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Feb 4, 2021 · The spend on film and HETV production in the UK in 2020 reached £2.84bn, a 21% decrease on 2019’s levels. The year started strongly and was heading towards a record production spend for the first quarter, however by the end of March production was suspended.
- 1. Executive summary
- 2. Economic and fiscal context
- 3. Responding to Covid-19
- 4. Investing in a recovery for all regions of the UK
- 5. Delivering on the government’s promises to the British people
- 6. Strengthening the UK’s place in the world
- 7. Departmental settlements
- 8. Impact on Equalities
- 9. Shared Outcomes Fund
Spending Review 2020 (SR20) prioritises funding to support the government’s response to Covid-19, invest in the UK’s recovery and deliver on promises to the British people. It sets departmental budgets for 2021-22 and devolved administrations’ block grants for the same period, confirming that core day-to-day spending – that is, before taking into account Covid-19 spending – will grow at an average of 3.8 per cent a year in real terms from 2019-20 to 2021‑22. This is the fastest rate in 15 years.
SR20 also provides £100 billion of capital investment next year, a £27 billion real terms increase compared to 2019-20. This is another significant step towards achieving the government’s objective of over £600 billion of gross public investment over the next five years, reaching the highest sustained levels of public sector net investment as a proportion of GDP since the late 1970s.
The Covid-19 pandemic has caused exceptional hardship for individuals, families and businesses across the UK. The health emergency has been accompanied by unprecedented economic uncertainty and the deepest recession on record[footnote 1]. The Office for Budget Responsibility’s (OBR’s) forecast expects GDP to shrink by 11.3 per cent in 2020 – the largest annual fall since the Great Frost of 1709[footnote 2].
Since the start of the crisis the government has taken extensive and unprecedented action to tackle the virus and mitigate these impacts across all areas of the UK. The International Monetary Fund (IMF) described these steps as “one of the best examples of coordinated action globally”.[footnote 3] This action comes at significant fiscal cost. However, providing the funding necessary to respond to the virus is the right thing to do: as the OBR set out, “the costs of inaction would certainly have been higher”.[footnote 4]
SR20 confirms an additional £38 billion for public services to continue to fight the pandemic this year, bringing total support for public services to £113 billion in 2020-21, and total spending on the Covid-19 response this year to over £280 billion.
SR20 provides a further £55 billion of support for the public services response to Covid-19 next year. This funding is targeted to:
2.1 UK economy
The Covid-19 pandemic has brought with it significant disruption to the UK economy and countries around the world. From the outset, the government took necessary action both to slow the spread of the virus, placing considerable restrictions on people and businesses, and to provide exceptional support to jobs and incomes. The Office for National Statistics (ONS) estimates that output fell 25 per cent between February and April as the economy entered the largest recession on record.[footnote 18] As cases fell[footnote 19] this allowed for restrictions to be eased over the summer and activity recovered sharply, with GDP rising by 15.5 per cent between July and September, leaving output 8.2 per cent below the February level.[footnote 20] However, as with other countries, cases have risen again in the UK since the summer,[footnote 21] requiring a return to greater restrictions in order to contain the spread of Covid-19, save lives and protect the economy in the longer term. Economic growth has slowed and output is likely to have fallen in November.[footnote 22] The government has provided further support to protect livelihoods and limit damage to the economy. The pace of growth slowed to 1.1 per cent on the month in September.[footnote 23] While retail sales have risen 6.7 per cent above February’s pre-pandemic level in October,[footnote 24] consumer sentiment has since fallen back to levels last seen in May.[footnote 25] Business conditions have continued to worsen in recent months.[footnote 26] Of those continuing to trade, nearly half have reported abnormal falls in turnover,[footnote 27] while the majority of businesses who continue to operate do not expect demand to recover until well into next year.[footnote 28] Unemployment has risen, but reflecting the government’s support for jobs, has continued to remain well below the level implied by its historical relationship with output. For the three months to September, the unemployment rate rose 0.9 percentage points on the year to 4.8 per cent. However, more timely data suggests that further rises in unemployment are to come. Between March and October, the number of employees on payroll fell by 782,000 (2.7 per cent). Redundancies rose to 314,000 in the three months to September – the highest level on record. Meanwhile, vacancies this year fell further and more rapidly than during the 2008-2009 recession and in October were still around 35 per cent down on the year.[footnote 29] The impact of Covid-19 has been felt across all parts of the UK with employment falling in all regions. Employment fell the most in London, by 4.6 per cent, reflecting the importance of hospitality and entertainment in that region, while Northern Ireland saw the smallest decline of 1.6 per cent between March and October.[footnote 30]
2.2 Economic Response
