In Depth

Spending review: what did chancellor Sajid Javid announce?

Chancellor hails the ‘end of austerity’

Sajid Javid has revealed the Government’s spending plans amid the ongoing Brexit chaos. 

The Chancellor pledged new funding for health, education, police and defence in what he said was “the fastest increase in day-to-day spending for 15 years”, the Evening Standard reports.

The Government has “turned the page on austerity”, he added.

“No department will be cut next year. Every single department has had its budget for day to day spending increased at least in line with inflation,” said Javid.

"That’s what I mean by the end of austerity,” the BBC says.

The Chancellor said total government spending would rise next year by £30.4bn.

But shadow chancellor John McDonnell dismissed the spending round as “grubby electioneering” and “a compendium of meaningless platitudes”.

He called the spending rise “a pathetic sum to spending departments who are on their knees at the moment”.

McDonnell accused Boris Johnson’s Machiavellian adviser Dominic Cummings of being behind the review, which was “straight out of the Lynton Crosby handbook: opinion poll politics”, says iNews.

On Monday Johnson used the platform of the Downing Street podium to blow the government’s trumpet in what sounded like pre-election fanfare.

“I am proud to say that on Wednesday Chancellor Sajid Javid is going to set out the most ambitious spending round for more than a decade,” said Johnson.

So what was included in the government’s spending plans?

Schools

Javid announced a £14bn boost for school funding in England over three years.

Figures include £2.6bn for schools in 2020/21 with additional funding increasing to £4.8bn in 2021/22 and £7.1bn in 2022/23. 

The Chancellor confirmed his plan in his spending round speech: “A good school, inspirational teachers, are the most effective engine for social mobility that there is,” he said.

“That’s why today we are delivering on our pledge to increase school spending by £7.1bn by 2022/23,” reports The Guardian.

He added that every secondary school will get a minimum of £5,000 per pupil.

The funding plan also includes £400m for further education colleges, which Javid previously claimed was the biggest cash injection for post-16 education in a decade. 

Johnson had said outside Downing Street on Monday: “I said I wanted every child in this country to have a superb education and that’s why I announced last week that we are levelling up funding across the country and spending much more next year in both primary and secondary schools.” 

Javid committed to increased pay for teachers, with starting salaries rising to £30,000 by 2022/23.

The Chancellor said in his spending round speech: “We’ll provide over £700m more to support children and young people with special educational needs next year – an 11% increase compared to last year.” 

He said the Government would develop plans for a youth investment fund to pay for more youth centres, to give pupils more support after the core school day. 

Reacting to Javid’s speech, McDonnell said education spending has been cut by £10bn in real terms since 2010 thanks to successive Conservative governments. 

Health 

The NHS will receive a £6.2bn increase in funding next year, said the Chancellor. 

“We’re investing more in training and professional development for our doctors and nurses, over £2bn of new capital funding – starting with an upgrade to 20 hospitals this year, and £250m for ground-breaking new AI technologies,” said Javid.

“This Spending Round reaffirms the government’s commitment to the NHS, giving it a cash increase of £33.9 billion a year by 2023-24 compared to 2018-19 budgets,” says the government summary

The Chancellor also announced an extra £1.5bn for councils for social care next year – £1bn through a new grant and £500m through the adult social care precept.

“This will support local authorities to meet rising demand and continue to stabilise the social care system,” says gov.uk

Boris Johnson said in his speech on Monday: “I said I wanted to improve your hospital and reduce the waiting times at your GP.

“And so we are doing 20 new hospital upgrades in addition to the extra £34bn going into the NHS.”

But Labour says some of the money was already held by health trusts but had simply not yet been spent.

Jonathan Ashworth, the shadow health secretary, said: “Boris Johnson has misled the public and our NHS staff. You cannot trust a word he says and his claims are unravelling.”

Replying to Javid’s speech, shadow chancellor McDonnell repeated the claim, saying that the NHS spending commitment had already been shown to include money already in the system.

Defence

The Chancellor announced an additional £2.2bn for the Ministry of Defence, an increase of 2.6%.

He said the Government was “increasing again the share of our national income we spend on defence and national security”. 

The move is designed to honour Johnson’s leadership campaign pledge to “exceed the minimum 2% Nato spending target” and “fund defence fully”.

Javid said on Monday ahead of the spending review: “Across our history, Britain has thrived as an open, free-trading nation.

“As we leave the EU, we are deeply committed to playing a leading role on the global stage. That means bolstering alliances, celebrating our culture, building new trading relationships and making sure we can act when needed to keep our people safe.”

Javid also announced extra funding for the Normandy Memorial Trust, which commemorates D-day.

Diplomacy and trade

The September spending round included a £90m boost for British embassies and consulates around the world, and a further £60m to extend the “Great” campaign promoting trade with the UK.

“We support diplomacy, with £90m of funding for 1,000 new diplomats and overseas staff, and 14 new and upgraded diplomatic posts,” said the Chancellor.

The Government committed to £2bn spending in 2020/21 to help the UK to establish a new relationship with the EU, and “capitalise on the opportunities created by Brexit”.

Home Office spending

Javid pledged a 6.3% increase in Home Office spending, claiming this was the biggest increase in 15 years.

The cash boost will help fund an extra 20,000 police officers in three years, the Chancellor said.

When the plans were revealed last week, Labour accused the Government of misleading the public, saying that new officers will be allocated “between territorial, regional and national policing functions”.

This means “as many as 7,000 of the 20,000 officers could be allocated to bodies such as the National Crime Agency”, rather than in front line roles says The Guardian

And today, John McDonnell said that the Chancellor had forgotten it was the Conservative party who cut police numbers by 20,000.

