BBC Politics

That's where we'll end our coverage and analysis of the Spending Review, and this week's Prime Minister's Questions.

Our reporting today was brought to you by Jennifer Scott, Paul Seddon, Kate Whannel, and Howard Mustoe, with Johanna Howitt in the editor's chair.

Thanks for following along with us.

Good night.

Image source, UK Parliament/ Jessica Taylor

Laura Kuenssberg
Political editor

Image source, Reuters

On rare occasions, nervous chancellors leave No 11 gripping their documents, to deliver news to the country that resets the dial.

That happened today.

The pandemic has already cost jobs and hardships, but there can now be no doubt that the economic aftermath will last for many years.

The predictions of job losses, record levels of borrowing and debt - all huge headlines in themselves.

In the last few months, with almost no dissent, the government has scrambled to expand the state to help cope with coronavirus.

Borrowing rates are at rock bottom.

Other countries have done the same. There is little controversy about the decisions that have been taken so far.

But what lurks on the country’s balance sheet is the biggest economic baggage for generations.

There is almost zero political pressure to solve the problem any time soon.

But eventually the pressure will force a reckoning in the Tory party.

It’s a Conservative chancellor - whose instinct is to pare back the state - who has presided over a generational emergency expansion.

How Rishi Sunak and Boris Johnson propose to solve that paradox will create the contours of political arguments at least until the next election.

BBC Politics

The Chancellor Rishi Sunak has set out what the UK government will spend on health, education, transport and other public services next year. Here's a recap on the main points:

For more details you can read more here.

Image source, HM Treasury

After delivering his speech in the Commons earlier, the chancellor visited the National Institute for Health Research in west London where he met staff, and was talked through the process followed by vaccine volunteers.

Speaking to reporters Rishi Sunak said with "record peacetime debt levels" he had to make some "tough decisions" in his Spending Review.

He said the "fiscal and economic situation" meant decision had to be made to "focus on the priorities of the British people".

Asked about the public sector pay freeze, Mr Sunak said "if you look at the private sector, people are losing their jobs, hours are being cut wages are being cut, and in the context of that, it wouldn't be fair or right to have an across the board increase in public sector pay."

He said the targeted approach "still means a majority of public sector workers will see an increase in their pay next year, which is a fair and reasonable approach to take"

BBC Politics

Earlier today we said 1.3 million people would be directly affected by the central government public sector pay freeze.

Here is a bit more detail on that stat.

In total there are 5.5 million public sector workers.

Around a million NHS workers and 2.1 million lower paid workers won't be affected.

The freeze announced today does not apply those paid by local or devolved government - although those bodies may also decide to implement their own pay rise pause.

If that happens the total number of public sector workers impacted will be much higher.

Image source, PA Media

Earlier today, Rishi Sunak announced a £4bn "levelling up" fund to pay for upgrading local infrastructure across the UK.

Speaking to Radio 4's PM, Labour Mayor for Greater Manchester Andy Burnham describes the fund "distinctly underwhelming".

Because the fund is open to every single local authority, he argues that the money will not be prioritised in the areas where it is needed.

He also says there will be a £20m cap on any project. "We're talking modest train stations, bus interchanges, small roads - I don't think that amounts to a major strategic plan to level up poorest regions," he says.

And he notes that local areas will have to apply to central government to get money. "This is Whitehall wanting to hoard the money and the power," he says adding that the funding should be devolved to regions of England.

Jayne McCormack
BBC News NI political reporter

Image source, Getty Images

The headline figure for Northern Ireland is £920m – but when you break it down, more than half is in relation to Covid-19 spending, with £380m for Stormont’s nine departments to share on day-to-day matters.

The Finance Minister Conor Murphy has made it clear he’s less than impressed with what’s been dished out.

He’s also concerned about where this leaves the executive in terms of investing for economic recovery, both from the impact of coronavirus and to mitigate any problems arising with Brexit next year.

Decisions on pay awards for public sector workers are devolved to Stormont, so that will be a difficult discussion the executive will need to have soon – but Mr Murphy said he did not support the idea of “dividing” those providing critical services across the country.

The DUP – former confidence-and-supply partners of the Conservative Party – has welcomed the funding announcement but said it would have liked to see armed forces and police officers included with those who are in line for a pay rise.

Read more on the reaction from Northern Ireland here

Rajdeep Sandhu
Westminster Correspondent, BBC Scotland's Nine

Image source, Getty Images

The Scottish government will get £2.4bn from this Spending Review to spend as it wishes.