In the face of the significant and far-reaching impacts of Covid-19, the government’s priority has been to protect lives and livelihoods. Unprecedented fiscal action has been needed to minimise the short-term damage to the economy. Furthermore, by protecting jobs and supporting firms the government has acted to minimise permanent economic effects. Without such action many firms and jobs would have been lost, leading to persistently higher unemployment, which would have weakened the economy and the public finances in the future. This is in addition to the strong growth in public investment announced in Budget 2020, which the Office for Budget Responsibility (OBR) conclude will support the economic recovery in the medium-term.[footnote 31] In the first phase of the crisis, beginning in March, the government responded to wide-ranging restrictions to economic activity by supporting jobs and incomes using the Coronavirus Job Retention Scheme (CJRS), the Self-Employment Income Support Scheme (SEISS) and by providing valuable support for businesses using loans, grants and tax deferrals. As it became possible to ease some restrictions over the summer and into the autumn, the government designed an economic approach focused on jobs. This provided continued wage support to individuals, incentives for businesses to retain staff beyond the end of the furlough scheme and new job creation and training schemes, such as the Kickstart Scheme. Increased transmission of the virus into the autumn meant the only viable solution left to protect the NHS was the temporary reintroduction of significantly enhanced restrictions. Therefore, given the change in public health restrictions and the economic impact they would have through job losses and business closures, the government reintroduced its support for incomes through the CJRS, SEISS and its support for affected businesses. As highlighted by the OBR and the Bank of England, without the measures the government has taken, the outlook would be much worse.[footnote 32] The OBR today confirms that the CJRS has prevented a larger rise in unemployment.[footnote 33] The IMF has also remarked on the strength of the UK’s economic policy response, saying that “the authorities’ aggressive policy response – one of the best examples of coordinated action globally – has helped mitigate the damage, holding down unemployment and insolvencies”.[footnote 34] Given these unprecedented circumstances, the government has provided a fiscal policy response of remarkable scale with targeted support for public services, workers and businesses. Since March, the government has spent over £280 billion on one of the largest and most comprehensive packages of economic support in the world. The government will continue to do whatever it takes to support the economy through the Covid-19 pandemic. Over the course of the Covid-19 pandemic, the economic and fiscal policy response has evolved to support the changing economic landscape and will continue to evolve to ensure the right support is in place. Spending Review 2020 (SR20) represents the next step in the government’s fiscal response to Covid-19. It provides significant support for the government’s priority to control and mitigate the virus by funding significant increases in testing capacity and making provisions for the rapid, mass deployment of a successful vaccine. This will allow the government to loosen economic restrictions whilst continuing to protect lives. Responding to the increase in unemployment, SR20 provides additional funding to build on the commitments of the government’s Plan for Jobs, taking further steps to provide unprecedented support to help unemployed people find a job. Table 1.1 shows the cost or yield of all decisions made since Budget 2020, with a direct effect on Public Sector Net Borrowing (PSNB) in the years up to 2025-26. This includes tax measures, changes to Departmental Expenditure Limits (DEL) and measures affecting Annually Managed Expenditure (AME). The government remains committed to the robust and credible policy frameworks and institutions that have made such a substantial policy response possible. The OBR’s independent and transparent assessment of the economy and the public finances continues to provide important scrutiny of the government’s fiscal position. The Bank of England’s independent policy committees have played an important role by using levers at their disposal to support the economy within their mandates. This includes a reduction of the Bank Rate to 0.1 per cent by the Monetary Policy Committee, the announcement of an additional £450 billion of asset purchases[footnote 35] and the expansion of the Term Funding Scheme with additional incentives to lend to SMEs, alongside the measures undertaken by the Financial Policy Committee to support lending in the real economy. Table 1.1: Policy decisions since Budget 2020 (£ million) (1)
2.3 Economic Outlook
As the OBR have noted the economic outlook remains “highly uncertain”[footnote 36] and depends upon the future path of the virus, measures to combat it and responses of firms and households to all of this. As in their July Fiscal Sustainability Report, the OBR have outlined various scenarios to demonstrate the range of possible outcomes embodying different assumptions regarding the course of the pandemic, In their forecast the OBR expect GDP to shrink by 11.3 per cent in 2020. In the upside and downside scenarios GDP shrinks by between 10.6 per cent and 12 per cent in 2020.[footnote 37] In the OBR’s upside scenario, consistent with a vaccine becoming widely available in spring of 2021, activity rebounds quickly as expanding testing and the effective roll-out of a vaccination programme allows for the removal of restrictions. GDP returns to its pre-virus level by the end of 2021 and there is no enduring economic scarring. However, under the downside scenario, where subsequent waves of infection require periodic re-imposition of health restrictions and a sufficiently effective vaccine does not become available, output recovers to its pre-virus level only in the third quarter of 2024, consistent with persistently higher unemployment. The OBR’s forecast assumes a higher infection rate necessitates keeping a set of public health restrictions over winter, but an effective vaccine becomes widely available in the latter half of 2021 permitting a gradual return to normal life. The OBR expects the unemployment rate to average 4.4 per cent across 2020, rising to 7.5 per cent at its peak in Q2 2021.[footnote 38] The unemployment rate is then projected to fall to 4.4 per cent by 2025, compared to a pre‑crisis rate of 3.8 per cent in 2019.[footnote 39] However, under the downside scenario the unemployment rate peaks at a high of 11 per cent in Q1 2022.[footnote 40]
Since the emergence of Covid-19, the government has taken swift action to save lives, support the NHS and mitigate damage to the economy. Spending Review 2020 (SR20) builds on action so far and prioritises funding to support the government’s continued response to the virus.
