02 Feb The Autumn Spending Review
“Our health emergency is not yet over. And our economic emergency has only just begun.”
The Chancellor of the Exchequer, Rishi Sunik, didn’t mince his words when he set out the current state of the nation’s finances as part of his annual spending review. With the Office for Budget Responsibility (OBR) forecasting an 11.3% contraction over the course of 2020 thanks to the Covid crisis, there was an acknowledgement that despite forecast rises of 5.5% in 2021 and 6.6% in 2022 the fallout from Covid would still be affecting the economy in 2025 and beyond.
Nevertheless, this was a review for the moment; one which looked towards promoting health and jobs and infrastructure as much as it acknowledged the ongoing effect of Covid. We did see a few announcements of spending reductions, most notably a reduction in overseas aid to 0.5% of National Income and a freeze on public sector pay with the exception of NHS and low paid workers. However we also saw a number of announcements which looked to boost spending across government departments, the NHS and schools as well as infrastructure. Key announcements for business and industry include:
- £100 billion in capital investment in 2021; a rise of £27b in real terms from the current year. This is to be targeted at kick-starting growth, boosting green infrastructure and climate change plans, and supporting jobs across the UK.
- The creation of a new infrastructure bank to catalyse private investment in projects across the UK.
- A £4b levelling up fund which will invest in local infrastructure that has a visible impact on people and their communities. In addition the UK Shared Prosperity Fund will receive further funding to at least match receipts previously received from EU Structural funds.
- The creation of up to ten freeports as hubs for global trade and investment.
- £15b earmarked for R&D to promote the UK as a world-class research base and increase the productivity and international competitiveness of its innovative firms.
- The British Business Bank to receive an additional £56.5m in funding to support entrepreneurs to start and grow their businesses.
- A boost to mobile and broadband coverage including £1.2 billion to subsidise the rollout of gigabit-capable broadband.
- £1.9b to be made available for charging infrastructure and consumer incentives to promote the transition to zero emission transport. A further £1.1b is to be made available to make homes and buildings net zero-ready. Additional funding will be targeted towards low hydrogen carbon production, offshore wind and nuclear power with £1b going to a carbon capture and storage infrastructure fund.
- £519m of funding confirmed to support the continued delivery of Covid-19 loans.
- The business rates multiplier frozen for 2021-22 with options under consideration for further reliefs.
Despite speculation to the contrary the National Living Wage for those aged 23 and over is to increase by 2.2% from April 2021 to £8.91 per hour. National minimum wage rises were also announced for all relevant age groups and for apprentices. The review papers also confirm the previous announcement to the effect that personal allowances and national insurance rates for 2021/22 will rise in line with September CPI.