise by 2.2% to £8.91 an hour and 23 and 24-year olds will qualify for the living wage for the first time.
In addition, the overseas aid budget will be cut from 0.7% to 0.5% of total national income, a reduction of about £4bn in support for tackling global poverty. The UK will revert back to the 0.7% target in 2022-23 if the public finances allow. This is a highly popular move among British taxpayers who feel it is time we prioritised spending their money on the deprived areas of Britain, although it has not been so popular with many in the establishment who feel this corrodes the UK’s international image.
None of this is ideal, but the Chancellor’s every move is calculated to getting the UK economy back up and running again and getting people into jobs that will provide secure livelihoods. We know that even in 2025, the economy is predicted to be around 3% smaller than was expected in the March Budget forecast, but in spite of all this bad news, we must keep investing and we must keep our economy moving. It will not be like this forever.
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