Throughout this crisis, the government has sought to protect people’s jobs and livelihoods across the UK, support businesses, and public services. The government has spent over £280 billion to do so this year. Of that, SR20 confirms that £113 billion will have been provided across the UK in the course 2020-21 to support public services– from the NHS, to local government, transport and employment support, including £38 billion of further funding for public services announced today. It also announces £55 billion of support to public services in responding to Covid-19 in 2021-22.
Supporting businesses and livelihoods Action already taken in 2020-21
Since March, the government has helped to pay the wages of people in 9.6 million jobs[footnote 48] across the UK through the Coronavirus Jobs Retention Scheme (CJRS), protecting jobs that might otherwise have been lost. The government has also supported the livelihoods of an additional 2.6 million self-employed workers.[footnote 49]
Businesses have received significant government support in loans, tax deferrals, business rate reliefs, and general and sector-specific grants. Around a million business properties received over £11.6 billion worth of grants through the Small Business Grant Fund, the Retail, Hospitality and Leisure Grant Fund, and the Local Authority Discretionary Grant Fund.[footnote 50] These schemes provided support to small businesses in some of the sectors hit hardest by Covid-19. These schemes closed to new applicants at the end of August 2020. In recognition of the fact that many businesses are continuing to face a very challenging environment, the government has announced the Local Restrictions Support Grant schemes which support businesses that are facing reduced demand as well as those that are legally closed. Over £1.1 billion has already been provided to Local Authorities to enable them to make payments to businesses under these new schemes.
These unprecedented economic support schemes have benefited all regions of the United Kingdom. Figure 2.1 illustrates the regional and national breakdown of large schemes, including the CJRS, Self-Employment Income Support Scheme (SEISS), Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), Local Restriction Support Grants (LRSG) and Additional Restrictions Grant. In Scotland, Wales and Northern Ireland over 1.4 million jobs have been protected by the CJRS, and almost £6 billion in loans under BBLS and CBILS have been provided.
4.1 Building a stronger future
Spending Review 2020 (SR20) sets out the government’s plans for targeted investment that will support an economic recovery for all and build a stronger future. At the heart of this is the government’s mission to level up across the UK, ensuring economic opportunities for everyone and unleashing the potential of the Union. At Budget 2020 the government announced ambitious plans to deliver over £600 billion of gross public investment over the next five years, reaching the highest sustained levels of public sector net investment since the late 1970s. These plans will underpin growth across the UK and start to tackle the longstanding weaknesses which have for too long held back UK infrastructure. To respond to the immediate impact of Covid-19, this summer the government accelerated £8.6 billion of capital spending to support the construction sector and its vital role in supporting jobs and the recovery across the UK. SR20 continues to make progress on these commitments, transforming UK infrastructure while supporting the country’s economic recovery. SR20 announces £100 billion of capital spending in 2021-22, a £27 billion real terms increase compared to 2019-20, targeted towards investment that will drive economic recovery and support jobs and businesses across the UK. This funding will target high-value, jobs-rich projects that are deliverable next year. This includes: almost £19 billion of transport investment next year, including £1.7 billion for local roads maintenance and upgrades significant increases in research and development (R&D) with almost £15 billion in 2021‑22 including funding for clinical research to support delivery of new drugs, treatments and vaccines £4.2 billion for NHS operational investment next year to allow hospitals to refurbish and maintain their infrastructure, and £325 million of new investment in NHS diagnostics equipment to improve clinical outcomes over £260 million for transformative digital infrastructure programmes, including the Shared Rural Network for 4G coverage, Local Full Fibre Networks, and the 5G Diversification and Testbeds and Trials Programmes. In addition to significant increases in capital spending next year, SR20 also maintains momentum on the government’s infrastructure plans with select multi-year capital settlements. These allocations give funding certainty for existing infrastructure projects as well as targeting investment towards areas which will improve the UK’s competitiveness in the longer term – for example by backing new investments in cutting-edge research and clean energy sources of the future. This includes multi-year funding to deliver: a step-change in investment to tackle climate change and deliver the Prime Minister’s Ten Point Plan for a Green Industrial Revolution,[footnote 54] including funding for electric vehicle charging infrastructure, and new Carbon Capture and Storage (CCS) clusters by 2030 over £58 billion of investment confirmed for road and rail, levelling up across the country nearly £20 billion of investment underpinning the government’s long-term housing strategy, including £7.1 billion for a National Home Building Fund and confirming over £12 billion for the Affordable Homes Programme a multi-billion pound capital investment to deliver the government’s commitments on building hospitals, schools and prisons a doubling of flood and coastal investment across England investing £5.2 billion over six years £1.2 billion to subsidise the rollout of gigabit-capable broadband, as part of the government’s £5 billion commitment to support rollout to the hardest to reach areas of the UK an ambitious programme of defence modernisation, including funding to develop the next generation of naval vessels, as well as £6.6 billion of R&D funding for areas such as artificial intelligence, future combat air power and other battle‑winning technologies. Significant capital spending next year, together with select multi-year spending commitments, means that SR20 will support confidence and wider investment across the economy. It will also progress the government’s agenda to level up and unleash the potential of the Union, with the devolved administrations also receiving funding through the Barnett formula. SR20 also transforms how investment in infrastructure is targeted across the UK with: a new National Infrastructure Strategy (NIS), outlining the government’s longer-term vision for transforming UK infrastructure and plans to create a new infrastructure bank to catalyse private investment in infrastructure projects across the UK[footnote 55] a refreshed Green Book[footnote 56] updating the government’s guidance on how to assess potential investments, to help achieve the aim of addressing regional imbalances the implementation of recommendations made by the Project Speed taskforce to enable faster and smarter delivery of projects across the government’s infrastructure portfolio. By prioritising capital investment now when the cost of borrowing is low by historic standards and when returns are greatest, SR20 paves the way for record levels of capital investment across this parliament and beyond – driving economic recovery so we can build a stronger future across the whole of the UK.
