Chancellor claims 'austerity is over' as he unveils Spending Review

In his Spending Review, Chancellor Sajid Javid said that 'austerity is over' as he announced significant increases in spending across most government departments.

05 Sep 2019

In his Spending Review, Chancellor Sajid Javid said that 'austerity is over' as he announced significant increases in spending across most government departments.

As he unveiled the one-year Spending Review, the Chancellor said the increases showed that although cuts over the past decade had been tough, they had 'paid off'.

The Chancellor said: 'No department will be cut next year. Every single department has had its budget for day-to-day spending increased at least in line with inflation. That's what I mean by the end of austerity.'

Mr Javid announced an additional £2 billion in Brexit preparation funding, while promising there will be more support to ensure businesses are ready. He also said the Treasury would work with the Bank of England to co-ordinate a fiscal and monetary response for the UK economy.

The Chancellor plans to 'review our fiscal framework to ensure it meets the economic priorities of today, not of a decade ago', with rule changes coming ahead of this autumn's Budget. The Home Office is set to receive an extra £750 million as part of plans to recruit 20,000 new police officers. Spending on schools will increase over three years by £7.1 billion, and there will be an extra £2.2 billion for defence next year. NHS spending is set to rise by £6.2 billion in 2020, while the transport budget will have £200 million earmarked for buses.

Commenting on the Spending Review, the Institute for Fiscal Studies (IFS) said the announcements were 'made on the basis of fiscal headroom', which would be wiped out if the Treasury used up-to-date forecasts incorporating the recent slump in economic activity. Paul Johnson, Director of the IFS, said: 'Making big fiscal announcements in a period of great economic uncertainty means we will have little idea how sustainable or costly decisions . . . will be.'

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