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The government will rush through a one-year spending review next month in order to honour pledges on police numbers, schools and the NHS.
The chancellor, Sajid Javid, said a one-year budget allocation would be “fast-tracked” in order to allow civil servants to press ahead with improvements to public services while ensuring departments can focus on delivering Brexit by 31 October.
Javid, who replaced Philip Hammond in Boris Johnson’s cabinet reshuffle last month, said the Treasury would also make sure budgets for devolved administrations in Scotland, Wales and Northern Ireland were agreed by the end of September.
Javid said: “The prime minister and I have asked for a fast-tracked spending round for September to set departmental budgets for next year. This will clear the ground ahead of Brexit while delivering on people’s priorities.”
He added: “We will get Brexit done by 31 October and put our country on the road to a brighter future.” A three-year review that had been expected under Hammond will now be held next year.
Within days of moving in to No 10, Boris Johnson made commitments to increase police numbers by 20,000 officers, improve NHS hospital buildings, recruit more doctors and nurses and increase school funding. Johnson also promised to accelerate plans for a high-speed rail link between Manchester and Leeds and to increase defence spending.
The Institute for Fiscal Studies, an economic thinktank, has estimated the planned increase in police numbers will add £1.1bn to annual Whitehall spending. Johnson said an extra £1.8bn would be added to the annual NHS budget, though much of the money is believed to be unspent funds, while the rail link is predicted to cost at least £39bn.
Javid, who was a junior minister at the Treasury between 2012 and 2014, is likely to finance the extra spending with an increase in borrowing, using headroom created by Hammond, who brought down the budget deficit to 1.2% of GDP. The Treasury’s fiscal rule allows the deficit to hit 2% of GDP, handing the chancellor an extra £27bn to spend over the life of the parliament.
But the Office for Budget Responsibility, the government’s independent economic forecaster, has warned that a no-deal Brexit would wreck the UK’s public finances. The OBR said leaving the EU without a deal would plunge Britain into a recession that would shrink the economy by 2% and push unemployment above 5%. Current forecasts for spending and tax receipts are based on Britain leaving the EU with an agreement in place.
The Treasury will hold a budget in the autumn, which could enact pledges made by Johnson to cut taxes for businesses and higher rate taxpayers.
The chief secretary to the Treasury, Rishi Sunak, will run the spending review, having been handed the task of negotiating the allocation of a total Whitehall budget of £892bn with departments.
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