4.2 Levelling up and the Union
The economic impact of Covid-19 is being felt across all regions of the UK, and the economic recovery must support everyone, no matter where they live. This is why the government is driving forward on its ambition to level up opportunity across the UK through SR20. The government wants people to feel that they can succeed in their local area. SR20 will deliver this by boosting jobs, wages and prospects for all communities, and by re-wiring government to better deliver for the communities it serves. By levelling up, SR20 also unleashes the potential of the Union: together, England, Scotland, Wales and Northern Ireland are safer, stronger and more prosperous. The infrastructure investment in SR20 will provide support across the UK: whether in ship building in Scotland, in net zero R&D in Wales or in faster broadband in Northern Ireland. To help people get on, the government is taking steps to strengthen skills and education, and support wellbeing across every region of England. SR20 continues to level up schools funding, upgrades further education estates and invests in skills, supporting local areas as they recover from Covid-19. Across every region of the UK, the government is supporting jobs and wages through the Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS). Through SR20, the government will also support local economies to grow by: investing in new green industries to support green growth clusters, including supporting coastal and post-industrial communities with investment in offshore wind capacity, port infrastructure, a global underwater engineering hub, CCS and low-carbon hydrogen delivering major investment for local transport priorities in English cities through the Transforming Cities Fund and, building upon this, through five-year intra-city transport settlements for eight Mayoral Combined Authorities accelerating multi-year projects under four City and Growth Deals in Scotland, driving forward local economic priorities in Tay Cities, Borderlands, Moray and the Scottish Islands supporting housing delivery and regeneration, unlocking brownfield sites, regenerating estates and releasing serviced plots on public sector land across the country through an additional £100 million in 2021-22 on top of the £400 million Brownfield Fund announced at Budget 2020 providing £1.1 billion to support farmers, land managers and the rural economy, and £20 million to support fisheries in Scotland, Wales and Northern Ireland. Through SR20 the government is investing to ensure that each place, whether rural or urban, is well-connected, including: investing in local infrastructure, local transport and digital connectivity to ensure that the services people use most often are well-maintained and accessible in all places. This investment will transform bus services and cycling infrastructure, provide high-quality 4G mobile coverage and rollout gigabit-capable broadband across the UK strengthening the spine of the UK’s transport connectivity to connect across regions, including through High Speed 2, the largest ever investment in motorways and A-roads, and the Union Connectivity Review. The government is supporting the regeneration of towns and communities by targeting further investment at places most in need by: launching a new Levelling Up Fund worth £4 billion for England, that will attract up to £0.8 billion funding for Scotland, Wales and Northern Ireland in the usual way. This will invest in local infrastructure that has a visible impact on people and their communities and will support economic recovery. Moving away from a fragmented landscape with multiple funding streams, this new cross-departmental Fund for England will invest in a broad range of high value local projects up to £20 million, or more by exception, including bypasses and other local road schemes, bus lanes, railway station upgrades, regenerating eyesores, upgrading town centres and community infrastructure, and local arts and culture. It will be open to all local areas in England and prioritise bids to drive growth and regeneration in places in need, those facing particular challenges, and areas that have received less government investment in recent years. SR20 makes available up to £600 million in 2021‑22. The government will publish a prospectus for the fund and launch the first round of competitions in the New Year supporting the long-term regeneration of 167 towns across England to increase jobs, deliver growth and improve living standards through the Towns Fund supporting places, such as former industrial areas, deprived towns and coastal communities, by setting out what the UK Shared Prosperity Fund (UKSPF) will invest in and how it will be targeted (see Box 3.1) delivering 10 Freeports across the UK – at least one in each of England, Scotland, Wales and Northern Ireland – to bring jobs, investment and prosperity to some of the most deprived communities. The programme aims to establish Freeports as national hubs for global trade and investment across the UK, promote regeneration and job creation and create hotbeds for innovation. SR20 confirms an additional £4.7 billion to the devolved administrations through the Barnett formula in 2021-22, including £2.6 billion related to Covid-19, on top of their combined baselines of over £60 billion. This provides an additional £2.4 billion for the Scottish Government, £1.3 billion for the Welsh Government and £0.9 billion for the Northern Irish Executive. This builds on the unprecedented £16 billion of upfront resource funding the UK government has guaranteed to the devolved administrations in relation in 2020-21, in addition to their Budget 2020 funding for that year. SR20 also takes steps to change how the government invests in places and embed changes across government to ensure national policy-making better serves the communities it works for. SR20 takes action to: support better appraisal of investment in places through the refreshed Green Book[footnote 57] improve the government’s understanding of, and its impact on, places, through supporting investment in departments’ IT estates and strengthening guidance enabling better data capturing and data sharing bring policy makers closer to the communities they serve, setting out plans to deliver a new government economic campus in the North of England and progresses work on government Hubs in Cardiff and Belfast, to operate alongside the new Queen Elizabeth House ‘Edinburgh Hub’. These steps will support the Places for Growth programme to enable further relocations of civil service roles outside of London. The government will apply this approach through future fiscal events and Spending Reviews to continue to level up opportunity for communities across the UK, and in doing so, unleash the potential