June 11th 2025
Spending Review
The Chancellor wrapped up her Spending Review by sayingshe had made her choices, and she has chosen national renewal. But Rachel Reeves will also be hoping that today’s statement is a chance for her to reset, with the long-awaited review an opportunity to shift the tone - and hopefully the polling - for the Chancellor and for the Government. She acknowledged that many people across the country are yet to feel the benefits of Labour being in charge but said that her choices are a reflection of the choices of working people. With headline announcements around defence, record investment in social and affordable housing, long-term infrastructure spending and an extra £29bn a year for the day-to-day running of the NHS, the Chancellor is hoping that this renewal will start to be felt.
Several announcements had been trailed in advance, including the U-turn on Winter Fuel payments, allowing Reeves to use today’s statement to focus on the priorities of security, economic growth and the nations’ health. There was an emphasis on investing in energy to shore up national security, with recommitments to Sizewell C, small modular reactors, and new announcements on carbon capture projects. The Government is also looking to back tech, with additional money for R&D and £2bn for their AI action plan. Whilst the Department for Health was the biggest winner, other public services will benefit, with the core schools’ budget in England set to reach £69.5bn by 2029. Elsewhere, looking to cut costs, the Chancellor committed to ending the use of hotels for asylum seekers in this Parliament and said she would be relentless in driving out Government inefficiencies.
Though Reeves took time to thank her Cabinet colleagues, some will be feeling more thankful than others. Whilst overall spending on Departments is set to increase by 2.3% over inflation, for some there will be a real-term cut, with Home Office spending down 1.7% a year to 2028-29, the Foreign, Commonwealth & Development Officelosing 6.9% and the Department for Transport down 5%. This comes after weeks of tense negotiations between Departments and the Treasury, where some managed to argue their case more convincingly than others.
