Spending review

Thursday

Claire Ainsley

Is Rachel Reeves’s headroom shrinking?

13 min listen

There were clear winners and losers in Rachel Reeves’s spending review yesterday but some of her announcements around capital spending and investment saw her dubbed the ‘Klarna Chancellor’ by LBC’s Nick Ferrari for her ‘buy now, pay later’ approach. Clearly trying to shake off the accusations of being ‘austerity-lite’, Labour point to longer term decisions made yesterday, such as over energy policy and infrastructure. But will voters see much benefit in the short-term? And, with the news today that Britain’s GDP shrank by 0.3% in April, will the decisions Rachel Reeves have to make only get harder before the October budget? Lucy Dunn speaks to Michael Simmons and Claire Ainsley,

James Heale James Heale

Rachel Reeves, the Iron Chancer

Gordon Brown may not be every teenager’s political pin-up. But as an Oxford student, Rachel Reeves proudly kept a framed photo of him in her bedroom. It was Brown who introduced the first multi-year spending review in 1998: the kind of big political set-piece speech which he relished. Reeves’s speech on Wednesday showed the level of constraints facing the Treasury this decade vs the 1990s. Chess, not poker, is the Chancellor’s chosen game of recreation. As a player and a politician, she prides herself on making decisions guided by skill, care and thought. Yet this week she staked her government’s future on a series of political bets. Her tax rises

The Spectator

Britain needs reform

This week’s spending review confirms that where there should be conviction, there is only confusion; where there should be vision, only a vacuum. The country is on the road to higher taxes, poorer services and a decaying public realm, with the bandits of the bond market lying in wait to extract their growing take from our declining share of global wealth. When every warning light is flashing red, the government is driving further and faster towards danger The Chancellor approached this spending review with her credibility already undermined. Promises not to raise taxes on working people translated into a tax on work itself which has driven up unemployment. A pledge

Wednesday

Tim Shipman

Spending review: smoke, mirrors and no strategy

10 min listen

There were few surprises in Rachel Reeves’s spending review today. Health was the big winner, with a £29bn increase in day-to-day spending and £39bn was announced to build social and affordable housing. The main eyebrow-raiser was the announcement that the Home Office will end the use of hotels for asylum seekers within this parliament; this could save £1bn or it could become Labour’s ‘stop the boats’ moment. The bigger picture was confusing – with increases measured against levels three years ago, is there really as much cash as Rachel Reeves wants you to think there is? And what’s the strategy behind it all? The Spectator’s new political editor Tim Shipman

Monday

James Heale

Labour try to silence ‘austerity-lite’ accusations

13 min listen

James Nation, formerly a special adviser to Rishi Sunak and now an MD at Forefront Advisers, joins the Spectator’s deputy political editor James Heale and economics editor Michael Simmons, to talk through the latest on the government’s spending review, which is due to be announced on Wednesday. The last holdout appears to be Home Secretary Yvette Cooper, pushing for more police funding. But, against a tough fiscal landscape, what can we expect? And how much does it matter with the wider public? Plus – former chairman Zia Yusuf returned to Reform just two days after resigning, what’s going on? Produced by Patrick Gibbons.

Wednesday

James Heale

How to do a spending review

21 min listen

Labour’s spending review is expected on the 11th of June, when we will find out which government departments face cuts and which costs have been ringfenced. This can set the tone for politics for months to come as it gives a clue to which priorities matter most – especially in times of fiscal restraint – and which ministers are up, and which are down. But how is a spending review conducted? How does His Majesty’s Treasury balance the negotiations with those competing for its attention? And, following the leaked Angela Rayner memo, do we know which economic arguments are winning out? James Nation, formerly an official at HMT and then in

Monday

Katy Balls

Johnson vs Sunak: The political battle of the autumn?

