CHANCELLOR Rishi Sunak's spending plans will do little to lessen the economic impact of the pandemic on York or fund services people have relied on during the crisis.

The warning comes from City of York Council leader Cllr Keith Aspden after Mr Sunak set out his one-year Spending Review to the House of Commons.

Mr Sunak told MPs the unemployment figure for the UK was expected to soar to 2.6 million by mid-2021.

He said the UK's 'economic emergency' was only just beginning, with the government expected to borrow £394bn this year.

Here are the key points from his 25-minute speech on Wednesday:

  • Mr Sunak said the Government was providing £280 billion this year to get the country through the coronavirus crisis.
  • The Office for Budget Responsibility (OBR) is forecasting the economy will contract this year by 11.3% - the largest fall in output for more than 300 years.
  • The OBR expects the economy to start recovering once Covid restrictions are lifted, growing by 5.5% next year, 6.6% in 2022, then 2.3%, 1.7% and 1.8% in the following years.
  • In 2025, the economy will be around 3% smaller than expected in the March Budget.
  • The UK is forecast to borrow a total of £394 billion this year, equivalent to 19% of GDP - the highest recorded level of borrowing in peacetime history, according to Mr Sunak.
  • Underlying debt is forecast to be 91.9% of GDP this year and is predicted to continue rising, reaching 97.5% of GDP in 2025/26.
  • The OBR expects unemployment to peak at 7.5% in the second quarter of 2021 - 2.6 million people.
  • NHS doctors and nurses will receive a pay rise, but pay rises in the rest of the public sector will be "paused" next year.
  • The 2.1 million public sector workers who earn below the median wage of £24,000 will be guaranteed a pay rise of at least £250 next year, however.
  • The National Living Wage will increase by 2.2% to £8.91 an hour.
  • Total Government department spending next year will be £540 billion, with day-to-day departmental spending rising, in real terms, by 3.8%.
  • The overseas aid budget will be cut to 0.5% of gross national income in 2021 but Mr Sunak said the Government's "intention" was to return to 0.7% when the fiscal situation allows.
  • A new UK infrastructure bank - headquartered in the north of England - to finance major new projects is set to be established.
  • A £4 billion "levelling up" fund to finance local infrastructure improvement projects will also be created, Mr Sunak said.
  • The Chancellor said that through the Barnett formula, Scottish Government funding will increase by £2.4 billion and Welsh Government funding by £1.3 billion, with £0.9 billion for the Northern Ireland Executive.

Cllr Keith Aspden said the council had provided critical support during the pandemic for those who have shielded, struggled on low-incomes and to local businesses.

"At the same time, under difficult circumstances, our staff have maintained frontline services, helped residents and businesses to adapt to the ever-changing national guidance, and have provided a successful local track and trace system where the national system has been unsuccessful.

“This has all been achieved with the burden of unprecedented financial pressures caused by the pandemic and £15 billion of Government funding cuts over the last decade.

"This year, the Government has provided additional funding to help councils manage the impact of Covid-19, which has been welcome.

"However, the Government made a promise to give councils everything we need to respond the pandemic, yet despite this, City of York Council continues to face a budget gap of over £20 million.”

"Unfortunately, today’s announcement will do little to mitigate the economic impact of the pandemic on our city, as well as provide the necessary funding for all our services which have been so relied upon during this time of national crisis.

"Whilst we welcome the support to our low income public sector workers and additional adult social care grant, it’s quite clear that local authorities across the UK are now having to contemplate difficult decisions for the months ahead."

Meanwhile, Will Gardiner, CEO of Drax Group, a major employer in the region, said: “Today’s Spending Review setting out the next stages of the government’s record investment plans in infrastructure to drive a green recovery underscores the significant role for businesses in the North, like Drax, who will be at the heart of a green industrial revolution – attracting investment and creating jobs and helping the UK show climate leadership ahead of COP26 next year.

"Investing in new green technologies like bioenergy with carbon capture and storage at Drax to deliver negative emissions, and decarbonising other industries in the Humber cluster would boost skills and create tens of thousands of jobs – helping to level up  while delivering over £3bn in clean growth.”

York Press:

Steve Harris, regional director for Yorkshire and the Humber at Lloyds Bank Commercial Banking, said: “The Treasury has put large sums of money behind protecting and creating jobs in a bid to curb unemployment and underpin the economic recovery. This is encouraging news for the region given our latest data shows that many firms expect to reduce their headcounts over the next year.

“Meanwhile, the creation of jobs comes hand-in-hand with the rollout of local and national infrastructure improvements that will be a catalyst in the region’s post-lockdown come-back. The levelling-up agenda is very welcome and firms will be eagle-eyed for action – in the time they need it most.”