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Key points from Rishi Sunak’s spending review

Chancellor Rishi Sunak has set out government spending plans and latest economic forecasts.

Here are the main points:

Public sector pay

  • Pay rises for over a million nurses, doctors and others working in the NHS but pay rises “paused” for the rest of the public sector next year
  • However, the 2.1 million public sector workers earning less than £24,000 will receive a rise of at least £250 – and this means the majority of public employees will see their pay increase in 2021

Aid

  • Spending 0.7% of national income on overseas aid is “difficult to justify” at a time of “unprecedented crisis”
  • It is being cut to 0.5% in 2021 but with the intention to return to 0.7% when the fiscal situation allows
  • Based on latest OECD data, the UK would remain the second highest aid donor in the G7

Live updates and reaction after Rishi Sunak’s spending review

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‘We’ve never seen anything like this’

Coronavirus spending

  • £18bn allocated to testing, PPE and vaccines next year and £3bn for the NHS plus over £2bn to keep transport arteries open, more than £3bn to local authorities and £250m to help end rough sleeping
  • Altogether public services funding to tackle coronavirus next year will be £55bn
  • This year a total of £280bn provided “to get our country through coronavirus”

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Public sector pay freeze announced

Economic forecasts

More from Business

  • The OBR expects GDP to shrink by 11.3% this year, the biggest decline in more than 300 years
  • GDP expected to grow by 5.5% in 2021 but will not recover to pre-crisis levels until the fourth quarter of 2022
  • Growth is pencilled in at 6.6% in 2022, 2.3% in 2023 then 1.7% and 1.8% in subsequent years
  • Despite this growth, long-term “scarring” means that in 2025, economic output in 2025 will be 3% lower than had been expected when the OBR last issued comprehensive forecasts in March
  • Borrowing is expected to reach £394bn for the current fiscal year, or 19% of GDP – the highest recorded level of borrowing in peacetime
  • Underlying debt is forecast to reach 97.5% of GDP in 2025-26, a situation that is “clearly unsustainable over the medium term”

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Public finances must be repaired when ‘the war is over’

Jobs

  • Unemployment is expected to peak at 7.5% – 2.6 million people – in the second quarter of next year
  • The chancellor confirms £3bn for a three-year Restart programme to help a million people who have been unemployed for over a year to find jobs
  • The national living wage will rise by 2.2% to £8.91 per hour and will be extended to those aged 23 and over.
  • For a full-time worker on the national living wage, that’s an increase of £345 next year
  • National minimum wage will also increase.

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Foreign aid cut for UK jobs and services

Wider spending: Schools, hospitals, police and prisons

  • Over this year and next, departmental spending will rise in real terms by 3.8%, the fastest growth rate in 15 years
  • Core health budget rises by £6.6bn next year, allowing the government to deliver 50,000 more nurses and 50 million more GP appointments, Mr Sunak said
  • There will also be a £2.3bn increase in capital investments in the NHS – to replace old MRI and CT scanners and fund a promised hospital building programme
  • Schools budget to increase by £2.2bn next year and a £291m boost for further education plus £1.5bn to rebuild colleges and £375m to deliver the PM’s lifetime skills guarantee
  • £400m to recruit 6,000 new police officers and £4bn over four years for 18,000 new prison places
The sun sets beyond construction cranes standing over the building site for new apartments and a retail complex, at the Battersea Power Station redevelopment site in south London on May 14, 2020 following an easing of the novel coronavirus COVID-19 lockdown guidelines. - Prime Minister Boris Johnson has urged people to continue to work at home if they can but said those in sectors such as manufacturing and construction could return if it is safe. (Photo by JUSTIN TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)
Image: A new national infrastructure bank will be set up

Infrastructure

  • Capital spending next year will total £100bn, £27bn more than last year in real terms
  • £7.1bn national home building fund
  • A new national infrastructure bank, headquartered in the north of England, will work with the private sector to finance major new investment projects across the UK, starting in the spring

Nations and regions

  • There’s £2.4bn more for Scotland, £1.3bn for Wales and £900m for Northern Ireland
  • Local authorities to be given extra flexibility to raise council tax which – together with an extra £300m grant from Whitehall – will give them an extra £1bn to spend on social care
  • “Levelling up” fund worth £4bn to pay for local projects with “real impact” – such as bypasses, railway station upgrades, traffic reduction, libraries, museums and galleries as well as high street and town centre improvements

How will the spending review affect you and the country? Sky’s economics editor Ed Conway will answer your questions on the Sky News app and website from 5.30pm. Email questions to news@sky.com

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