Expert opinion: Spending review
Experts from the University of Salford Business School give their thoughts after Chancellor Rishi Sunak announced his spending review in the House of Commons today;
Dr Gordon Fletcher, expert in retail and the economy, said:
“The Chancellor's spending reviews statement does not make easy reading. His own use of the term, 'economic emergency' provides the headlines against a predicted contraction in the economy, unemployment reaching 7.5% next year and government debt nearly rising to match GDP in five years’ time.
“And that is all without a single reference to Brexit in the statement. Recognising the scale of the problem is part of the solution. However, the actions being offered feel less ambitious than the scale of the problem being faced. Without too many details the increase of 3.8% or £14.8 billion to government departments may support that solution - or not.
“A £6.6 billion increase for health and the promise of new hospitals is to be expected and £2.2 billion for education is welcome, although the statement is not specific on how much of this goes to the longer-term project of rebuilding 500 schools.
“Irrespective of these details the overall increase sets a benchmark for the more direct forms of support being offered; £250 million for tackling rough sleeping and a £4 billion levelling-up fund for local authorities but managed by central government. Both initiatives offer a glimmer of hope but lack ambition in terms of their scale or purpose. Instead the initiative and impetus is left to a UK Infrastructure Bank to work with the private sector to fund the promises of the spending review.
“This decision ultimately reflects the tension for a Conservative government committed to 'small government' finding itself in the unenviable task of delivering a crisis budget.”
Dr Maria Rana, expert in economic growth and development, said:
“There were not many surprises in the announcement, since the government had to prioritize the response to the covid-19 emergency and protection of jobs. A total of £55 bn to tackle the pandemic next year, with £18bn allocated to vaccines, testing, and PPE.
“The hope is that this time the funds will not be mismanaged and vaccines can be distributed with no delays once they pass the safety tests. We do now wonder how many lives, jobs, businesses and public money could have been saved if an efficient track and trace system was in place and no mismanagement of funds would have occurred since March.
“Brexit was the big elephant in the room, not even mentioned by the Chancellor. It is however undeniable that decisions have to be made regarding how to replace the current EU funding (such as, for example, research grants to Universities , support funds to regions, subsidies to the agricultural sector , etc..), as well as on how to best support businesses that now face two major unprecedented challenges.”
Faisal Sheikh, accounting and finance expert, said:
“In his November Spending Review (SR), Chancellor Rishi Sunak has stressed the UK currently faces an ‘economic emergency and highlighted that the economy is set to contract by a whopping 11.3%, the biggest contraction in over 300 years.
“At the heart of the Sunak’s SR was protecting people’s lives and livelihoods; supplying robust public services; and finally making what he stated was a ‘once in a generation’ investment in infrastructure. This has all has the trappings of a Keynesian approach or fiscal freedom. This bold investment will be underpinned by £3bn for the Department for Work and Pensions to kick-start a brand-new three-year restart program to help 1m people who have been unemployed for over a year find new work.
“Sunak stated his definitive priority was the highest public investment for 40 years in mass infrastructure. This includes £7.1bn for housebuilding; better broadband to five million premises, and 4G for 95% of the country by 2025, as well as spending on new roads, improving railways and cycle lanes.
“I was personally pleased to hear, as a Mancunian, that a new UK infrastructure bank will be headquartered in the North of England which will work in conjunction with the private sector to finance new investment projects, starting next spring. This an important development as this measure will help to close the perennial ‘north-south divide’.
“Overall Sunak is spending his way out of trouble, but we should be prepared for tax rises to pay for this raft of structural reforms.”
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