of the Union. Box 3.1 – UK Shared Prosperity Fund – Heads of Terms The UKSPF will help to level up and create opportunity across the UK for people and places. It will operate UK-wide, using the new financial assistance powers in the UK Internal Market Bill. Investments and programmes will display common branding. The government will ramp up funding, so that total domestic UK-wide funding will at least match current EU receipts, on average reaching around of £1.5 billion a year. A portion of the UKSPF will target places most in need across the UK, such as ex-industrial areas, deprived towns and rural and coastal communities. It will support people and communities, opening up new opportunities and spurring regeneration and innovation. Its funding profile will be set out at the next Spending Review. The government will develop a UK-wide framework for investment in places receiving funding and prioritising: investment in people and skills tailored to local needs, such as work-based training, supplementing and tailoring national programmes (e.g. the Adult Education Budget); and other local support (e.g. for early years) investment in communities and place including cultural and sporting facilities, civic, green and rural infrastructure, community-owned assets, neighbourhood and housing improvements, town centre and transport improvements and digital connectivity investment for local business including to support innovation, green and tech adoption, tailored to local needs. Places receiving funding will be asked to agree specific outcomes to target within the UK-wide framework. They will then develop investment proposals to be approved by the government among a representative stakeholder group. Investment should be aligned with the government’s clean growth and net zero objectives. A second portion of the UKSPF will be targeted differently: to people most in need through bespoke employment and skills programmes that are tailored to local need. This will support improved employment outcomes for those in and out of work in specific cohorts of people who face labour market barriers. The government will set out further details of the UKSPF in a UK-wide investment framework published in the spring.
4.3 Additional Funding in 2021-22
To help local areas prepare over 2021-22 for the introduction of the UKSPF, the government will provide additional funding to support our communities to pilot programmes and new approaches. This additional funding will be delivered UK-wide, using the new financial assistance powers in the UK Internal Market Bill. Further details will be published in the New Year.
5.1 Improving outcomes in public services
Spending Review 2020 (SR20) prioritises funding to ensure that the UK’s public services have the support they need. Chapter 2 outlined the exceptional support provided to help public services respond to Covid-19. This chapter sets out increased support for their day‑to‑day operations. Delivering improvements in day-to-day public services is at the heart of the government’s vision to rebuild for a stronger future. SR20 invests in public services to deliver on the government’s promises to: support a high quality, resilient healthcare system level up education standards and provide all learners with a quality education experience continue tackling crime to keep people safe support local authorities in their efforts to serve local communities. Overall core day-to-day spending, excluding exceptional funding to fight Covid-19, will rise to £384.6 billion in 2021-22. This is an increase of £14.8 billion in 2019-20 and comes on top of the £21.5 billion cash increase announced at Spending Round 2019. This includes: a £6.3 billion cash increase in NHS spending in 2021-22, compared to 2020-21 a £2.2 billion uplift for the core schools’ budget in 2021-22 compared to 2020-21 levels of funding an additional £400 million to help recruit 20,000 additional police officers by 2023 increasing core spending power for local authorities by an estimated 4.5 per cent in cash terms. The government has reconfirmed multi-year resource settlements for the NHS and schools, providing long-term certainty on the priorities of the British people and delivering on the promise to enable positive, long-term changes across key public services. SR20 also delivers a step change in investment in critical social infrastructure like schools and hospitals. The government’s ambitions on economic infrastructure are matched in the social sector by increased multi-year investment to deliver on promises to build 40 new hospitals by 2030, launch a ten-year school rebuilding programme, and deliver 18,000 prison places by the mid-2020s.
5.2 Investing in our public services: Health
Britain’s health services have met unprecedented challenges in the face of Covid-19. SR20 upholds the government’s long-standing commitment to support the NHS. Overall, core resource budgets will grow 3.5 per cent on average per year in real terms between 2019-20 and 2021-22 to £147.1 billion. Core capital budgets will grow by £2.3 billion in cash terms compared to 2019-20, delivering a 13.4 per cent average real terms increase per year. Within this, SR20 reconfirms the government’s historic long-term settlement for the NHS. This provides a cash increase of £33.9 billion a year by 2023-24, taking the core NHS England budget from £114.6 billion in 2018-19[footnote 66] to £148.5 billion in 2023-24. This includes an increase in core funding of £6.3 billion in 2021-22. To further support the health system next year, SR20 includes: £325 million for the NHS to invest in new diagnostics equipment an additional £260 million for Health Education England in 2021-22, to support the training and retention of our vital NHS workforce multi-year funding to build 40 new hospitals and upgrade 70 more by 2030 £4.2 billion for hospitals to refurbish and maintain their infrastructure £559 million to support the modernisation of technology across the health and care system £165 million for the eradication of mental health dormitories. Announcements at SR20 also enable local authorities to access over £1 billion of spending for social care through £300 million of social care grant and the ability to levy a 3 per cent adult social care precept. This funding is additional to the £1 billion social care grant announced last year which is being maintained. The government expects to provide local authorities with over £3 billion to address Covid-19 pressures, including in adult social care. This will support councils to maintain care services while keeping up with rising demand and recovering from the impact of Covid-19. In the longer term, the government is committed to sustainable improvement of the adult social care system and will bring forward proposals next year.
