Chancellor must “come clean” on plans for spending review, says Labour

Anneliese Dodds has called on the government to publish instructions issued to departments by the Chancellor in preparation for the 2020 comprehensive spending review, calling on the government to “come clean” on its plans.

In a letter sent to Rishi Sunak today, the Shadow Chancellor raised concerns that the government is preparing departments for further cuts – despite Boris Johnson’s claim that “we are absolutely not going back to the austerity of ten years ago”.

Dodds urged the Chancellor to “learn the lessons” of the 2008 financial crisis, and warned against a return to an “ideological approach to spending that resulted in the slowest economic recovery in eight generations”.

She said: “This has been the toughest of times for Britain’s workers, wherever they work. Even before Covid-19 hit, real terms wages were flatlining for many and even falling for others compared with a decade ago.

“Yesterday, there seemed to be light at the end of the tunnel for some frontline workers. But the language in the Chancellor’s announcement on the comprehensive spending review suggests he might be giving with one hand only to take away with the other.

“This is not the time to fall back on policies that delivered the slowest economic recovery in eight generations. And it’s not the time for the government to keep the public in the dark about its fiscal plans.

“It’s time for the Chancellor to come clean and explain how he plans to delivers growth across the country and rebuild the vital public services we all rely on.”

Following an announcement this week that some public sector workers, not including nurses or care staff, would see a pay rise the Treasury launched its review and said: “We must exercise restraint in future public sector pay awards.”

The government indicated on Tuesday that public sector employees could expect a squeeze on their pay levels in its bid to restore the public finances after the coronavirus pandemic.

Below is the full text of the letter sent by Dodds this morning.

Dear Chancellor,

The comprehensive spending review (CSR) that you announced today takes place in extraordinary circumstances. The outlook for our economy, and our public finances, looks completely different today to how it looked even six months ago.

The CSR needs to reflect that. This is a moment to think boldly and strategically about the kind of country we want to be, and the public services we need, as we emerge from this crisis and prepare ourselves for the future. In particular, we need to ensure that a health emergency which has done so much to restrict economic activity is not compounded by political choices around public spending that weaken demand further. We must learn the lessons of the last crisis.

As things stand, however, it is not clear whether the instructions you have given to departments are more in line with the Prime Minister’s promise that “we are absolutely not going back to the austerity of ten years ago” or the intimations in your statement today that further – and potentially significant – cuts are on the way.

The messages are similarly mixed when it comes to paying the public workers who have done so much for us all throughout the crisis. Last night you announced that some would be receiving a pay rise and yet this morning you spoke of “restraint” and the prospect of cuts to come. That is not the right way to treat those who have contributed so significantly to tackling the coronavirus, often at great personal risk.

The CSR – and the context in which it is taking place – raises big public policy questions. They deserve to be discussed openly and publicly so that voters know whether this is genuinely an exercise in designing public services fit for the 21st century or if it just presages a return to an ideological approach to spending that gave us the slowest economic recovery in eight generations.

As such, I am calling on you today to publish the directions you have given to government departments so that everyone can see the context in which those departments will begin making critical choices about their spending plans and operations.

I look forward to hearing from you and engaging with this process, which comes at such a critical time for our country.

Yours sincerely,

Anneliese Dodds