Politics

Spending review predictions: what will Chancellor Sajid Javid announce?


Sajid Javid has set a 4 September date for the Government’s first spending review.

The Chancellor has promised increased spending on health, education and police numbers.

Writing in the Daily Telegraph, he said the review “will be about clearing the decks to allow us to focus on Brexit”.

But he insisted that he would stick to the current borrowing rules, which limit the scope for extensive spending increases, says the BBC. “Any departments expecting a blank cheque will be sorely disappointed,” said Javid.

The Chancellor said the review would allow the government to “focus relentlessly on making sure we’re ready to leave the EU on 31st of October” rather than being distracted by government funding when planning for Brexit.

Shadow Chancellor John McDonnell said on twitter: “Nobody is fooled that this is a spending review. It’s a one off pre election panic driven stunt Budget.

“Each spending announcement is exposed as inadequate & whole areas of spending needs like local councils & addressing child poverty are ignored. This is not serious government,” he added.

In his piece for the Telegraph, Javid said: “Unlike the Labour Party, we don’t believe in just throwing money at a problem. And especially at a time when the global economy is slowing, it’s important that we don’t let our public finances get out of control.”

The announcement of the spending review comes after the new Chancellor’s first major speech, due on Wednesday, was cancelled by the Treasury less than 24 hours before it was due to take place.

The timing of the review “increases speculation that Prime Minister Boris Johnson is preparing the ground for a general election in the autumn – something that Downing Street denies,” says BBC political correspondent Nick Eardley.

So what could be included in the government’s spending plans?

Tax threshold for higher earners

Boris Johnson has committed to raising the threshold at which income tax is paid at 40% from £50,000 to £80,000. The net cost of such a move would be £9bn, according to the Institute for Fiscal Studies.

“Most of the gain goes to those in the top 10% of the income distribution, [who] would gain an average of nearly £2,500 a year,” adds the IFS.

National Insurance

Johnson wants to raise the starting point for National Insurance Contributions to an annual £12,500. The plan “would cost £11bn a year and take 2.4 million people out of paying NICs altogether, but would still offer most benefits to those on higher earnings,” says The Guardian.

Schools

Leaked Government documents suggest a £4bn boost for school funding in England. Figures include £2.8bn for primary and secondary schools including £800m for children with special education needs and a potential £800m for sixth forms and further education colleges, reports The Guardian.

The paper lists the proposed funding, including: increased pay for teachers, with starting salaries rising to £30,000 by 2022, encouraging school leaders to ban or confiscate mobile phones, backing headteachers who want to exclude pupils and new guidance on behaviour.

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The proposals also include offering academy trusts financial incentives to take over struggling schools, opening new free schools, removing inspection exemptions for ‘outstanding’ schools, and converting more local authority maintained schools to academy status.

Shadow Education Secretary, Angela Rayner, said: “Time after time Boris Johnson has backed Tory cuts to school budgets that created the crisis in our classrooms, while slashing taxes for the richest.”

Health

The NHS is expected to receive at least £1.8bn funding for front-line services, following an announcement by Boris Johnson in August, reports The Telegraph.

Johnson said the entire pledge was additional funding: “Don’t forget that this is £1.8bn of new money. It wasn’t there ten days ago.”

But Labour say some of the money was already held by health trusts but had simply not yet been spent. Jonathan Ashworth, the Shadow Health Secretary, said: “Boris Johnson has misled the public and our NHS staff. You cannot trust a word he says and his claims are unravelling.”

Police

Boris Johnson has pledged an extra 20,000 police officers in three years, says The Telegraph.

But Labour has accused Johnson of misleading the public, saying that a letter written by the Home Secretary, Priti Patel, to the London Mayor, Sadiq Khan, last week, says that new officers will be allocated “between territorial, regional and national policing functions”.

This means “as many as 7,000 of the 20,000 officers could be allocated to bodies such as the National Crime Agency”, rather than in front line roles says The Guardian.

The paper puts the cost of the move at £1.1bn.

Stamp duty

The Prime Minister has suggested switching stamp liability from the buyer of property to the seller, and scrapping stamp duty entirely on homes worth £500,000 or less, says Open Access Government.

Stamp duty currently generates £1bn a month for the exchequer and the IFS says £3.8bn a year of that comes from property sold at under £500,000.

Nationwide broadband coverage

Johnson has pledged nationwide broadband coverage by 2025, calling the previous goal of 2033 “laughably unambitious”.

But “without any detail it is just a pledge,” said Andrew Ferguson, editor-in-chief of ThinkBroadband.

“The key to getting excited is dependent on what the pledge means in terms of help for commercial roll-outs and extra funding to ensure that areas unlikely to see commercial roll-out for a number of years can be moved forward.”

Openreach is currently covering 80,000 new home a month with fibre broadband, but that rate would need to increase to 400,000 a month to meet Johnson’s goal, says Wired.

HS2

The Government has pledged to launch an independent review into the future of HS2, which will decide whether to go ahead with the idea, alter it, or scrap it entirely.

George Osborne’s Northern Powerhouse think tank has announced plans to hold its own review into the high-speed railway amid reports that the project may be scrapped by Boris Johnson’s Government.

National Living Wage

Johnson said in a July interview with Sky that he wanted to raise the minimum wage.

However, he didn’t know what the minimum wage – now dubbed the ‘national living wage’ – was. Asked “What is the living wage?” Boris replied “Well, it’s at or around…£10 or so.”

The wage rose from £7.83 to £8.21 on 1 April.





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