5.3 Upskilling for the Future: Education and Skills
The government is committed to providing learners with excellent educational opportunities at all stages of their lives. Building on commitments made at SR19, the government has prioritised investment in education and skills at SR20. At SR19 the government set out a commitment to increase the core schools budget by £7.1 billion by 2022-23, compared to 2019-20 funding levels. SR20 reaffirms this commitment, with the government’s three-year investment representing the biggest school funding boost in a decade. The schools budget will increase from £47.6 billion in 2020-21 to £49.8 billion in 2021‑22 – an uplift of £2.2 billion. SR20 also provides additional education funding in 2021-22 to: invest in Further Education to ensure that core funding for 16 to 19-year-olds is maintained in real terms per learner, rising in line with demographic growth continue delivering opportunities for lifelong learning, helping those who want or need to reskill to do so at any stage of their life or career confirm changes to support employers offering apprenticeships by delivering further improvements to the system. The government will also provide £220 million for the Holiday Activities and Food programme to provide enriching activities and a healthy meal for disadvantaged children in the Easter, Summer and Christmas holidays in 2021. This provides funding up to the end of 2021-22 and supports the government’s commitment to establish a Flexible Childcare Fund to increase the availability of high quality and affordable flexible childcare.
The Covid-19 pandemic has highlighted the importance of stronger international cooperation and collaboration against an increasingly challenging, competitive and uncertain global context. The UK is already playing a pivotal role on the world stage and will continue to build on this as it holds the G7 Presidency and hosts COP-26 in 2021.
Spending Review 2020 (SR20) will continue to strengthen the UK’s place in the world, providing the right resources to support its leadership in tackling the world’s toughest and most urgent problems, and reflecting the UK’s values overseas.
SR20 ensures that the government matches the ambitions of a global Britain. This includes reinforcing the UK’s role as a scientific superpower by investing in research and development (R&D); supporting the global economy in the wake of the pandemic; championing global health; leading the world to achieve net zero and help tackle climate change; and maintaining a cutting-edge military and world-class intelligence community.
This all supports a reinvigorated international approach, which the government will set out in the New Year with the publication of the Integrated Review (IR) of Security, Defence, Development and Foreign Policy. The IR will outline the government’s long-term vision for the UK’s place in the world over the next decade.
Maximising global influence Shaping an open and stable international order
The UK will spend the equivalent of 0.5 per cent of gross national income (GNI) as overseas aid in 2021. SR20 therefore provides £10 billion of Official Development Assistance (ODA) in 2021-22. This settlement will ensure that the UK remains one of the largest ODA spenders in the world and well above the OECD average.[footnote 71]
7.1 Department of Health and Social Care
Table 6.1: Department of Health and Social Care Table 6.2: Department for Health and Social Care multi-year capital health programmes The Department of Health and Social Care (DHSC) settlement provides a £6.6 billion cash increase in core resource funding from 2020-21 to 2021-22, delivering a 3.5 per cent average real terms increase per year since 2019-20. The department’s capital budget increases by £2.3 billion in cash terms compared to 2019-20, delivering a 13.4 per cent average real terms increase per year, taking core total DEL to £156.4 billion. Average real growth in core total DEL is 4 per cent per year from 2019-20 to 2021-22. The government remains committed to the historic long-term settlement for the NHS which provides a cash increase of £33.9 billion a year by 2023-24. This takes the NHS England budget from £114.6 billion in 2018-19 to £148.5 billion in 2023-24, with an increase of £6.3 billion in 2021-22. It is also confirming its commitment to deliver 50,000 more nurses and to create an additional 50 million appointments in general practice a year. Spending Review 2020 (SR20) supports the country’s ongoing response to Covid-19. In 2021-22, this includes £15 billion for Test and Trace, £2.1 billion to continue to maintain and distribute stocks of personal protective equipment, and £163 million for medicines and therapeutics. This builds on over £50 billion of funding the government has made available to the health services for Covid-19 in 2020-21, including £22 billion for Test and Trace. The government stands ready to continue this pragmatic approach in 2021-22, including by providing further funding to make vaccines widely available as necessary, building on the total of more than £6 billion that the government has now made available to develop and procure Covid-19 vaccines. It also provides an additional £3 billion to support the NHS’s recovery from the impact of Covid-19: this includes around £1 billion to begin tackling the elective backlog, enough funding to enable hospitals to cut long waits for care by carrying out up to one million extra checks, scans and additional operations or other procedures around £500 million to address waiting times for mental health services, give more people the mental health support they need, and invest in the NHS workforce around £1.5 billion to help ease existing pressures in the NHS caused by Covid-19. This will be supported by £325 million for the NHS to invest in new diagnostic machines (such as MRI and CT scanners) to improve clinical outcomes, enough funding to replace over two thirds of imaging equipment that is over 10 years old. The government also remains committed to ensuring the NHS has the certainty it needs to plan and will agree further funding for operationally necessary direct Covid-19 costs with the NHS next year. SR20 provides capital investment to continue to improve the NHS estate, including: multi-year capital funding commitments of £3.7 billion until 2024-25 to make progress on building 40 new hospitals by 2030 and £1.7 billion until 2024-25 for over 70 hospital upgrades to improve health infrastructure across the country over the