The Spending Review and Autumn Statement was announced by Chancellor George Osborne on 25 November 2015 and set out how £4 trillion of government money will be allocated over the next five years. It revealed how the Government will invest in priority areas like the NHS, defence and housing.
The good news is that, on average, departmental spending will fall at less than half the rate of the previous five years. The Government announced that it will spend £756 billion this year, rising to £821 billion in 2019/20. The Office for Budget Responsibility (OBR) forecast that public finances would be £27 billion better off by 2020 than previously predicted – a significant boost for public spending. With public spending set to rise it’s an exciting time in public procurement.
It was announced in the Spending Review that schools funding will be protected in line with inflation. £23 billion will be invested in school buildings, creating 600,000 extra school places and 500 free schools. Maintenance loans will also be available to higher education students who study part time from 2018.
It was also announced that free infant school meals are to be maintained, and that the school funding system is to be phased out and replaced by a new formula, to be introduced from 2017.
George Osborne announced a £6.9 billion investment in house building in the Autumn Statement, an announcement that signals the Government is making all the right noises when it comes to tackling the crisis of home ownership. The Government committed to build 400,000 affordable new homes by the end of the decade. However, it must be noted that this announcement will focus once more on ownership.
The social housing sector however remains in a strong financial position with access to sufficient finance, according to the latest quarterly survey published by the Homes and Communities Agency (HCA). The 2015/16 Q2 survey (1 July to 30 September 2015) reports that the sector has access to sufficient finance, with £13.8 billion in undrawn facilities and £5.3 billion held in cash, and with 98% of providers (June: 97%) having sufficient debt facilities to last for more than 12 months. Cashflow forecasts show that the sector plans to invest £8.8 billion in housing supply over the next 12 months. This is to be funded by debt, use of cash balances, operating cashflows, fixed asset sales and grant funding.
One of the biggest announcements in the Spending Review was that the Government will protect overall police spending in line with inflation – an increase of £900 million by 2019-20. Additional funding will be provided for forces which have strong proposals to support efficiency and reform. The National Crime Agency’s budget will also be protected in cash terms to help cut organised crime and £1 billion will also be spent on 4G communications for police forces and other emergency services, allowing officers to take mobile fingerprints and electronic witness statements.
In infrastructure, it was announced that a £400 million Northern Powerhouse investment fund will be created to help small businesses to grow.
There were some positive announcements of departmental spend in the Spending Review. The Chancellor announced a £10 billion real terms increase in NHS funding in England between 2014-15 and 2020-21, of which £6 billion will be delivered by the end of 2016-17, as well as £4.8 billion capital funding every year for the next five years.
Osborne also announced he is increasing the MOD’s budget by 3.1% in real terms to 2019-20 as part of the Government’s commitment to spend 2% of GDP on defence. £1.3 billion will also be reinvested to transform HMRC into one of the most digitally advanced tax administrations in the world.
The big news for local authorities is that George Osborne says local government will be allowed to spend 100% of assets they sell. Councils will also be given further powers over decision making in their local areas. They will be able to add 2% to council tax bills to pay towards social care in their areas, if they wish.
From 2020 councils will be able to keep money from business rates collected from shops and businesses to spend on local services like street repairs, libraries and transport. Local police and crime commissioners will also have the ability to raise local council taxes. From next April, police forces will be able to increase the amount they require from council tax collections by 2%.
The Chancellor also said Government is setting aside £12 billion for the local growth fund, and that councils will get the power raise or lower business rates.
The biggest winner in the Spending Review was the NHS. It was announced that a £0.5 trillion commitment will be made to the NHS over this Parliament.
The NHS budget is to rise from £101 billion to £120 billion by 2020-21. NHS England will receive £10 billion more a year in real terms by 2020 than in 2014-15. This will fund: 800,000 more operations and treatments; 5.5 million more outpatient appointments; two million more diagnostic tests; increased access to GP services in the evenings and at the weekend and seven-day access to hospital services by 2020.
By 2020, health and social care will be integrated across England, joining up services between social care providers and hospitals. This will mean that health and social care will feel like a single service for patients. Local councils will be able to add 2% to council tax to pay for local social care.
Grants for health students will also be replaced by loans, and the cap on the number of nurses and midwives that can go into training each year will be removed, providing up to 10,000 more nurses and other healthcare professionals for the NHS. These students will be able to receive 25% more financial support during their studies as a result.
It was also announced that over £500 million will also be spent on new hospitals including in Cambridge, Brighton, and Sandwell. The Chancellor announced £1.5 billion increase to the Better Care Fund by 2019 and £600 million additional funding for mental health.