Seeing Green: Chancellor of The Exchequer Rachel Reeves departs 11 Downing Street to deliver her Spending Review in Parliament © Justin Ng / Alamy Stock Photo
The Chancellor’s cash giveaway, also known as the Spending Review, landed with a bang on Wednesday after weeks of trailed announcements on housing, infrastructure and energy. In an entirely unoriginal concept, we’ve tried to cut through the jargon of capital investments, review periods and funding settlements, to break down the winners and losers for you:
Winners
The housing sector, as Angela Rayner’s Ministry of Housing, Communities and Local Government won a huge £39bn for its affordable homes programme, with the Chancellor celebrating it as “the biggest cash injection into social and affordable housing in 50 years.” The investment will be essential to the Government’s aim of building 1.5 million new homes in this Parliament.
The Ministry of Defence, who off the back of the publication of the Strategic Defence Review last week, received an £11bn increase in spending, while the security and intelligence agencies saw a £600m uplift. The Chancellor announced that defence spending will hit 2.6% of GDP by April 2027 (inc. security and intelligence spending), although number-crunchers found that under the plans spending will then be flat until 2029, despite an imminent call from NATO for members to increase defence spending to 3.5% by 2032.
Nuclear energy, as Energy Secretary Ed Miliband announced that the Government will stump up the huge amount required to build Sizewell C. He also announced that Rolls-Royce had been selected to develop small modular nuclear reactors, although these won’t be up and running until the mid 2030s.
The NHS, which was endowed with a generous 3% annual real-terms increase in spending, although this will do little more than cover pay increases and the constantly increasing requirements of the UK’s ageing population. We can therefore expect the Health Secretary to continue his campaign for the need for extensive NHS reform.
Schools, with the Department for Education’s core schools budget set to rise by £2bn in real terms by 2029. It’s worth noting that much of this will be spent on existing pledges such as free breakfast clubs and free school meals… removing these actually results in a real-terms freeze in the schools budget.
Bus users, who will see the £3 cap on fares frozen until March 2027. It was also payday for large infrastructure projects with a flurry of investment into new rail and tram projects. However, the Department for Transport saw the largest real-terms spending decrease of any department.
Losers
The Home Office, which saw overall cuts of 1.7% a year. While the police did receive a 2.3% annual funding increase, police chiefs warned that this will cover little more than annual pay increases for officers and that the Government’s target for halving violence against women and girls within a decade was in serious jeopardy without further funding. Hotel owners will also potentially lose their gravy train, as the Chancellor pledged to end the use of hotels for housing asylum seekers in this Parliament. Good luck with that.
The Foreign, Commonwealth and Development Office, the Department for Environment, Food & Rural Affairs and the Department for Culture, Media & Sport all also saw cuts to their budgets.
London. The Chancellor, in Levelling Up-esque language, declared that “past Governments have underinvested in towns and cities outside London and the south-east” and failed to announce funding for the large infrastructure projects Sadiq Khan had on his wish list. In what you could call spiteful, she insisted they were “backing London” by supporting Heathrow expansion – something Khan vehemently opposes.
And finally, the Chancellor’s fiscal wriggle-room down the line. Most of the beneficial announcements are baked into ‘phase 1’ of the review (2025-26), while costs relating to ‘phase 2’ (2027-29) look tighter; and almost all of the figures rely on administrative cost-cutting to the tune of 10% of departmental budgets.
2.3% – amount departmental spending will rise by in real terms following the Spending Review this week.
0.3% – fall in GDP in April, despite growth of 0.7% in the first quarter of the year.
£29bn – new investment announced in the NHS as part of the Spending Review.
£39bn – new investment in social housing announced as part of the Spending Review.
0 – number of times the UK’s £2.7tn debt or £137bn deficit were mentioned in the Spending Review
50 – MPs who wished Speaker Linsday Hoyle a Happy Birthday on Tuesday in the House of Commons.
2027 – when the next Spending Review will take place, after the Treasury confirmed they will now happen every two years.
£1 – how much high street chain Poundland was (perhaps appropriately) sold for this week.
1,340 – the number of written parliamentary questions answered on Tuesday this week... the highest on any day in at least the last five years.
The Air India plane crash tragically claimed the lives of 241 passengers and crew on board, with just one survivor, a British man. More casualties are expected from on the ground too, after the plane crashed on departure from Ahmedabad into a doctors’ hostel.
Israel has bombed sites across Iran overnight in a major escalation which targeted nuclear and military facilities. Israeli Prime Minister Netanyahu claimed the attacks were necessary as Iran was on the verge of weaponising its nuclear programme and declared the offensive will “continue for as many days” as needed. The strikes have so far killed the head of the Iranian Revolutionary Guard, the chief and deputy chief staff of its armed forces, and multiple nuclear scientists. Iran’s foreign minister called it a “declaration of war”.
The Prime Minister gave a speech at London Tech Week on the power of AI to make a difference for working people, in which he: announced Liquidity would base their European HQ in London, welcoming the £1.5bn investment; confirmed the Government’s partnership with 11 major companies to train 7.5m workers in AI by 2030; highlighted they were partnering with NVIDIA on a new AI talent pipeline; and announced a new TechFirst training programme, backed by £185m, to train up to 1m young people with tech skills and embed AI in the education system. Technology Secretary Peter Kyle also delivered a speech at London Tech Week, confirming a new partnership between DSIT, Imperial College and the World Economic Forum which will see London host the new Centre for AI-Diven Innovation.
