Spending Review 2020, reaction.
Rishi Sunak has made his statement about the fiscal state of Britain for the next year, let’s delve into the details.
- 3m public sector workers have their pay frozen for 2020–21: this comes of of the back of a previous 8 year pay freeze. It pits worker against worker, it pulls demand out of the economy at a time we need people spending, and it punishes those who’ve kept the country running during the pandemic; it is shameful. Those earning under 24k get a measly £250 increase, and NHS workers receive an (inadequate but welcome) pay rise.
- National Living Wage is rising 2.2% to £8.91 an hour: this is the right move, and we should push for it to go further; despite neoliberal scaremongering, more pay = more demand and more spending, which turbocharges the economy. We’ve heard worrying whispers of backing down on minimum wage commitments from the govt, this cannot happen and it would be an attack on working people. 23 and 24 year olds qualifying for this is excellent, and it should be expanded to the entire workforce.
- The economy is falling into the doldrums, we’re contracting by 11.3% (largest fall for 300 years) forth quarter of 2022 being earliest we recover, unemployment heading for 7.5%, borrowing 19% of GDP and debt 91.9%, economy 3% smaller than expected by 2025: due to the interest rate climate, we should set austerity arguments to bed and accept deficit hawks (like the Chancellor) have been wrong one too many times. The approach is a growth lead recovery, we need to focus on investment and an industrial strategy to build back better.
- Health budget increases by £6bn, £3bn for NHS, £18bn on testing and vaccines 2021, £1bn treatment backlogs, £500m mental health, £325 replacing ageing equipment, £300m social care: more for the NHS and increased support for social care, alongside funding for vaccines, treatment backlogs and mental health are of course all right and proper and welcome, but these figures simply don’t match what is needed to even get close to a semblance of providing the service people need.
- Back to work package, Restart scheme, Kickstart getting £1.6bn, skills package, £4bn for levelling up, business rates multiplier frozen 2021–22, and a new infrastructure bank in the north of England: the infrastructure bank is exactly the sort of bold thing we need to see, and it is to the credit of John McDonnell; without his time on the shadow bench such a thing would never have been considered. Other provisions are good, we need oversight of where levelling up funds go, so they benefit all left behind areas not simply Tory marginals.
- Aid budget cut to 0.5% until 2022–23, billions to defence, new artificial intelligence and cyber force projects: the government is shredding £4bn from the world’s neediest at a time like this, it is indefensible, low hanging fruit, and won’t improve fiscal conditions one iota.
- 2.2% increase per pupil, 4.5% increase in council spending power, £250m for rough sleeping, 18 000 new prison places and 6000 new police officers by 2022: the government is half heartedly reversing the disasters it has caused; education will still be neglected, councils will still be on a cliff edge, and there will be less or the same police numbers as when the Tories came to power.
- No mention of Brexit, put prediction of 2.1% shrink if No Deal occurs, with other deals unlikely to help, and various temporary logistical disruptions: the fact Sunak didn’t talk about the single biggest change in economic conditions is insane, this should be near top of the agenda (top if not for coronavirus) and we’re heading into the arctic with no coat on.
- More funding for devolved admins: an attempt to woo Scotland that won’t get far at all, business as usual continues.
A few closing thoughts… the extent to which Sunak is stealing ideas from Labour’s 2019 manifesto but in a piecemeal half baked fashion is almost amusing, and the left needs to develop a coherent case beyond “well we’d spend more”. Welcome provisions and bold ideas here, a chance to shore up the Tory base and postpone difficult choices that will hurt one group or another, and upset one group or another; Sunak yet to grow a spine and raise taxes on the wealthy, working people set to suffer due to inadequate support.