With a general election looming, Boris Johnson has sanctioned a multibillion-pound spending programme announced at the Conservative party conference.
Ministers have promised investment in the transport system, NHS and digital infrastructure in an attempt to stimulate economic growth and win back erstwhile Tory voters. But there are concerns the party has jettisoned its reputation for fiscal rectitude.
In March, the then chancellor, Philip Hammond, said it was necessary to hold back fiscal reserves to cope with a no-deal Brexit. He could have spent £26.6bn over the life of the parliament without breaching a self-imposed rule to limit the annual spending deficit to 2% of GDP, but instead chose to keep the funds in reserve.
Hammond’s successor, Sajid Javid, pledged last month to increase public spending by £13.8bn as part of a one-year spending review. Police, hospitals and local government were all big winners as Javid claimed the government had turned the page on 10 years of austerity.
But this package ate up almost half the Treasury’s fiscal headroom. Last week, the Office for National Statistics said the government would need to write off £12bn of student debt, which would take up almost all the rest of the £26.6bn.
Now Javid wants to spend more money on public services, tearing up the 2% deficit rule and leaving the government - which is also coping with lower tax receipts after a fall in GDP growth – with no option but to ramp up borrowing in the event of a no-deal Brexit.
Here are the spending pledges made so far:
Hospitals
A pledge to spend £13bn to build 40 new hospitals is more accurately £2.7bn for six NHS trusts, which had plans already in place for hospitals in need of rebuilding. The rest of the building programme starts with £100m in “seed funding” to help 21 trusts develop plans to rebuild or construct 34 hospitals, including up to a dozen community hospitals in Dorset.
There is also £3bn in addition to an already announced £1.8bn tranche of funding for NHS building repairs. The remaining projects would be completed over the second half of the next decade.
In all, the government hopes to spend another £33.9bn on the NHS each year by 2023, though much of this was already in the Treasury’s projections and to some extent simply accounts for rising inflation.
Infrastructure
The government will allocate more than £25bn to the strategic road network over the next five years, with 14 major roads to be upgraded. Hammond increased spending on roads in his previous budgets, meaning many of the 14 projects, such as making the entirety of the A66 transpennine road a dual carriageway, have already been unveiled.
Broadband
Javid will commit £5bn to improving fast broadband access in harder-to-reach parts of the country. All but £200m of the funds to strengthen full-fibre and 5G internet networks had not been previously announced. However, Labour said that according to the National Infrastructure Commission, building and maintaining a national full-fibre network would cost more than £33bn.
Transport/buses
Mostly announced at the time of the spending review, plans are in place to create two all-electric bus towns as part of a £220m package of funding. About £30m will be spent on improving existing routes and restoring previously cancelled services, and £20m will be spent on developing new “on-demand” bus services to make them more flexible. Since 2010, government subsidies to bus companies have been cut by 45% and more than 3,000 bus routes have been forced to close.
Police
Javid said there would be a 6.3% increase in Home Office spending in real terms, amounting to £750m, to fund the first year of the government’s plan to recruit 20,000 new police officers.
There will also be an extra £45m provided so recruitment can start immediately, with the intention of having 2,000 officers in place by the end of March. He also announced a 5% real-terms increase in the resources budget for the Ministry of Justice, as well as confirming an extra £80m for the Crown Prosecution Service.
Local government
Ministers have promised the largest increase next year in local government spending power since 2010. Councils will receive £1.5bn for social care to “help stabilise the system”. A 2% council tax levy will be used to raise £500m. Javid said there would be £54m of new funding to address homelessness and rough sleeping, and £241m next year to help regenerate high streets.
Environment
The chancellor said there would be £432m in additional funds for the Department for Environment, Food and Rural Affairs to tackle climate issues.
Education
School spending will increase over three years by £7.1bn, though government claims that every secondary school will be allocated a minimum of £5,000 for each pupil next year are widely disputed. Critics say no-deal Brexit planning has denied all departments the time to deliver fresh spending, including £700m to support children with special educational needs next year.
Defence
An extra £2.2bn next year means a real-terms increase of 2.6% to ensure defence spending stays above the Nato target level of 2% of GDP.
Minimum wage
The public sector directly employs 5.4 million people and many more indirectly to provide essential services. About 4 million people will benefit from an increase in the “national living wage” from £8.21 an hour to £10.50 an hour by 2024.
Javid’s plan also lowers the age limit at which people can receive the national living wage from 25 to 21. The Treasury said it did not know how much the public sector wage bill was likely to increase by as a result, though it admitted there would be a rise. However, workers and employers will pay higher levels of national insurance, offsetting the cost.