BRITAIN is ‘turning the page on austerity’ Sajid Javid has said, as he unveiled a £13.4billion spree.
With an early election likely, the chancellor set out plans to increase spending for the ‘people’s priorities’, including the NHS, schools and the police. But experts warned his cash injection risked breaking fiscal rules on government borrowing and failed to reverse a decade of squeezed budgets.
The spending plan for 2020-21 was fast-tracked to clear the decks ahead of Brexit, with the normal multi-year settlement planned for next year.
Mr Javid told MPs: ‘We are turning the page on austerity and beginning a new decade of renewal. A new economic era needs a new economic plan and today we lay the foundations with the fastest increase in day-to-day spending in 15 years.’
The announcement means that £13.4billion is added to existing plans for public spending and marks a 4.1 per cent increase on 2019-20.
However, measures to boost the NHS, police numbers and funding for England’s schools had already been announced before yesterday.
Despite the increased sums, Mr Javid insisted: ‘We won’t be writing blank cheques.’
Shadow chancellor John McDonnell called the announcement a piece of ‘grubby electioneering’ and accused the government of ‘pretending to end austerity when they do nothing of the sort’.
Mr Javid’s first major statement as chancellor was also repeatedly criticised by Commons Speaker John Bercow for straying into comments on Brexit and attacks on Labour.
The Institute for Fiscal Studies (IFS) said it would be ‘touch-and-go’ whether the chancellor stayed within the existing target of keeping the deficit below two per cent of GDP. The Home Office, Ministry of Justice and Department for Environment, Food and Rural Affairs budgets would be 17 per cent lower on average than a decade earlier.
A no-deal Brexit could also weaken the economy and push up public borrowing, meaning the announcements would ‘represent a pause, rather than an end, to austerity for spending on public services’, the think-tank warned.
IFS director Paul Johnson said: ‘There looks to be a very real risk of having to choose between tax increases or missing his current fiscal targets come the Budget later this year — even with a smooth departure from the EU.’
The Treasury said the announcements reduce the ‘headroom’ for extra borrowing to approximately £1.6billion. A source said more funds would be available if they are needed after a no-deal Brexit.
Chancellor’s ‘people’s priorities’
■ A PROMISE that no Whitehall department will be cut next year, with all ministries having their day-to-day spending budgets increased at least in line with inflation.
■ COUNCILS will have access to an additional £1.5billion to fund social care next year, of which £500million is to be raised by a council tax precept.
■ AN EXTRA £2billion for Brexit preparations in 2020/21, matching 2019/20. It brings the total spent on planning for Brexit to £8.3billion.
■ AN INCREASE of 6.3 per cent in real terms for Home Office spending, including £750million for the already announced plan to recruit 20,000 police officers nationwide.
■ A REAL-TERMS increase of five per cent for the Ministry of Justice’s resource budget.
■ FUNDS to tackle homelessness will rise by 13 per cent — an extra £54million.
■ NHS funding to be increased by £6.2billion.
■ THE Ministry of Defence gets an extra £2.2billion.
■ SUPPORT for children and young people with special educational needs rises by £700million.
■ NURSERIES will be given an extra £66million.
■ A FUND of £200million to ‘transform bus services’.
■ SCOTTISH farmers who lost out under the allocation of Common Agricultural Policy funding will receive £160million.
■ TO HELP ‘seize the opportunities of Brexit’, £90million is being made available to fund 1,000 diplomats, overseas staff and upgrade missions.
■ THERE will be an extra £432million for the Department for Environment, Food and Rural Affairs to tackle climate issues.