The Government Spending review – how it will affect you?
Lots of people from all across the political spectrum would have been waiting in anticipation for Wednesday’s spending review and how it will affect our economy. Read what was announced and what it really means below:
1. State of the economy
We all knew that the economy would be in a bad state but not many could have foreseen the severity of the economy’s downfall due to COVID-19. Sunak announced that the economy is set to contract by 11.3%, the worst in more than 300 years. The Chancellor also went to explain that borrowing is forecast to hit £394bn this year. Although these are both worrying statistics, the one that will probably worry the most is that unemployment is projected to rise to 7.5%, with 2.6 million people out of work. The prospect of being unemployed is a worrying one for most, especially as some have not been able to work since March. However, despite these high figures the government have yet to announce whether the £20 weekly increase on the Universal Credit standard allowance will continue past April 2021. If the government do scrap the increase it would be a devastating blow for those currently on Universal Credit and will mean many will no longer receive any monthly Universal Credit payments. This was a point that Marcus Rashford MBE was quick to press the Chancellor on as part of his wider campaign to support working class families accord the UK:
Britain’s largest union, Unite, also responded by creating a model motion to send to local councillors, which urges councils to send a letter to the Prime Minister to ask for the £20 increase in Universal Credit to remain. You can view the motion and read how to send it to your local councillors here.
2. Department Spending
Also announced was a 3.8% rise in day-to-day department spending on top of substantial increases in the health and social care. While this may look great at first glance, for the NHS it is nowhere as much as estimates suggests. Overall, the NHS saw an budget increase of £3bn next year. Even before we take into account the extra strain the NHS is under from the backlog of patients due to COVID-19, the budget increase falls short on what the British Medical Association and Health Foundation think-tank have suggested they need for the rising demand for care. The increase in the budget may get the NHS through the winter, but it won’t reverse the years of austerity and NHS cuts.
3. Public sector pay freeze for most
It was a huge blow to the majority of frontline workers on Wednesday when Sunak announced that there would be a pay freeze for the public sector with the exemption of 1 million staff and public sector workers who are on a salary of less than £24,000 next year. There is no doubt that the public sector helped save countless lives during the current pandemic and have worked harder than ever to keep the deaths rates as low as possible. This difficult news for the social sector comes at a time when car parking charges for NHS staff are set to increase by 200%, leaving staff having to pay ridiculous fees just to be able to work. This decision can be seen as ironic due to the fact that the Chancellor was out clapping for key workers just months ago. Sunak, I’m afraid claps doesn’t put a roof over your head; a pay rise does!
Key members of the shadow cabinet responded on Twitter, rightly criticising this decision.
Local Firefighter and FBU activist Neil Bevan told Worcestershire Transformed:
“A decade of austerity has left firefighters and the communities we serve less safe, with huge fire funding cuts driving the loss of over 11,000 firefighter jobs. Frontline workers were made to pay for the bankers’ crisis in 2008 – and we’ll resist any attempt to make us pay for the pandemic. Ministers were more than happy to clap us all early on in the pandemic, when we stepped up to help our NHS and care staff, but claps are worthless when you’re facing another real-terms pay cut and your profession is being asked to do more without enough resources. For more than 100 years, the Fire Brigades Union (FBU), has fought attacks on our profession, our livelihoods, and the communities we serve. We stand in solidarity with workers in other industries and support any action they choose to take through their unions’ democratic processes.”
4. Overseas aid cut to 0.5%
In order to try and make savings, the Chancellor announced a decreasing of the overseas aid budget from 0.7% of the gross national income to 0.5% This announcement clearly shocked MPs, even some Conservative ones . This is devastating news for those who consider Britain as holding an important place in the world, with the decrease in funding set to lead to some horrific statistics such as 1 million girls losing out on schooling and 5.6 million children being left unvaccinated around the world. It is obvious that it sent shockwaves through the Conservative Party with Tory peer Baroness Sugg resigning from her ministerial role at the Foreign, Commonwealth and Development Office soon after Sunak announced the foreign aid budget cut.
5. Levelling up
The last major announcement that Sunak made during his spending review was that there would be a £4bn fund for “levelling up”. This funding will be available for all local areas to bid for to fund local projects. In reality though, this money will not be enough when compared to the levels of neglect exhibited by the Government towards local councils in the last 10 years of austerity. Local councils will see this as a step in the right direction but it will not fill the funding gap that the last 10 years have caused.
It was never going to be an exciting Spending Review due to the effects of COVID-19, but it can be easily inferred that like typical Tory decisions, the working class will have to pay. Meanwhile, the government have wasted billions on giving vital contracts to their pals, with Matt Hancock awarding his neighbour key lucrative contacts being one of many examples.
Solidarity with the public sector workers that have done so much to keep us safe and keep this country going. The Government may not appreciate you – but your community does.