long term. These projects will span the length and breadth of England, supporting the government’s levelling up agenda £4.2 billion in 2021-22 for NHS operational capital investment to allow hospitals to refurbish and maintain their infrastructure. Additionally, the government will provide £165 million in 2021-22, ringfenced to replace outdated mental health dormitories with single en suite rooms. The DHSC settlement provides further investment in the NHS workforce. This includes £260 million for Health Education England to continue to grow our NHS workforce and support commitments made in the NHS Long Term Plan. This includes training more new nurses and doctors, delivering some of the biggest undergraduate intakes ever, and funding to increase the mental health workforce and deliver training to highly valued NHS staff. SR20 confirms an additional £25.8m to increase the value of Healthy Start Vouchers to £4.25 in line with the recommendation of the National Food Strategy. Local authority spending through the public health grant will also continue to be maintained and the government will set out further significant action that it is taking to improve the population’s health in the coming months. The government will enable local authorities to access over £1 billion of spending for social care through a £300 million social care grant and the ability to levy a 3 per cent adult social care precept. This funding is additional to the £1 billion social care grant announced last year which is being maintained. The government expects to provide local authorities with over £3 billion to address Covid-19 pressures, including in adult social care. This will support councils to maintain care services while keeping up with rising demand and recovering from the impact of Covid-19. In the longer term, the government is committed to sustainable improvement of the adult social care system and will bring forward proposals next year. SR20 includes an investment of £573 million in Disabled Facilities Grants and £71 million in the Care and Support Specialised Housing Fund, supporting people to live independently for longer. SR20 also includes £9.4 million to improve maternity safety, including through pilots aimed at reducing incidence of birth-related brain injuries. To continue to improve patient safety and tackle the rising costs of clinical negligence, the government will publish a consultation next year. The government is providing a DHSC research and development (R&D) budget of £1.3 billion to continue the world-leading work of the National Institute for Health Research (NIHR) and Genomics England (GEL) and their research into better patient outcomes, including on Covid-19, as well as supporting the wider UK life sciences sector. SR20 also provides £559 million to support the modernisation of technology across the health and care system, including the NHS’s Artificial Intelligence Lab.
7.2 Delivering public value
This settlement includes the following priority outcomes: Improve healthcare outcomes for people by providing high-quality and sustainable care at the right time in the right place Improve healthcare outcomes through a supported workforce fit for the future Improve and protect the public’s health, including from Covid-19, while reducing health inequalities Improve social care outcomes through an affordable, high-quality and sustainable adult social care system.[footnote 85]
7.3 Department for Education
Table 6.3: Department for Education Table 6.4: Schools settlement Table 6.5: Department for Education multi-year capital programme The Department for Education (DfE) settlement provides a £2.9 billion cash increase in core resource funding from 2020-21 to 2021-22, delivering a 3.2 per cent average real terms increase per year since 2019-20. The department’s capital budget increases by £0.5 billion in cash terms next year, taking core total DEL to £76.4 billion. Average real growth in core total DEL is 3.4 per cent per year from 2019-20 to 2021-22. SR20 supports the government’s commitment to level up education standards by providing for an increase in the schools budget from £47.6 billion in 2020-21 to £49.8 billion in 2021-22 – an increase of £2.2 billion. This reaffirms the government’s commitment at Spending Round 2019 (SR19) to increase the core schools budget by £7.1 billion by 2022-23, compared to 2019-20 funding levels – with the government’s three year investment representing the biggest funding boost for schools in a decade. SR20 also supports the government’s commitment to improve skills in the economy and level up productivity across England by: providing £291 million for Further Education in 2021-22, to ensure that core funding for 16 to 19-year-olds is maintained in real terms per learner. This is in addition to the £400 million that the government provided at SR19 investing £375 million from the National Skills Fund in 2021-22, which will provide: £138 million for the government’s commitment to fund in-demand technical courses for adults, equivalent to A level, and to expand the employer-led boot camp training model £127 million to continue support for people to build the skills they need to get into work, building on the summer Plan for Jobs, including funding for traineeships, sector‑based work academy placements and the National Careers Service £110 million, including £50 million of capital investment, to drive up higher technical provision in support of the future rollout of a Flexible Loan Entitlement to test and develop innovative models for local collaboration between skills providers and employers. making available £2.5 billion of funding for apprenticeships and further improvements for employers: from August 2021, employers who pay the Apprenticeship Levy will be able to transfer unspent levy funds in bulk to small and medium-sized enterprises (SMEs) with a new pledge function. Unspent levy funds will still expire after 24 months. The government will also introduce, from August 2021, a new online service to match levy payers with SMEs that share their business priorities from April 2021 allowing employers in construction, followed by health and social care, to front-load training for certain apprenticeship standards. The government will explore whether this offer can also be made available in other sectors during 2021-22, the government will test approaches to supporting apprenticeships in industries with more flexible working patterns, including consideration of how best to support apprenticeship