UK Government Spending Review
Blog by Shona Mitchell, SFHA Policy Lead.
Chancellor Rishi Sunak announced his 2020 Spending Review on 25 November.
Speaking in the House of Commons, Mr Sunak said the economic crisis caused by the coronavirus pandemic was still in its early stages, and protecting jobs and businesses would be a priority for the UK Government.
The Chancellor said public services would receive £55 billion in total next year to deal with the consequences of the pandemic. As a result of Barnett consequentials, the Scottish Government will receive an additional £2.4 billion – of which £1.3 billion is related to Covid-19 and is to support the growing of the economy.
National Living Wage will be increased by 2.2% to £8.91 per hour from 1 April next year. This will impact staff costs for many housing associations.
The Spending Review also confirmed the accelerating of multi-year projects under four City and Growth Deals in Scotland – Tay Cities, Borderlands, Moray and the Scottish Islands – from 15 years to 10 years.
Despite calls from SFHA and a large number of other civic groups to make it permanent, the £20 per week uplift to Universal Credit announced in the emergency budget in March 2020, will only remain in place until April 2021. Despite this uplift, the benefit cap has remained in place, so some claimants have not seen any benefit and may even be worse off, because deductions from entitlement are on a percentage basis. The uplift was only for Universal Credit claimants and was not extended to those on legacy benefits.
More generally, the Chancellor stated the UK economy is forecast to contract by 11% this year, with economic output not expected to return to previous levels until late 2022.
UK unemployment is expected to peak at 7.5%, a total of 2.6 million people out of work, in the second quarter of next year.
The Treasury has now published the 2020 Spending Review and related documents.
Alongside the review, a statement on funding policy for the devolved administrations has been published.
The Treasury has also launched consultations about reforming the methodology for the Retail Prices Index.
The Scottish Budget will take place on 28 January. SFHA will make representation to parliament in advance of this and will also provide a summary of the budget announcement for members.