Yahoo Finance What to expect from chancellor Sajid Javid's 2019 spending round
“There will be billions and billions of pounds. It’s going to be the most beautiful spending round you’ve ever seen,” the prime minister’s top adviser Dominic Cummings reportedly said last week, channeling Donald Trump.
Chancellor Sajid Javid signalled late on Tuesday that more taxpayers’ cash will be handed to police, schools and hospitals in a government spending round announcement on 4 September.
Boris Johnson’s many spending pledges had already raised expectations that strict borrowing rules could be relaxed to fund them, ending years of unprecedented cutbacks for many public services.
The ratings agency Moody’s even said earlier this month that all the announcements raised questions about Johnson’s commitment to bringing down high levels of public debt.
READ MORE: UK chancellor sets the date for a spending round before Brexit
But now the chancellor has warned there will be no “blank cheque” for departments, and pledged to stick to his predecessor Philip Hammond’s strict budget limits—something Johnson had declined to do during his leadership campaign.
Alarm bells will suddenly be ringing in other departments and in cash-strapped local authorities as officials wonder if austerity could be far from over, even if the continued fiscal rules may reassure some investors.
The remarks suggest education, policing and the NHS could be the only areas in line for a significant cash boost, with no reversal of drastic cuts and even a further funding squeeze not ruled out in many other areas.
The government does currently have enough so-called “fiscal headroom” for a wider increase in spending, but Hammond had planned to keep the reserves aside to support the economy after Brexit—and a no-deal exit could even wipe out any headroom altogether.
Here’s what to expect on 4 September:
Health: extra cash, new equipment and hospital upgrades
Johnson and Javid have made clear they want to inject extra cash into health services, in move seen by some as designed to undermine Labour’s better reputation for protecting the NHS.
The prime minister has previously announced a £1.8bn boost for “more beds, new wards, and extra life-saving equipment,” as well as upgrades for 20 hospitals nationwide.
The Nuffield Trust think tank has argued £1bn of the funding is not actually new, but Johnson hopes the announcements will show voters he takes seriously the Leave campaign’s famous £350m-a-week slogan on the side of a bus.
Sources told Reuters earlier this month he would bring forward former prime minister Theresa May’s pledge for an extra £20bn on the NHS by 2023.
Education: new funding, teacher pay rises and new schools
Chancellor Sajid Javid has pledged new funds for schools, but the most detail so far has come from a briefing document reportedly leaked to the Guardian this week.
Officials are said to be planning a £3.5bn boost for schools, with £2.8bn for primaries and secondaries up to 16. £800m of the funds will apparently be earmarked for children with special educational needs and disabilities.
Teachers could be in line for a pay rise, with starting salaries raised to £30,000 from 2022.
READ MORE: How Johnson’s spending pledges to ‘unleash’ the economy stackup
A new wave of controversial ‘free schools’ partially outside government control could be opened, plus a new push to take even more schools out of local authority hands by converting them to academies.
Academy trusts could also receive incentives to take over struggling schools, with some trusts currently steering clear of them to protect their reputations or avoid the challenges of turning them around.
Police: 20,000 more officers as cuts reversed
Boris Johnson’s pledge to hire 20,000 more officers has caught many headlines, and the September spending round could see local constabularies receive the cash to hire them.
It suggests he wants to revive the Conservatives’ reputation for law and order amid rising concern over knife crime, and after Labour successfully attacked Theresa May over police cuts at the last election.
But the move would only reverse cuts made to police numbers by his own party since 2010.
There is also some doubt about how able the government will be to hire so many officers, with reports interest in working for the police is falling and calls for recruitment to be better spread across the whole criminal justice system.
Everything else: uncertainty over planned cutbacks
The chancellor’s suggestion he wants to keep a tight rein on public spending could mean dashed hopes of any reversal of cutbacks in other areas.
The government has slashed 600,000 staff since since an austerity drive began after the financial crisis, with thousands of different local services including children’s centres, courts and social care teams slashed.
Current government spending plans inherited from May’s government mean many departments are due to face even further cuts, despite May’s suggestions she would end austerity.
Javid would have to top up funding by £2bn simply to prevent these cuts, and spend tens of billions more to reverse the slashes made across the board since 2010, according to the Institute for Fiscal Studies (IFS).
He may pull some last-minute rabbits out of the hat, but it is telling he is playing down expectations of big giveaways.
Paul Johnson, head of the IFS, said on Wednesday Javid was unlikely to use the full £15bn ‘headroom’ he has under current spending rules, as he will need to save cash for likely tax cuts and a potential post-Brexit emergency budget.
Ministers responsible for business, transport, work and pensions, justice, immigration, culture, the environment, rural affairs, international trade, housing and defence will probably be begging this week to at least avoid further cutbacks.
