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Autumn's Comprehensive Spending Review: Five things to look out for

07 August 2020

How will Covid-19 shape the Spending Review this autumn and what are the implications for the infrastructure sector?

Autumn's Comprehensive Spending Review: Five things to look out for
Chancellor Rishi Sunak. Image credit: Shutterstock

Following the Budget in March and an update in summer, the UK will have a Comprehensive Spending Review (CSR) this autumn. The Review will cover the period from 2021/22 to 2023/24 with capital budgets going further to 2024/25.

This then, will be one of the defining policy moments for this Government before the next election. In this blog, we assess some of the things to look out for with this CSR.

1. Headwinds

While the Government has confirmed that budgets will outpace inflation, some significant challenges will remain. Government spending has increased to support the economy through the coronavirus lockdown while tax revenues have declined, meanwhile the economy is forecast to shrink by 14% this year.

The forecast is for government borrowing to top £300bn this year, more than 15% of GDP. Expect much of the inflation busting increases to departmental resource budgets to come in later years, as the government looks to repair the nation's finances.

2. The Government will be aiming to pivot back to their political agenda

This has understandably been put on steady jogging as all of government responds to the coronavirus pandemic. Levelling up, global Britain, net-zero and public service reform will be the priorities.

But there are some big unknowns that could still steal the limelight. Will the UK have finalised a trade deal with the EU in time? Will there be a Covid-19 vaccine and if not, will there be a second wave of the pandemic?

3. Within that pivot, they may seek to lay the seeds for holding on to so-called 'red wall' seats

Principally looking at how to create and embed frameworks to ensure more money flows to these sorts of seats. A review of the Green Book is underway, the industrial strategy may be revived to focus on new sectors and places and expect to see the move of some departments out of Whitehall to other parts of the country.

Our latest consultation seeks views on the role of infrastructure as part of the ‘levelling up’ agenda. Infrastructure investment will play a key role, but the right frameworks will be needed for this to be more than a flash in the pan.

4. The definition of infrastructure will be broad

There were already plans to do a zero based review of capital spending last year, focused on whether major projects 'are having positive effects on growth and the wealth and wellbeing of individual people'. This didn't go ahead. But talk of 'capital spending' rather than 'economic infrastructure' spending is something that has lasted.

Notably the Prime Minister’s Build, Build, Build narrative has focused on prisons, schools and hospitals. Will much of the announced increases in 'infrastructure' spending be more on the social side? And where does that leave the National Infrastructure Strategy?

5. Covid-19 'lessons' will be used to justify a lot of changes

We've seen some of these already. For example, the lessons we can learn from the speed at which we built the Nightingale hospitals is one of the main pillars of the Infrastructure Delivery Taskforce and Project Speed.

The key lesson, as outlined by the Chief Secretary to the Treasury recently, will be how we can use data as a tool for public policy decision making in the future. Within the world of infrastructure this is an important lesson, data can unlock much from adapting design codes, monitoring carbon, allowing more flexible use of infrastructure assets the opportunities for productivity, cost and decarbonization are significant.

What lessons are there?

The Infrastructure Client Group and ICE have been conducting a call for evidence to understand what some of the lessons from Covid-19 may be for the infrastructure sector. We'll be publishing the results, in the form of a White Paper, next week. This will look at what has changed as a result of Covid-19, what hasn't changed and what needs to be done differently to deliver infrastructure better, faster and greener.

  • Chris Richards, director of policy at Institution of Civil Engineers