Javid also said he will double the Places of Worship fund - a pot of money established to fund security against hate crime - following an increase in attacks on mosques and synagogues this year.

The Chancellor also announced an additional £30m to tackle online child exploitation.

Justice

Said Javid announced that there will be a “5% real terms increase in the resource budget for the Ministry of Justice”.

He said this means an increase in the department’s capital budget to £620m next year, and an extra £80m for the Crown Prosecution Service. 

Reacting to a pledge of 10,000 extra prison places, John McDonnell asked if these “were the same 10,000 extra prison places promised by the government in 2016, and then again in 2017, and then again in 2018”, says The Guardian.

Homelessness

The Chancellor has committed an extra £54m to tackle homelessness and rough sleeping.

“On any given night, too many people are sleeping rough on our streets,” said Javid. “The human cost of that is too high.”

“Today we do more, with £54m of new funding to reduce homelessness and rough sleeping, taking it to a total funding to £422m.”

McDonnell replied that there has been a 160% increase in people sleeping rough under the Conservative government, and people have died due to homelessness just outside Parliament.

Environment

Javid said in his spending round that this government will be first to leave the environment in a better state than it found it.

“Leaving the EU provides an opportunity to set world-leading environmental standards, and we’re giving DEFRA £432m of funding to do so,” said the Chancellor.

“We’re providing £30m of new money to tackle the crisis in our air quality and another £30m for biodiversity.”

At least £250m will be spent on international climate and environment funds, including the Green Climate Fund, which is dedicated to helping meet the conditions of the Paris Agreement on climate change.

Transport

Sajid Javid - famously the son of a bus driver - announced he will spend £200m on transforming bus services.

“We’re funding ultra-low emissions buses and will trial new, on-demand services to respond to passenger needs in real time,” said the Chancellor.

He committed to a total £490m for buses, road and rail. “This includes extra funding to make buses more environmentally friendly, rail track maintenance to ensure more reliable journeys, and continued support for development of major projects,” says the government website.

Nationwide broadband coverage

Johnson has pledged nationwide broadband coverage by 2025, calling the previous goal of 2033 “laughably unambitious”.

But “without any detail it is just a pledge,” said Andrew Ferguson, editor-in-chief of ThinkBroadband.

“The key to getting excited is dependent on what the pledge means in terms of help for commercial roll-outs and extra funding to ensure that areas unlikely to see commercial roll-out for a number of years can be moved forward.”

Openreach is currently covering 80,000 new home a month with fibre broadband, but that rate would need to increase to 400,000 a month to meet Johnson’s goal, says Wired.

In his spending round, Sajid Javid said: “It isn’t good enough that our small business owners waste so much time because of slow internet speeds and poor mobile connections.

“We’re going to change that. We want faster broadband for everyone in the country,” he added.

Sports and culture

The spending review committed £500m for future sports events. This includes a £46m boost for the 2022 Commonwealth Games in Birmingham, with the money to be spent on boosting tourism and jobs linked to the Games. 

“Today I can confirm the government’s total commitment to this celebration of sport will be over half a billion pounds,” said Javid. 

Agriculture

Javid pledged an extra £160m for Scottish farmers, who he said lost out through previous policies.

Tax threshold for higher earners

There was no mention of tax thresholds in this September spending round, but Boris Johnson has previously committed to raising the threshold at which income tax is paid at 40% from £50,000 to £80,000. The net cost of such a move would be £9bn, according to the Institute for Fiscal Studies.

“Most of the gain goes to those in the top 10% of the income distribution, [who] would gain an average of nearly £2,500 a year,” adds the IFS.

National Insurance

National Insurance was a surprise omission from the spending round.

Johnson wants to raise the starting point for National Insurance Contributions to an annual £12,500. The plan “would cost £11bn a year and take 2.4 million people out of paying NICs altogether, but would still offer most benefits to those on higher earnings”, says The Guardian.

HS2

The Government has pledged to launch an independent review into the future of HS2, which will decide whether to go ahead with the idea, alter it, or scrap it entirely.

George Osborne’s Northern Powerhouse think tank has announced plans to hold its own review into the high-speed railway amid reports that the project may be scrapped by Boris Johnson’s Government.

National Living Wage

Johnson said in a July interview with Sky that he wanted to raise the minimum wage.

However, he didn’t know what the minimum wage - now dubbed the ‘national living wage’ - was. Asked “What is the living wage?” Boris replied “Well, it’s at or around…£10 or so.”

The wage rose from £7.83 to £8.21 on 1 April.

Stamp duty

The Prime Minister had suggested switching stamp liability from the buyer of a property to the seller, and scrapping stamp duty entirely on homes worth £500,000 or less, says Open Access Government.

However, there was no mention of stamp duty in the September spending round.

Stamp duty currently generates £1bn a month for the exchequer and the IFS says £3.8bn a year of that comes from property sold at under £500,000.

Licence fee

The BBC confirmed plans in June to remove the right to a free TV licence for over-75s, arguing that the £745m annual cost of paying for over-75s would use 20% of its budget at a time when people in the age bracket are increasingly wealthy.

The 2017 Conservative manifesto pledged to keep TV licences free for over-75s, but later dismissed the pledge as a mistake, says the Guardian.

Charity Age UK has said Johnson is responsible for finding a resolution, and it may be that “the Government might decide to find some extra cash…to avoid a stand-off with older voters and damaging headlines at this juncture”, says This is Money.

However, the Government failed to stump up the cash during the September spending round, making it look less likely.

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