training agencies incentive payments for hiring a new apprentice introduced in the Plan for Jobs will be extended to 31 March 2021. SR20 additionally provides capital investment in the education estate to support levelling up education across England, including: further detail on the government’s ten-year school rebuilding programme. The programme will launch with a commitment to 50 new school rebuilding projects a year across England investment of £1.8 billion in 2021-22 to maintain and improve the condition of school buildings £300 million in 2021-22 for new school places for children with special educational needs and disabilities, almost four times as much as the government provided to local authorities in 2020-21 funding towards meeting the government’s commitment to £1.5 billion to bring all Further Education college estates in England up to a good condition £83 million in 2021-22 to ensure that post-16 providers can accommodate the expected demographic increase in 16 to 19-year-olds £64 million in 2021-22 for the Student Loan Company, including for its transformation programme £162 million in 2021-22 to support the rollout of T Levels wave 2 and 3 £72 million in 2021-22 to support the commitment to build 20 Institutes of Technology £24 million in 2021-22 to start a new programme to maintain capacity and expand provision in secure children’s homes. This will provide high quality, safe homes for some of our most vulnerable children and will mean children can live closer to their families and support networks, in settings that meet their needs. The DfE settlement also: confirms £22 million to continue improving the quality of teaching, including funding for mentor time as part of the Early Careers Framework provides funding towards delivering a £220 million Holiday Activities and Food programme to provide enriching activities and a healthy meal for disadvantaged children in the Easter, summer and Christmas holidays in 2021. This provides funding up to the end of 2021‑22 and supports the government’s commitment to establish a Flexible Childcare Fund to increase the availability of high quality and affordable flexible childcare provides £44 million for early years education in 2021-22 to increase the hourly rate paid to childcare providers for the government’s free hours offers. This is on top of the £66 million increase confirmed at SR19 provides funding to prepare for a UK-wide domestic alternative to Erasmus+, in the event that the UK no longer participates in Erasmus+, to fund outward global education mobilities. The government will set out further details in due course.
The government will continue with its ambitious agenda to support the public services relied on by everyone in the UK.
Further, in line with the government’s legal duties and its commitment to equalities, care has been taken to ensure that ministerial decisions at Spending Review 2020 (SR20) are informed by assessments of their impacts for those from protected characteristics. SR20 takes place against the backdrop of the Covid-19 pandemic, which the evidence suggests has disproportionately impacted some in society – in particular those with certain protected characteristics - and the government’s decision to set up an independent commission to examine how to address persistent disparities between ethnic groups.[footnote 106]
The three aims of the Public Sector Equality Duty (PSED) to which public sector bodies, including government departments, must pay ‘due regard’ in their work are:
•preventing unlawful discrimination for those sharing any of the nine ‘protected characteristics’
•promoting equality of opportunity for those sharing protected characteristics
•fostering good relations between those sharing protected characteristics and those who do not.
Spending Round 2019 announced £200 million for the Shared Outcomes Fund to fund pilot projects to test innovative ways of working across the public sector, with an emphasis on thorough plans for evaluation. The first round of the Shared Outcomes Fund is funding a wide range of projects that will run between 2020-21 and 2022-23. Spending Review 2020 announces a further £200 million will be made available for a second round of the Shared Outcomes Fund. The pilots funded by the first round are set out below, with each project’s evaluation to inform future policy development and programmes:
•drugs enforcement and treatment (£28.0 million – Home Office (HO), Department of Health and Social Care (DHSC), Public Health England (PHE), National Crime Agency, Ministry of Justice (MoJ), Ministry of Housing, Communities & Local Government (MHCLG), National Police Chiefs Council): Five pilots across England and Wales to take a whole-system response to tackling drug use through better join up of local law enforcement agencies, prisons and health and social care services
•transition to adulthood hubs (£3.0 million– MoJ, Youth Justice Board, MHCLG, DHSC): This pilot aims to reduce reoffending by meeting the needs of young adults (18-25) and 17-year olds due to transition from youth offending services into adult probation services in London. The pilot will co-locate Youth Offending Services and probation staff alongside other services for young adults to create smoother transitions
•prison leavers (£20.0 million – MoJ, Department for Work and Pensions (DWP), MHCLG, Department for Digital, Culture, Media & Sport (DCMS), DHSC, Department for Education (DfE), NHS England): The project will work closely with service users and stakeholders from across government, and the third and private sectors to test ways to improve the social inclusion of people leaving prison, and reduce reoffending
•creating opportunities forum for tackling serious violence (£3.7 million – HO, DWP, DCMS, DHSC, DfE): This pilot will work with the private and third sectors to generate employment opportunities and wraparound support packages for vulnerable young people at risk of serious violence
•grand avenues (£0.5 million – MoJ, Her Majesty’s Prison and Probation Service): This pilot aims to bring service providers together to work with offenders and their families in a community focussed way to address issues around intergenerational offending
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UK ENERGY IN BRIEF 2020. This booklet summarises the latest statistics on energy production, consumption, prices and climate change in the United Kingdom. Figures are primarily taken from the...
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