As ministers grow increasingly confident that they will be able to unlock by 19 July, Boris Johnson is facing a series of other political problems coming up the track. After the party lost the Chesham and Amersham by-election to the Liberal Democrats, Tory MPs with seats in the south are particularly restive. CCHQ has spent the weekend reaching out to these MPs in a bid to offer reassurance that the party has not forgotten about them. Yet the biggest problem Johnson faces is on spending. The spending review in the autumn will see all these various debates playing out Over the weekend, there have been a series of reports of

Wednesday

James Forsyth

The foreign aid cut marks a change of priorities

The proposed reduction in international aid from 0.7 to 0.5 per cent of GDP has elicited a furious reaction from some quarters. It has been condemned by five former prime ministers, three of whom never met the target when they were in office. What is missing from this debate is the historical context. The rise in development spending was part of the peace dividend that followed the end of the cold war. But the just-concluded defence spending settlement marks a UK recognition that this peace dividend is over — great power competition is back and this country’s military spending now needs to increase. Over the next decade or so, military

Lloyd Evans Lloyd Evans

Rishi Sunak’s New Labour pretensions

The House welcomed the Chancellor, Rishi Sunak, as he announced his spending commitments for the coming year. Rish the Dish delivered all kinds of goals and priorities for the UK but he left his personal plans in obscurity. Or did he? The Chancellor’s naked ambition may be sheathed in a Jermyn Street suit but his strategy is easy to read: knife the Honey Monster and evict him from his lair. Today he was addressing himself to his colleagues in cabinet, and in the wider party, and he wanted to show political intelligence and presentational shrewdness. His critics have already accused him of betraying the NHS by freezing pay settlements for

Stephen Daisley Stephen Daisley

The Tory case for overseas aid

There may be worse times to slash international development spending than the middle of a pandemic but it’s got to at least be in the top five. The reduction from 0.7 per cent of GDP to 0.5 represents a drop of £4 billion in investment. As Katy Balls notes, the current level was not only a manifesto commitment in 2019 but is enshrined in law, so ministers will have to ask parliament to legislate to allow them to break their own manifesto promise. International development is like foreign policy: there are no votes to be gained from it. In fact, abolishing it altogether would make the Tories more popular with their target

Kate Andrews Kate Andrews

Sunak’s Spending Review and the devastating impact of Covid

It’s been no secret that Covid-19 has sent the UK’s finances into disarray — but today we received a further insight into just how bad the books are looking. Alongside Rishi Sunak’s Spending Review came updated forecasts and scenarios published by the Office for Budget Responsibility, which confirm the UK economy is set to shrink by 11.3 per cent this year — the largest economic fall in 300 years. The road to recovery is forecast to be a long one: economic output is not expected to return to pre-Covid levels for another two years: Q4 in 2022. There is still no sign of a sharp, V-shaped recovery, but rather another

Robert Peston Robert Peston

The true cost of the coronavirus debt

There is a view that we don’t have to worry about the record debt the government has accumulated since coronavirus laid waste to our way of life and our economy. And in two senses I would half agree – though the other half of me is wracked with anxiety.  First, this is not a uniquely British problem; it is a problem of all developed economies. However, you should not underestimate the geopolitical significance of the explosion of debt in the rich West, because it represents by implication the fastest transfer of wealth and power to China and Asia in our lifetimes.  Second, there is the important counterfactual – namely what

Isabel Hardman Isabel Hardman

Does Rishi Sunak understand the scale of the mental health crisis?

Unsurprisingly, health spending will be a key part of Rishi Sunak’s spending review announcements this afternoon, with the Chancellor expected to pledge £3 billion for the NHS as it recovers from the pandemic. Part of that will be a £500 million boost for mental health, which accompanies a ‘winter care plan’ that was published earlier this week. Ministers are very keen to say they recognise the pressure that the pandemic has put on services and people who may be developing mental health problems for the first time, as a result of the strain they have found themselves under this year. But this money won’t go very far. The Strategy Unit