Comprehensive Spending Review and Autumn Statement: Overview
George Osborne has unveiled his Comprehensive Spending Review and first Autumn Statement since the general election, in a keynote address that sets the fiscal framework for the rest of this Parliament. In a roughly hour-long speech, the Chancellor announced both a consolidation of departmental budgets for the next four years and spending priorities over the coming year.
Headline announcements made by the Chancellor today included the results of agreements struck between Osborne and his senior ministerial colleagues. While the Department of Health budget has been reduced, spending on the NHS is to rise from £101bn to £120bn by 2020/21. Following intense wrangling between the Treasury and the Home Office, police budgets will not face reductions. Elsewhere the Department of Energy and Climate Change sees a 22% cut; the Department for Business’s budget is reduced by 17%; and the Department for Transport sees a 37% reduction, although its capital spending rises 50%.
Alongside departmental spending settlements, the Chancellor used his statement to set out his plans for the future of tax credits, a subject of intense political controversy. In something of a surprise, Osborne revealed he would be abandoning proposed changes altogether rather than offering transitional relief. He justified this on the basis that the Office of Budget Responsibility, the independent public spending watchdog, rated the public finances £27bn stronger now than at the time of the summer budget. However, some commentators noted that the introduction of the Universal Credit in 2020 will incorporate changes to the credits regardless.
On public spending more broadly, the Chancellor could confirm his precise target for a surplus in 2019-20 after the OBR indicated the Government was set to meet its goal of being £10.1bn in the black by the end of the Parliament. However, the OBR indicated Osborne was likely to breach a cap on welfare spending, something that could require him to seek parliamentary approval to go above this self-imposed restriction in the coming years.
As with many of his other recent financial statements, the Chancellor also used today's appearance to measure delivery of some of his key policy projects. He hailed deals on devolution struck with English city regions, and played up the large number of jobs being created in the Northern Powerhouse area. There was also confirmation of the Government’s plan to abolish the uniform business rate and allow local authorities to raise rates themselves, provided the proceeds are spent on infrastructure projects supported by business.