A total of £570m will go towards maintaining EU funding for farming and another £14 million for fishing.

It will also get a portion of the £800m "levelling up" fund that is being split across the four nations.

But a lot of the other spending plans had already been announced, such as freeports and city deals.

The majority of public sector pay is met by the Scottish government - apart from some civil servants - so the pay freeze won’t directly impact majority of public sector workers.

But it could indirectly hit them through less money being available through the block grant given to them by the UK government.

Ministers in Scotland had been calling for a more generous support package and a commitment to the Universal Credit uplift, and are likely to repeat demands for greater financial powers.

The First Minister, Nicola Sturgeon, has also called on the chancellor to reverse the cut in foreign aid spending, calling it "deplorable".

On Twitter she said, external it "is a political gesture to the right wing of the Tory party, and the price of it will be paid by some of the poorest people in the world."

Ione Wells
Westminster Correspondent, BBC Wales

Image source, PA Media

The spending review today confirms an extra £1.3bn for the Welsh Government - some of which is an increase in their core spending budget, and some of it is extra cash as a result of more spending in England to tackle coronavirus.

The UK Government's also outlined plans to spend £240m to support farmers and land managers in Wales, and £2m to support fisheries.

A farmers union claim this is a cut of at least £95m compared to previous EU funding.

But UK Government ministers insisted they are honouring a commitment to maintain farm incomes.

There are still questions, however, about what funding Wales is going to get to replace EU funding for the poorest regions of the UK.

European structural and investment funding in Wales amounts to approximately four times the UK average per person. West Wales and the Valleys received the highest level of EU Structural Funds available in each funding period for the past twenty years.

The Treasury have announced the replacement fund - known as the Shared Prosperity Fund - will at least match EU funds UK-wide.

But what's not yet clear is whether Wales will get the same amount it did from the EU. UK ministers previously promised Wales would not get "a penny less."

You can read more reaction from Wales here

Alex Forsyth
Political correspondent

Back in East Lancashire, and some are finding the figures from the Office of Budget Responsibility - predicting the biggest economic decline in 300 years - hard to fathom.

Peter Boys is the director of B+E Boys, a family construction firm which is one of the biggest employers in Rossendale.

He says the numbers are so huge the scale is “very difficult to understand.”

“You just know it’s a large number and it’s going to take some sorting out some point in the future, perhaps not this generation, but for the generation to follow, and I do worry about that," he says.

But Peter warns against more austerity measures for his part of the world.

“Towns like Rossendale have not only had a decade of austerity, they’ve probably had about four decades of austerity, from the late 80s and the early 90s, with industry taken out of the country, and we started to see more imports of goods," he says.

“We’ve suffered since then really, so it really needs some funding to back that up in the future.”

Alex Forsyth
Political correspondent

I've been speaking to people in Rossendale and Darwen, East Lancashire, about what they needed from the chancellor in today's Spending Review.

For Oliver and Lewis, both 19, it is jobs, with both men unemployed and looking for work.

Oliver was a commercial bodyworks engineer but was made redundant during the pandemic and has been looking for work ever since.

“It’s demoralising," he said. "You’re applying for jobs all day and you get no response half of the time, and if you do get a response it’s a no, and that’s no way to live your life.”

Lewis says he’s probably applied for about 50 jobs recently, describing the hunt as "horrible" and "painful".

He said: “I thought going to college would be a good idea to get my experience up and that would be the push to get a job.

"But I’ve got nothing so far... so I’m stuck here with qualifications I can’t use.”

Former Conservative Prime Minister, David Cameron, has said it’s a "very sad moment" that the government has abandoned its commitment to spend 0.7% of GDP on overseas aid.

Mr Cameron has said the chancellor is making "a mistake".

He told reporters it was a promise made that the government doesn’t have to break.

The former PM said he "totally understands" the economic climate and that difficult decisions have to be made, but the commitment was a manifesto promise and was set down in legislation.

He added that commitment "really said something about Britain" and allowed the country to do ‘brilliant things’.

Image source, TUC

Head of the Trades Union Congress Frances O'Grady tells BBC News the public sector pay freeze will hit "the very people who have been caring for the rest of us throughout this crisis".

And she argues that the £250 pay rise for low earners "won't go very far when food and rent are taking into account".

She says the Treasury is justifying the pay freeze on the grounds that those in the public sector are paid more than the private sector.

However she says this is incorrect and cites a report by the Institute for Fiscal Studies which found that once qualifications and age are taken into account, there is no difference between private and public salaries.

The BBC understands that 1.3 million people will be directly affected by the public sector pay freeze.

