This week’s Spending Round was a short-sighted sigh of relief

5 Sep 19

Although education had some certainty for the next three years, other public services did not and some areas are still likely to feel the pinch of austerity over the next year, says CIPFA’s Don Peebles. 


Promised to be a “turn of the page on austerity” chancellor Sajid Javid’s fast-tracked Spending Round was highly anticipated by the public sector.

After years of budget cuts and harsh restrictions on public funds, the chancellor announced a series of short-term funding boosts for public services - a self-declared ‘end to austerity’.

Brought forward ahead of the 31 October Brexit deadline, the administration’s spending package included £13.8bn in funding focused predominantly on what the government termed the ‘people’s priorities’: education, policing, and health and social care, as well as homelessness, transport and infrastructure. 

The items proposed are a welcome first step for public services, albeit with plenty of room for clarity and follow-up.

Crime is up and police budgets have been strained, so police funding was widely expected and proved to be a major focus of the announcement. Following the prime minister’s plans to hire 20,000 police officers, £750m will fund policing efforts over the next year.

An additional £45m has also been set aside for the immediate recruitment of new police officers.

These funding streams are vital to the UK’s police force, and it’s imperative that they continue to flow past this year to maintain the integrity and effectiveness of the service.

Javid’s review also highlighted £1.5bn in funding for adult and child social care.

'A key area of concern is that this Spending Round was announced without the Office of Budget Responsibility’s latest fiscal forecasts, comments or consultation, as we would expect with a Budget or Spring Statement.'

An estimated £1bn in funding will be made available to local councils for social care services, whilst councils will be permitted to raise a further £500m independently via the precept to meet local service demands.

It’s worth noting that how this tranche of funding is to be split between child and adult care was not specified in the review. Additional details on the application and division of funds is still needed.

There’s no denying this burst of funding is welcomed in the public sector. Demand for social care is rising and funding will benefit some of the most vulnerable members of our society. However, if we’re truly to address the national social care crisis, larger and more frequent funding boosts will need to follow.  

All government departments have also been promised that their current funding levels will stay the same over the next year, adjusted for inflation. Interestingly, the chancellor declared this announcement to be the definition of austerity being over. However, while further funding cuts may have been avoided, funding levels are much lower than they’ve been in previous years.

Further, how funds are allocated within each government department means that, among lower levels of government, budget cuts may still occur. While this point struck a positive note in the House of Commons, the reality for many people could be very different.

Depending on the location or particular government service, citizens may still feel a lingering austerity-linked pinch over the next year. 

A key area of concern is that this Spending Round was announced without the Office of Budget Responsibility’s latest fiscal forecasts, comments or consultation, as we would expect with a Budget or Spring Statement.

This coupled with the looming prospect of a disorderly Brexit, means that these allocations have been made with a limited fiscal view and without knowing the real costs of the UK’s departure from the EU.

There’s a real possibility that once the OBR’s estimates are reviewed in six months’ time, this funding package could be reversed or the chancellor’s fiscal rules could have to be revised.

Ultimately, this week’s spending package was a short-term sigh of relief for desperately under-funded public services. Though education and schools received certainty around their funding for the next three years, unfortunately the rest of the public sector didn’t receive the same medium-term assurance.

In reality, the chancellor’s budget does little to repair the deep public sector fractures that have resulted from a decade of harsh austerity measures.

Yesterday’s Round was undoubtedly a short-term start, but good public sector financial management calls for both medium- and long-term visibility.  

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