Earlier this month, Chancellor Sajid Javid delivered a surprise announcement on his plans to fast-track a one-year spending review to be completed by September 2019 in preparation for Brexit. This means that Philip Hammond’s three-year Spending Review, previously planned for this summer, will now be delayed until 2020.
On the surface, Mr. Javid’s motivation behind this decision is to ensure Departments and devolved administrations have budgetary assurance for the upcoming 2020/2021 financial year, due to pressures from preparing to leave the European Union on the October 31st.
It’s clear that Johnson’s government want to assure they deliver on their policy promises of improvements to the NHS, police services and schools: £1.8 billion in extra funding for the NHS; the recruitment of 20,000 new police officers; and an increase in funding for schools.
The Chancellor said:
“We will get Brexit done by October 31st and put our country on the road to a brighter future.
“The Prime Minister and I have asked for a fast-tracked September to set departmental budgets for next year.
“This will clear the ground ahead of Brexit while delivering on people’s priorities.”
Chief Secretary to the Treasury, Rishi Sunaki, said:
“This Spending Round will give financial certainty to departments’ plans for next year.
“We will invest in the priority areas of schools and policing, while delivering our promises on the NHS, defence and Official Development Assistance (ODA).”
But where will all this money come from? The government is expected to increase their borrowing to provide the funding needed. Philip Hammond decreased the budget deficit to 1.2% of GDP, with a deficit allowance of 2%, so Mr. Javid has room to borrow an extra £2.7 billion.
There is much speculation around Westminster that such spending promises are part of the Prime Minister’s plans to gain public support in preparation for a general election. Labour have criticised the Government’s plans, with John McDonnell saying it is purely “pre-election panic” by the Boris administration and that the Prime Minister is “splashing a little bit of cash as a publicity stunt”.
It still remains uncertain what lies ahead with all of the Brexit drama, but is this a sign we could be heading for a general election in the upcoming weeks? Who knows!
