The 2020 Spending Review, due to conclude on 25 November, will
not be the comprehensive, multi-year review we were originally
promised. Instead, the Chancellor has decided to set plans for
2021−22 only – a sensible decision in the circumstances.
But while this Spending Review might be more short-term in its
nature than usual, it will still contain important announcements.
First, it will tell us whether the Chancellor will be more or
less generous to public services next year than he indicated he
would be back in March, and hence whether austerity has really
ended across the public sector. That should give millions of
public sector workers at least some idea of what will happen to
their pay.
Second, we should discover how much extra spending he expects
will still be required to deal with the coronavirus crisis.
Third, he will be taking big decisions on investment spending and
its role in the economic recovery.
Fourth, we will find out whether targets on overseas aid spending
– which is due to be cut dramatically this year anyway as
national income has fallen – will be adhered to. It is possible
he will also indicate whether “temporary” increases in Universal
Credit will be maintained into next year. These are big decisions
and will set the scene for economic and fiscal policy for the
rest of this Parliament.
Ben Zaranko, Research Economist at the IFS and author of
the observation said:
“While next week’s Spending Review will only cover the coming
financial year, rather than the usual three or four, it will
still contain important announcements. The Chancellor’s decisions
will determine whether austerity has really ended across the
public sector, the role of government investment in the economic
recovery, the future of targets on defence and overseas aid
spending, and much else besides.
The Chancellor will also need to pencil in spending totals up to
2025−26. These could provide some indication over the extent to
which he is planning a fresh squeeze on public spending after the
current crisis, or whether he might instead opt for substantial
tax rises at some future Budget, or allow higher levels of
borrowing to persist.”
Notes to editors
The IFS Observation ‘What to look out for in the 2020 Spending
Review’ by Ben Zaranko is now published on the IFS website here:
https://www.ifs.org.uk/publications/15177
