Chancellor Rishi Sunak is expected to unveil the government’s spending plans for the year ahead at around 12.30pm (GMT) on Wednesday, following prime minister’s Questions.
The Spending Review will detail day-to-day budgets for Whitehall departments in 2021-22. Mr Sunak will also set out the extent of economic damage the coronavirus pandemic has wrought this year.
The chancellor will pledge to make jobs his “number one priority” and announce the launch of a three-year Restart programme, worth £2.9bn to help more than a million unemployed people get back to work.
There will also be £1.4bn promised to increase the capacity of Jobcentre Plus and a £375m skills package.
But Mr Sunak is also expected to announce a controversial pay freeze for millions of public sector workers, which wil likely lead to a strong backlash from trade unions.
Public sector wages have fallen in the past decade compared with those in the private sector, but have held up better since the start of the coronavirus pandemic. Mr Sunak appears prepared to justify the pay freeze against the backdrop of the private sector suffering blows from the crisis.
NHS doctors and nurses will likely be exempted from the pay freeze, and the chancellor is set to announce a further £3bn for day-today NHS funding.
Mr Sunak also promised he will announce “quite a significant” increase in spending on public services for 2020-21, and will set out a £100bn plan for long-term infrastructure investment as part of plans to level up regions of the UK.
A £220m UK Shared Prosperity Fund — a replacement for EU regional funding — is planned to help areas that have been “left behind”. There will also be £1.6bn for roads to cover pothole repairs and upgrades.
The chancellor is also facing mounting pressure over an expected cut of the overseas aid budget to 0.5 per cent of national income. Former prime ministers Sir John Major, David Cameron and Tony Blair, as well as former Scottish Conservative leader Ruth Davidson, have all criticised the move.
Sir John called it “morally wrong and politically unwise, while Mr Cameron — who enshrined the current 0.7 per cent commitment in UK law — denounced it as a “strategic mistake”.
Ahead of his statement, Mr Sunak has insisted there will be no return to “austerity” and promised to continue supporting the economy as it recovers from the pandemic.
He said: “The Spending Review will ensure hundreds of thousands of jobs are supported and protected in the acute phase of this crisis and beyond with a multibillion package of investment to ensure that no-one is left without hope of opportunity.”
But shadow chancellor Anneliese Dodds said the country’s current “jobs crisis” was a result of the Tory government’s “irresponsible choices” and economic mismanagement.