Fiscal Insight – Spending Round 2019
On 4 September 2019, the Chancellor of the Exchequer announced the UK Government’s plans for departmental spending in 2020-21 in the Spending Round 2019.
This ICAEW Fiscal Insight analyses the effect of this announcement on the public finances and what this means for public services. Headlines include:
Planned departmental spending of £434.2bn in 2020-21
- Departmental current spending up by £13.8bn or 4.1% to £352.3bn
- Departmental capital spending up by £3.9bn or 5.0% to £81.9bn
- This is £13.4bn more than set out in the March 2019 Spring Statement
Increases in current spending
- £4.1bn for health, including £3.9bn for NHS England
- £2.2bn for education, including £1.8bn for schools and £400m for further education
- £1.3bn for law & order, including £750m for more police
- £1.0bn for social care, with the prospect of a further £0.5bn from council tax precepts
Increases in capital investment
- £2.2bn for transport, including HS2, Network Rail and Highways England
- £1.9bn for international development
Effect on the public finances
- Total managed expenditure in 2020-21 of £878.6bn, 2.4% more than this year
- With student loan accounting change deficit is £46.2bn or 2.0% of GDP
- Economic forecasts not refreshed, updating them would likely increase the deficit further
- The government is likely to breach its fiscal targets for 2020-21
An end to austerity?
- All departments’ current budgets will increase by at least inflation
- Welfare spending is still being cut
- The Spending Round is for one year only
The Spending Round marks a turning point for spending on public services, with all departmental budgets increasing by inflation at the very least. This is a significant change after a decade of cuts in most department budgets.
Click here to read the ICAEW Fiscal Insight on the Spending Round 2019.