The Government has confirmed it is scrapping a planned multi-year spending review, and instead holding a one-year review at the end of November.
Chancellor Rishi Sunak said the decision was taken to prioritise the response to Covid-19 and focus on supporting jobs, setting departmental resources and capital budgets for 2021-22, and the devolved administrations’ block grants for the same period.
Funding for the NHS and schools will remain multi-year, along with priority infrastructure projects.
The Chancellor @RishiSunak has confirmed he will conduct a one-year Spending Review setting government department's resource and capital budgets for 2021-22, which will also set Devolved Administration’s block grants for the same period.
— HM Treasury (@hmtreasury) October 21, 2020
The Government had kept an open mind on scrapping the multi-year spending review but has come under pressure from economists in recent months, who pointed out that the uncertainty of the pandemic meant setting longer-term spending targets would prove difficult.
In a statement, the Treasury said: “While the Government would have liked to outline plans for the rest of this Parliament, the right thing today is to focus entirely on the response to Covid-19 and supporting jobs – that’s what the public would expect.”
It outlined three areas of support including supporting employment, funding public services in the fight against the virus and investment to unite and level up the country, it said.
The Chancellor, Mr Sunak, added: “In the current environment it’s essential that we provide certainty.
“So we’ll be doing that for departments and all of the nations of the United Kingdom by setting budgets for next year, with a total focus on tackling Covid and delivering our Plan for Jobs.
“Long-term investment in our country’s future is the right thing to do, especially in areas which are the cornerstone of our society, like the NHS, schools and infrastructure.
“We’ll make sure these areas crucial to our economic recovery have their budgets set for further years so they can plan and help us Build Back Better.”
The shift to a single-year review will have a knock-on impact on the wider programme examining the UK’s defence spending and foreign policy priorities.
The integrated review of security, defence, development and foreign policy is intended to define the Government’s vision for the UK’s role in the world over the next decade.
The Prime Minister’s official spokesman said: “We are considering the implications of the one-year spending review on the integrated review and we will provide an update on that in due course.”
Javed Khan, chief executive of children’s charity Barnardo’s, said: “It’s vital that the Government focuses the upcoming one-year spending review on funding for children and young people.
“The pandemic and recession are putting the future of this generation of children at stake and they need urgent investment and support.
“But we know that these challenges cannot be fixed within a year. There is now an opportunity for the Government to work with charities and other partners to design a long-term funding plan that will truly transform outcomes and give vulnerable children the best possible chance of a positive future.”