Reaction to the Spending review -Expert comment from Salford University

26th November 2020

Actions being offered less ambitious than the scale of the problems being faced

Brexit the ‘elephant in the room'



Experts from the University of Salford Business School give their thoughts after Chancellor Rishi Sunak announced his spending review in the House of Commons on Wednesday 25th November 2020

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 2020.

“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.”