The coronavirus pandemic has hit young people across the UK hard.

Recent BBC research found that people aged 16-25 were more than twice as likely as older workers to have lost their job.

So what do they think of Chancellor Rishi Sunak's Spending Review?

Our business reporter Lora Jones has spoken to four under 25s to gauge their reaction to today's announcements

Image source, PA Media

The Joseph Rowntree Foundation has echoed Marcus Rashford's question earlier, external, saying it is "deeply disappointing" that today's Spending Review "is leaving millions to wait out the winter in fear and uncertainty with no reassurance forthcoming" about Universal Credit.

The charity's director, Helen Barnard, said there was "no conceivable scenario in which this support will not be needed" and the government's "inaction risks a sharp rise in poverty".

She added: "It’s not too late for the chancellor to do the right thing.

"We urge the government in the strongest terms to correct its course and commit to making the £20 uplift permanent and extend it to legacy benefits at the earliest opportunity.”

Image source, Getty Images

Historically, economists often got twitchy when a country's debts exceeded the vale of its annual output, since it raised concerns about whether the debts would be repaid.

But the cost of borrowing is now close to zero. But those low rates must hold, says the Office for Budget Responsibility, which is there to check over the Treasury's sums.

The OBR thinks debt interest payments as compared to revenue will actually fall to historical lows because interest rates are so low.

But debt compared to gross domestic product (GDP) will rise to 105%, it thinks.

"So long as these conditions hold, a debt-to-GDP ratio over 100 per cent should not prove particularly onerous by historical standards," says the OBR.

Image source, PA Media

The County Councils Network, external - which represents England's 37 county councils and county unitary authorities - has welcomed a rise in funds from the chancellor's spending review.

Councillor David Williams, chairman of the group and leader of Hertfordshire County Council, said the £1.55bn - plus £300m for adults and children’s social care would "ease the burden on councils next year, especially in relation to the continuing costs of the coronavirus".

But he said there was still "an onus on local authorities raising more from council tax to fund their social care costs".

Councillor Williams added: "With councils facing an underlying funding shortfall before the pandemic, they still face some difficult decisions next year on what services to reduce."

Last month, the County Councils Network warned about the risks to services as many councils face huge problems balancing their books.

Image source, PA

Earlier this year the England and Manchester United footballer Marcus Rashford forced the government into a U-turn on extending free school meals.

Now it looks like he is embarking on a new campaign

The government increased Universal Credit by £20 a week during the pandemic. However it has insisted this is only a temporary measure to support those financially hit by coronavirus.

The raise is currently due to expire at the end of March next year.

Faisal Islam
BBC Economics Editor

Image source, PA

Today's assessment from the Office for Budget Responsibility confirmed not just that the pandemic hit the UK economy this year by the biggest amount in three centuries, 11.3%, but that it was also set to be the hardest hit of all the G7 major industrialised nations.

It also said that government borrowing in this year was 19% of the size of the economy, a peacetime record, just under £400bn in one year.

And yet the paradox is that next year the amount of money it costs to fund that debt will also reach a post-war record: a record low.

Since World War Two, our debts have never been bigger. And yet they've never been cheaper.

How long this situation will last is the fundamental judgement for this chancellor.

Read more from Faisal Islam here.

Reality Check

Chancellor Rishi Sunak defended the government’s decision to cut foreign aid spending from 0.7% of national income to 0.5%.

He said that, even after the change next year, “the UK would remain the second highest aid donor in the G7”.

According to the latest data from the Organisation for Economic Co-operation and Development, external (OECD) the UK’s current foreign aid budget is smaller in absolute terms than both the United States’ and Germany’s.

In 2019, the UK spent $19.4bn (£14.6bn) on foreign aid, while the US allocated $34.6bn (£25.9bn) to foreign aid and Germany spent $23.8bn (£17.9bn).

Mr Sunak has said that UK aid spending will fall to $13.3 (£10bn) in 2021.

Both the US and Germany have larger economies than the UK so when you look at aid spending as a proportion of national income, the UK – with its current 0.7% - ranks higher than them – and tops the list of the G7 wealthiest countries:

When the UK aid budget falls to 0.5% next year - it will drop behind Germany (0.6%), putting it in second place in the G7 - as the Chancellor said.

But if the reduced aid budget remained the same into 2022, the UK would also fall behind France, external - which plans to increase its aid budget to 0.55% of GDP by 2022

Mr Sunak did say the government’s “intention is to return to 0.7% when the fiscal situation allows” but gave no specific timeline.