Rishi Sunak unveils Spending Review: key points at a glance

Chancellor unveils spending boost for NHS, £100bn infrastructure investment and ‘levelling up fund’ despite £394bn hole in public finances

The Chancellor has warned that Britain’s “economic emergency has only just begun” as he unveiled a “once in a generation investment in infrastructure” at the Comprehensive Spending Review.

Rishi Sunak has set out departmental budgets for the next year after the pandemic forced him to scale back ambitions for a multi-year spending settlement. He announced a spending boost for jobs support, the NHS and the military, but his plans have been overshadowed by a grim outlook for the public finances.

The Spending Review covers everything from day-to-day spending, such as wages and the running of services, to investment, including big infrastructure projects.

Here are the key announcements made by the Chancellor:

Department spending
  • Public services spending to tackle coronavirus will total £55bn next year, the Chancellor said. Total departmental budgets will be £540bn with day-to-day spending climbing by £14.8bn.
  • Mr Sunak confirmed a “targeted” public sector pay freeze but the Government will still provide an increase in wages for NHS workers. In addition, the 2.1m public sector workers that earn less than the median wage of £24,000 will be guaranteed a pay rise of at least £250.
  • The national living wage will still increase by 2.2pc to £8.91 next year, which combined with an increase in the minimum wage will benefit around 2m Britons.

Read more: Living wage rise will spell job losses, hospitality bosses warn

  • Day-to-day health spending will rise by £6.3bn while NHS capital investment will increase £2.3bn. An extra £3bn to help the NHS tackle the pandemic has been confirmed, including £1bn for backlogs caused by Covid. A total of £18bn will be spent on testing, vaccine rollouts and PPE. Some £500m will be spent on supporting mental health services while an additional £151m has been allocated to help homelessness.
  • More than £4bn has been set aside to help get the jobless back in work. Last night the Chancellor announced a three-year £2.9bn Restart scheme to provide the long-term unemployed with tailored and intensive jobs support. Some £1.4bn will be provided to increase Job Centre Plus capacity.
  • The Ministry of Defence has emerged one of the big winners from the Spending Review, securing an additional £16.5bn over four years.
  • The schools budget will increase next year by £2.2bn with every pupil enjoying a funding increase of at least 2pc, Mr Sunak said. Some £1.25bn of new funding will be provided to create new prison places while an additional £400m will help recruit 20,000 police officers by 2023. Local authorities will also be given a £3bn spending boost and an extra £2bn in subsidies will be provided for the rail network.
  •  Mr Sunak announced a cut to overseas aid spending, reducing it from 0.7pc of GDP to 0.5pc in 2021. The Chancellor said the UK intends to return to the previous 0.7pc target when the fiscal situation has improved.

Read more: Fury as foreign aid budget slashed by £5bn 

Infrastructure investment
  • The Chancellor confirmed a new National Infrastructure Strategy that will invest £600bn over five years and £100bn next year – a £27bn year-on-year increase in real terms.
  • He committed to a £7.1bn national homebuilding fund, faster broadband for 5m premises, the biggest ever investment in new roads and funding for the prime minister's green agenda
  • A new “levelling up fund” worth £4bn was unveiled with local areas able to bid to fund projects. The Green Book, the set of guidelines used by officials to make key investment decisions, has been rewritten to favour projects driving the “levelling up” agenda. Critics said the rules had created a bias that were biased towards projects in London and the South East.
  • A new National Infrastructure Bank based in the North of England has been launched, supporting investment to aid the levelling up and net zero targets. It will work with the private sector to finance new projects from next spring.
Economic forecasts 
  • The Office for Budget Responsibility has unveiled new borrowing forecasts that revealed the scale of the damage done by Covid to the public finances. The budget watchdog warned borrowing will hit £394bn, or 19pc of GDP, in 2020-21 . It will fall to £164bn next year and £105bn in 2022-23, around 4pc of GDP.
  • The economy will contract 11.3pc in 2020 with a 5.5pc rebound in GDP pencilled in for next year, the OBR said. Output will not return to pre-virus levels until the end of 2022 and the economy will be 3pc smaller in 2025 than previously expected.
  • Unemployment will reach a peak of 7.5pc in the second quarter of next year, the OBR warned.

Read more: How to read the budget watchdog's numbers for the economy

Comment: Grim forecasts spell out the ugly truth of long economic Covid

How does the Government's spending review affect you? What did and didn't you like about the Chancellor's statement? Get in touch by emailing [email protected]