Michael Burton Dan Peters 21 October 2020

Coronavirus leads to scrapping of three-year Spending Review

Plans to create a three-year settlement for public spending have been abandoned as latest figures show the havoc coronavirus is wreaking on the public finances.

Next month’s Spending Review, which normally would plan for the next three years, will instead focus on one year due to the economic chaos created by the virus.

The autumn Budget has already been scrapped.

Chairman of the Local Government Association, Cllr James Jamieson, said it was ‘hugely disappointing’ that councils would only get a one-year funding settlement for the third year in a row.

He said: ‘This makes it incredibly difficult for them to plan how to provide local services our communities rely on and which have proved so vital during the pandemic, including public health, adult social care, children’s services, homelessness support and help for those in financial hardship.

'This is a missed opportunity for the Government to draw a line under inefficient short-term budgeting that leads to higher costs to the public purse and to allow councils to set reliable medium-term financial strategies.

‘Only with sustainable and certain long-term funding can councils protect and improve services and play a leading role in addressing the stark inequalities the pandemic has exposed, developing a green recovery, tackling skills gaps and rebuilding the economy so that it benefits everyone.’

Chief executive officer of the Chartered Institute of Public Finance and Accountancy, Rob Whiteman, added: ‘It is important that we do not lose sight of the fundamental principle that multiyear settlements are a more effective way of managing public money.

'Steadying the ship in turbulent waters also requires taking a longer-term view.’

The announcement came as the Office for National Statistics revealed borrowing in September was £36.1bn, £28.4bn higher than September 2019 and the third highest borrowing in any month since records began in 1993.

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