The chancellor has announced that he will conduct a one-year Spending Review in order to concentrate on the government’s response to COVID-19.
The chancellor and the prime minister have decided to conduct a one-year Spending Review, setting department’s resource and capital budgets for 2021-22, and Devolved Administration’s block grants for the same period. The one-year spending review will conclude in late November.
The Chancellor of the Exchequer, Rishi Sunak, said: “In the current environment its essential that we provide certainty. So we’ll be doing that for departments and all of the nations of the United Kingdom by setting budgets for next year, with a total focus on tackling Covid and delivering our Plan for Jobs.
“Long term investment in our country’s future is the right thing to do, especially in areas which are the cornerstone of our society like the NHS, schools and infrastructure. We’ll make sure these areas crucial to our economic recovery have their budgets set for further years so they can plan and help us Build Back Better,” he added.
A statement from The Treasury added that while the government would have liked to outline plans for the rest of this Parliament, the right thing today is to focus entirely on the response to Covid-19 and supporting jobs as that is what the public would expect.
The Treasury statement concluded that the Spending Review will confirm multi-year capital spending for key programmes where certainty is needed to ensure no time is lost in delivery.
The Spending Review is typically an opportunity to take a long-term view of the government's spending plans. It looks at the budgets of all the government departments and sets out how taxpayers' money will be spent, by fixing the maximum amount that they can spend.
The precise date for the Review will be confirmed shortly but it will be in the last weeks of November.
Cllr James Jamieson, Chairman of the Local Government Association, said: “It is hugely disappointing that councils will only get a one-year funding settlement for the third year in a row. This makes it incredibly difficult for them to plan how to provide the local services our communities rely on and which have proved so vital during the pandemic, including public health, adult social care, children’s services, homelessness support, and help for those in financial hardship.
“This is a missed opportunity for the government to draw a line under inefficient short-term budgeting, that leads to higher costs to the public purse, and to allow councils to set reliable medium-term financial strategies. Only with sustainable and certain long-term funding can councils protect and improve services and play a leading role in addressing the stark inequalities the pandemic has exposed, developing a green recovery, tackling skills gaps and rebuilding the economy so that it benefits everyone.
“We urge the government to publish this Spending Review as soon as possible as the end of November is incredibly late for councils to find out how much money they will have to provide services next year. Councils will face a £4 billion funding gap next year just to keep services running at today’s levels and need urgent certainty about how to set budgets and to plan any measures they may be forced to take to cut spending. Before the Spending Review is announced, the Government must confirm that the resources councils have this year will not reduce and there will be no business rates reset next year.
“Many councils were in a difficult financial position before the pandemic hit after a decade of central government funding reductions. They will continue to face demand pressures on day-to-day services - some pre-existing and others made more significant by the impact of COVID-19 – amid substantial income losses, such as from local taxation, fees and charges.
“The government has provided some much-needed support but significant challenges remain. It is vital that the government addresses in full the financial challenges facing councils as a result of COVID-19, including all lost income and local tax losses, and provides further investment so councils can protect and improve local services next year.”
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