Rishi Sunak’s Spending Review pledges £100bn to transform the country’s infrastructure

Chancellor Rishi Sunak has announced his 2020 Spending Review, promising to build a “stronger future” and transform the country’s infrastructure.

With public borrowing having increased to £372bn during the Covid-19 pandemic, the economic forecast has changed dramatically from what was envisioned in the March 2020 Budget, weeks before the pandemic took full effect. The chancellor said he wanted to support the country’s economic recovery through transforming UK infrastructure.

The funding includes “significant increases in research and development [R&D] with almost £15bn in 2021-22, including funding for clinical research to support delivery of new drugs, treatments and vaccines”, according to the Spending Review red book.

“Supporting innovators is vital to ensure that the UK translates its world-class research into technological breakthroughs, enhancing the productivity and competitiveness of UK business,” it said. “That is why the government is committed to raising economy-wide investment in R&D to 2.4% by 2027.”

The government is publishing an infrastructure strategy for the country, setting out how £100bn of capital funding will “level up” the UK economy.

In announcing the Spending Review, Sunak said: “Our final priority is to deliver our record investment plans in infrastructure. Capital spending next year will total £100bn – £27bn more in real terms than last year.

“Our plans deliver the highest sustained level of public investment in more than 40 years – once-in-a-generation plans to deliver once-in-a-generation returns for our country.”

Sunak also reiterated the need for “transformative digital infrastructure programmes” and announced £260m in funding for the Shared Rural Network agreement to increase 4G coverage, local full-fibre networks and the 5G Diversification and Testbeds and Trials Programmes.

The red book also said that supporting innovators is key to technological breakthroughs. “Innovative businesses require access to growth capital and funding for high-risk, high-reward innovation activities,” it said. “Innovate UK’s grant programmes and the Catapult Network provide critical support for innovative small and medium-sized enterprises and the Spending Review 2020 provides at least £490m for Innovate UK’s core budgets next year.

“This will support high-tech firms across the UK in developing the technologies of the future. The government is investing in R&D across a wide range of areas, from 5G through to climate change programmes, driving innovation across the economy.”

The Spending Review also promised to continue to fund digital programmes and deployments in the NHS, which have increased during the pandemic. As well as £325m for the NHS to invest in diagnostics equipment, it will also receive £559m to “support the modernisation of technology across the health and care system”.

Sunak said the government is “increasing capital investment by £2.3bn” in the NHS, “to invest in new technologies to improve patient and staff experience, replace ageing diagnostic machines like MRI and CT scanners, and fund the biggest hospital building programme in a generation – building 40 new hospitals and upgrading 70 more”.

Overall, the government is investing more than £600m in “outdated government IT to ensure core systems are secure and can support better administration”, said Sunak.

HM Revenue and Customs will receive £268m to improve the “agility, resilience and security” of its existing IT estate, as well as £146m to continue its Making Tax Digital programme. It will also get a £1bn budget to “reform and enhance the UK customs system after the end of the [Brexit] transition period, including investment in critical physical and IT infrastructure and support for UK traders and businesses”.