The year of two budgets! 2021 budget date set

The Chancellor has launched (7th September) Spending Review 2021 (SR21), which will conclude on 27th October 2021 alongside an Autumn Budget and set out the government’s spending priorities for the Parliament.

The three-year review will set UK government departments’ resource and capital budgets for 2022-23 to 2024-25 and the devolved administrations’ block grants for the same period.

When added to what the government have already provided to invest in future plans – including the additional funding for health and social care announced – the mean core departmental spending will grow in real terms at nearly 4% per year on average over this Parliament. By 2024-2025 the core departmental spending will be £140 billion more per year.

At the Spending Review, the government will set out how to “Build Back Better, deliver the priorities of the British people and continue to support businesses and jobs” through:

  • Ensuring strong and innovative public services – making people’s lives better across the country by investing in the NHS, education, the criminal justice system and housing;
  • Levelling up across the UK to increase and spread opportunity; unleash the potential of places by improving outcomes UK-wide where they lag and working closely with local leaders; and strengthen the private sector where it is weak;
  • Leading the transition to Net Zero across the country and more globally;
  • Advancing Global Britain and seizing the opportunities of EU Exit;
  • Delivering the Plan for Growth – delivering on claimed ambitious plans for an infrastructure and innovation revolution and cementing the UK as a scientific superpower, working in close partnership with the private sector.

The Chancellor of the Exchequer, Rishi Sunak, said:

Since the start of the pandemic, we’ve delivered on an unprecedented scale to protect people’s jobs and livelihoods.

Despite the worst economic recession in 300 years, we have not only got people back into work through the Plan for Jobs but continued to deliver on the priorities of the British people.

At the Spending Review later this year, I will set out how we will continue to invest in public services and drive growth while keeping the public finances on a sustainable path.

As part of the launch, the Chancellor set the envelope for spending over the next three years:

  • Core day-to-day departmental spending will follow the path set out at spring Budget 2021, with the addition of the net revenue raised by a new Health and Social Care Levy and the increase to dividend tax rates announced. The Government will make available around an additional £12 billion per year for health and social care on average over the next three years.
  • This additional funding for health and social care allows the Government to announce an SR21 RDEL settlement for NHS England and Improvement rising to £160 billion by 2024-2025
  • In total, day-to-day spending will increase to £440 billion by 2024-2025, increasing by nearly £100 billion a year in cash terms over the Parliament.
  • They propose to deliver a step-change in capital investment, as set out at Budget 2021. They will invest over £600 billion over five years, the highest sustained level of public sector net investment as a proportion of GDP since the late 1970s.
  • Overall the plans will see total core departmental spending (for day-to-day spending and investment) grow in real terms at nearly 4% per year on average (nearly 6% in cash terms) over this Parliament – a £140 billion cash increase and the largest real-terms increase in overall departmental spending for any Parliament this century.

This spending increase is part of our broader plan to return our public finances to a sustainable footing over the medium-term. The spending plans and focused tax changes we announced today, alongside the measures taken at the last Budget, show that we are determined to get our fiscal position back on track, so that we can continue to fund excellent public services in the future.

With a focus on ensuring every pound of taxpayer funding is well-spent, Departments have been asked to identify at least 5% savings and efficiencies from their day-to-day budgets as part of the plans.

PAYadvice.UK 7/9/2021

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