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Doncaster Chamber responds to 2020 Spending Review

Responding to Chancellor Rishi Sunak’s spending review statement, CEO of Doncaster Chamber, Dan Fell said, “At a time when businesses communities are fighting for survival today’s spending review is somewhat underwhelming, although concerns about debt and the public purse are valid. Ultimately, the country needs to invest in people, projects and businesses as the only way of growing the economy out of the crisis and balancing the books in the mid-term.

“We have a good education and skills strategy in place in Doncaster, and whilst young people have been significantly impacted by this pandemic, we have to recognise that training them for future roles, and making sure those roles are available for them in our region, is vital. Fortunately, ahead of the pandemic, Doncaster had made great steps forward to diversify its education offer and to be better connect the worlds of business and education. Doncaster University Technical College – which opened its doors this September – is one great example of this with another being the work the Chamber’s undertakes through its Opportunities Doncaster division.

“The £4bn Levelling Up Fund for regions and UK Shared Prosperity Fund are welcome, and signals that the Government may honour some of their commitments. However, the idea of a centrally administered funding pot is a bit paternalistic and not really in the spirit of levelling up. Covid has shown that local government is essential in delivering services for communities and we need an adequate approach to devise funding mechanisms between local authorities and central government.

“We are pleased that the Chancellor listened to the Chamber network’s call to amend the Green Book approach to appraisal of public investments. Businesses will want to see these changes implements as soon as possible to ensure that urgently needed infrastructure investment is delivered across all parts of the UK.

One of the striking things about policymaking this year is that most of the major economic decisions have happened outside the usual setpiece events.

Since the last budget back in March, Rishi Sunak has implemented the furlough scheme, perhaps the single-most important labour market measure in modern history; he has provided unprecedented support for self-employed workers; he has pushed through further support for mortgage payers and extra grants for small businesses.

It has been one of the biggest sets of fiscal measures we have ever seen, yet nearly all of it came outside the usual political calendar where tax and spending changes are made.

All of which has meant today’s 2020 Spending Review was likely to be somewhat unusual from all sorts of perspectives.

With borrowing expected to hit £350bn this year and the Chancellor aiming to level up the country by creating jobs and boosting funding for the NHS, Mr Sunak has made more big announcements in eight months than some chancellors do in several years.

In a Cabinet meeting this morning prior to his announcement, Mr Sunak told Cabinet colleagues the spending review had three priorities:

  1. To protect people’s lives and livelihoods providing the support they need to get through Covid.
  2. To make good on the promise to deliver strong public services by investing in schools, hospitals, the police force and more.
  3. To deliver record investment plans in infrastructure to level up and spread opportunity across the United Kingdom.

In his statement to the House of Commons at lunchtime the Chancellor revealed his spending review as the nation continues to grapple with the Covid pandemic.

On the current economy he announced:

  • Economy expected to contract by 11.3% according to the OBR – the largest fall in output for more than 300 years
  • Underlying debt is due to hit 97.5% of GDP in 2025-26- £395bn
  • Economy will be 3% smaller in 2025
  • Economic output is not expected to return until pre-covid levels until Q4 2022
  • Unemployment is expected to rise to 7.5% by next year approx. 2.6m people

Mr Sunak also announced a fighting fund worth almost £3bn to help one million unemployed people find a job as UK recovers from the coronavirus crisis.

The £2.9bn initiative will be spread over three years and will include measures to help people who have been out of work for more than 12 months.

They will be provided with 'regular, intensive jobs support' which will be 'tailored to their circumstances'.
The first year of the scheme in 2021/22 will see a £400m initial investment with more cash to be spent after that.

Meanwhile, ministers hope that spending £1.4bn to improve Job Centre Plus sites will make it easier for people searching for work to get the support they need.

Mr Sunak said, “My number one priority is to protect jobs and livelihoods across the UK.

“This Spending Review will ensure hundreds of thousands of jobs are supported and protected in the acute phase of this crisis and beyond with a multi-billion package of investment to ensure that no one is left without hope or opportunity.”

Mr Sunak also confirmed funding for the next stage of his so-called 'Plan for Jobs' which will include £1.6bn for the Kickstart scheme in 2021/22 to help create up to 250,000 government-subsidised jobs for young people.

An incentive for businesses to hire more apprentices, launched in August, will also be extended.
The scheme offers employers up to £2,000 for every new apprentice they hire, and it will now last until the end of March next year.

Some £375m will also be allocated to support skills, including £138m to deliver on Boris Johnson's Lifetime Skills Guarantee.

Infrastructure 

To try and counter a surge in unemployment and build new infrastructure details of the £100bn National Infrastructure Strategy confirmed 'ambitious plans' for capital investment which will include money for new roads, houses, railways and cycle lanes. Mr Sunak hopes these projects will 'support and create hundreds of thousands of jobs across the country’.

Spending on infrastructure will total £100bn up from £27bn in 2019.

The fund has been set aside to fulfil Boris Johnson's election promise to ‘level up’ the country’ through investments and improving infrastructure, such as transport links.

A £4bn levelling up fund will be available for local areas to bid directly to fund local projects to be delivered within the lifetime of this parliament.

The Chancellor’s further announcements included:

  • NHS Staff doctors and nurses will receive a pay increase
  • Pay rises for other public sector works will be paused until 202
  • However, 2.1m public sector workers, who earn below the median annual earnings will receive a pay rise of £250 in 2021

There will also be an extra £1bn to social care grant provided this year will be maintained into 2021
Meanwhile the Chancellor has accepted the recommendations of the Low Pay Commission to increase National Living Wage by 2.2% next year to £8.91 an hour and this is also extended to those aged 23 and over.

Closing his speech, the Chancellor said, “The true measure of our success" of the spending announced today will see "the individual, the family, and the community" become stronger.

"The spending announced today is secondary to the courage, wisdom, kindness and creativity it unleashes," he adds.

"These are the incalculable but essential parts of our future, and they cannot be mandated or distributed by government."

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