The Chancellor launched the Spending Review 2021 (SR21) on 7th September, which will conclude on 27 October 2021 alongside the 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.
At the Spending Review, the government will set out how they plan to Build Back Better 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 their Plan for Growth – delivering on 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 “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 the new Health and Social Care Levy and the increase to dividend tax rates recently 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 2024-25
- In total, day-to-day spending will increase to £440 billion by 2024-25, increasing by nearly £100 billion a year in cash terms over the Parliament.
- The government will also 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, 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 broader plan to return public finances to a sustainable footing over the medium-term.
Given the impact COVID-19 has had on the economy, the Chancellor has been clear that spending plans will be underpinned by a focus on ensuring every pound of taxpayer funding is well-spent.
Departments have therefore been asked to identify at least 5% savings and efficiencies from their day-to-day budgets as part of these plans, which will be reinvested in our priorities.