The Chancellor has launched Spending Review 2021, which will conclude on 27th October 2021 alongside an Autumn Budget and set out the government’s spending priorities for the Parliament.
As part of the launch, the Chancellor set the envelope for spending over the next three years:
- Core day-to-day departmental spending will follow the path set out at spring Budget 2021, with the addition of the net revenue raised by the new Health and Social Care Levy and the increase to dividend tax rates announced today. The Government will make available around an additional £12 billion per year for health and social care on average over the next three years.
- This additional funding for health and social care allows the Government to announce an RDEL settlement for NHS England and Improvement rising to £160 billion by 2024-25.
- In total, day-to-day spending will increase to £440 billion by 2024-25, increasing by nearly £100 billion a year in cash terms over the Parliament.
- We will also deliver a step-change in capital investment, as set out at Budget 2021. We will invest over £600 billion over five years, the highest sustained level of public sector net investment as a proportion of GDP since the late 1970s.
- Overall, our record and our plans will see total core departmental spending (for day-to-day spending and investment) grow in real terms at nearly 4% per year on average (nearly 6% in cash terms) over this Parliament – a £140 billion cash increase and the largest real-terms increase in overall departmental spending for any Parliament this century.
This spending increase is part of our broader plan to return our public finances to a sustainable footing over the medium-term. The spending plans and focused tax changes we announced today, alongside the measures taken at the last Budget, show that we are determined to get our fiscal position back on track, so that we can continue to fund excellent public services in the future.
Given the impact COVID-19 has had on the economy, the Chancellor has been clear that our spending plans will be underpinned by a focus on ensuring every pound of taxpayer funding is well-spent, so that we can continue to deliver the highest-quality services to the public at the best value. Departments have therefore been asked to identify at least 5% savings and efficiencies from their day-to-day budgets as part of these plans, which will be reinvested in our priorities.