(Title Image: The Guardian)
Yesterday, the UK Chancellor, Rishi Sunak MP, published a spending review for the 2021-22 financial year, which has resulted in major changes to UK public spending due to the Covid-19 pandemic.
The Chancellor said the UK economy is expected to contract by 11.3% for 2020-21 – the largest drop in economic output for 300 years. Unemployment is expected to peak at 7.5% by mid-2021.
The UK has borrowed £394billion for 2020-21 to cover a massive budget deficit – the highest recorded level of public borrowing in peacetime, meaning the UK national debt was edging closer to 100% of GDP.
UK defence spending will increase by £16.5billion over four years, while a 2019 manifesto commitment to maintain overseas aid spending at 0.7% of GDP has been dropped, being cut to 0.5% – though this will increase back to 0.7% in 2022-23 if finances allow.
Additionally, most public sector workers – except NHS workers and those earning less than £24,000 – will see their pay frozen in England. Decisions on pay for most of the Welsh public sector lies with the Welsh Government.
Wales will receive an extra £1.3billion in Barnett Formula consequentials as a result of spending announcements for England.
However, the Conservatives have been accused of breaking a pledge to maintain agricultural spending at EU levels after Brexit, with the Farmers Union of Wales (FUW) claiming Welsh farmers will lose £95million compared to the EU’s Common Agricultural Policy (CAP) – claims the UK Government denies as the EU will continue paying an element of CAP funding for three years.
Additionally, there are no indications as to how much money Wales will receive from the UK Shared Prosperity Fund – which will replace EU structural funds.
The Welsh Government criticised the public sector pay freeze and a decision not to maintain a pandemic-related increase to universal credit payments. There was also criticism of the lack of any announcements related to coal tip stability or February 2020’s floods.
Finance Minister & Trefnydd, Rebecca Evans (Lab, Gower) said: “The Chancellor failed to acknowledge in his statement today that any multi-year settlements offered to public services are exclusive to England only, and do not apply to Wales, which makes our task of planning ahead extremely difficult.”
