Brexit pressure forces one-year spending review

There will be a fast-tracked one-year spending review to ensure departments can focus on delivering Brexit by 31 October, the Chancellor has confirmed, as the normal three-year spending review is delayed

The scheduled three-year spending review, which was due to take place this autumn, has been put on hold until 2020 due to Brexit.

With less than 10 weeks until Brexit, this will be a rapid one-year spending round, which will fund departments’ 2020/21 activities, the Treasury confirmed.

The short timeframe means that there will be little time to influence the direction of spending, with the priority on ensuring that Brexit transition is handled without too much disruption to businesses, public services and the public.

The Treasury said it will carry out an accelerated exercise to ensure departments and devolved administrations have the financial certainty they need to deliver their plans on public services next year with full plans set to ready in September.

Ben Zaranko, a research economist at the Institute for Fiscal Studies (IFS), said: ‘The Chancellor’s decision to hold a spending review covering one year, rather than the usual three, is understandable given the degree of economic uncertainty surrounding Brexit.

‘It is odd, however, to be setting spending plans without knowing the Brexit outcome and without having the latest economic and fiscal forecasts.

‘This spending review looks likely to bring real budget increases for most major spending departments next year, but the outlook beyond that remains highly uncertain. A no deal Brexit could mean that this spending review will mark a pause to austerity, rather than an end.’

A full spending review is scheduled for 2020, when all public spending will be reviewed and multi-year budgets will be set for all departments and major infrastructure projects.

The spending round, which has to be completed in September, will support the commitments made by prime minister, Boris Johnson since he came to office, including the recruitment of 20,000 extra police officers.

Chancellor Sajid Javid said: ‘We will get Brexit done by October 31 and put our country on the road to a brighter future. The Prime Minister and I have asked for a fast-tracked Spending Round for September to set departmental budgets for next year. This will clear the ground ahead of Brexit while delivering on people’s priorities.’

Parliament is currently in recess and does not return until 3 September, and then only for around 10 days until the party political conference season kicks off over a four-week period.

Brexit is scheduled for 31 October 2019.

Sara White | 13-08-2019

Sara White |Editor, Accountancy Daily, published by Croner-i

Sara White is editor of Accountancy Daily, published by Croner-i, and in...

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