The Conservative Party will remove the ban on new oil and gas licences and overturn the ban on supporting oil and gas technology exports, party leader Kemi Badenoch announced this week as she delivered a speech at the Scottish Conservatives Conference. She criticised Labour for extending the Energy Profits Levy, arguing that international events make it clear the UK should be relying on domestic energy rather than imported oil and gas. Additionally, she questioned why the Government did not use the Spending Review to set out a clear plan to spend 3% of GDP on Defence.
Kemi Badenoch also gave a speech at RUSI, where she argued that the ECHR was “being used in ways never intended by its original authors” and launched a Lawfare Commission to “get to the bottom of what’s going on” – with the results set to be unveiled at the Conservative Party Conference. The Commission will explore five tests: the Deportation Test, the Veterans Test, the Fairness Test, the Justice Test and the Prosperity Test.
In a week of speeches, Reform UK leader Nigel Farage had to get in on the action, delivering a speech in Port Talbot in which he spoke of his ambition to “reindustrialise” Wales – including by reopening Port Talbot steelworks and allowing coal to be mined in Wales. He also pledged to put local people at the front of the social housing waitlist; committed to ending the use of any building for asylum seeker accommodation; and pledged to scrap the 20mph speed limit in Wales.
Former Reform Chairman Zia Yusuf rejoined the party just two days after quitting, having said that working for a Reform UK Government was no longer “a good use of my time.” Yusuf will now lead the Party’s DOGE unit, aiming to cut wasteful spending in the councils they now control. Explaining his change of heart, Yusuf said “I’ve been working pretty much non-stop” and that “exhaustion led to a poor decision.”
Rough sleeping will be decriminalised after 200 years, as the Government confirmed it will repeal the outdated Vagrancy Act 1824 by Spring next year. Alongside this, new targeted measures will ensure police have the necessary powers to keep communities safe, with a new offence of facilitating begging for gain and an offence of trespassing with the intention of committing a crime. This comes as the Government are currently in the process of developing a new homelessness strategy, due to published later this year.
A call for evidence on how to support and incentivise private sector investment in nature recovery was launched, seeking views on how the Government can increase business investment in protecting and improving the natural environment. This comes as Environment Secretary Steve Reed convened a roundtable event with leading figures from financial institutions, retail and sustainability sectors, where he emphasised the importance of fostering partnerships between the public and private sectors to support economic growth while powering nature recovery.
The Scottish Business Growth Group convened in Edinburgh for the first time in over two years, bringing together business leaders to discuss delivering economic growth. Chaired by Scottish Secretary Ian Murray and the Scottish Government’s Business Minister Richard Lochhead, the meeting considered the Spending Review, the Strategic Defence Review, recent trade deals with the US, EU and India, economic opportunities for the Scottish supply chain and the forthcoming Industrial Strategy.
Spend 5% of GDP on Defence or “learn to speak Russian”… that was the message NATO Secretary General Mark Rutte delivered in an address to Chatham House earlier this week, as he stressed the need to make NATO “stronger, fairer and more lethal” in order to meet an increasing range of threats, particularly regarding Russia’s capacity to rearm and threaten alliance countries in the near future.
The Trump Administration announced a review of the AUKUS agreement between Australia, under the President’s ‘America First’ agenda. The review into the 2021 agreement, which sees the three nations collaborate and share submarine technology, will be led by the Pentagon’s Deputy Under Secretary for Defence, Elbridge Colby, who has been notably critical of the agreement in the past.
The Planning and Infrastructure Bill completed its passage through the House of Commons this week, after MPs spent Monday and Tuesday debating one of the Government’s key pieces of legislation and its ambitions to build 1.5 million homes over the course of the Parliament, make planning decisions on 150 major economic infrastructure projects, and ensure clean energy projects are built as quickly as possible. It was a legislative-heavy week for MPs, as the Sustainable Aviation Fuel Bill was debated, and MPs continued their discussions on the Terminally Ill Adults (End of Life) Bill this afternoon. A vote on its third reading is now expected to take place next Friday.
The House of Lords dropped its opposition to the Data (Use and Access) Bill, with opponents stating that they “can only do so much” and that it was “up to the Government” to now listen. The Bill was passed between the Houses five times, with no compromise reached, and Baroness Kidron (who unsuccessfully sought to amend the Bill to increase protections for the creative sector) accused the Government of being “entrapped by the shiny promises of tech lobbyists”. The Bill is now awaiting Royal Assent.
Public concern about immigration has risen to its highest level since the 2016 Brexit vote, according to a new poll by Ipsos. The polling was conducted in May, during the period covering the success of Reform UK at the local elections and the Government’s announcement of the new White Paper on immigration. Forty-nine percent of the public now view immigration as a concern – the highest level recorded since June 2016, shortly before the EU referendum, when it stood at 48%. Additionally, nearly three in ten people (28%) consider it the most important issue currently facing the country.
A long-term plan for Great Northern Rail is needed to deliver prosperity and better lives, according to researchers at the IPPR. They argue that there needs to be ‘transformational investment’ in regional transport in the North, in order to close the ‘historic gap’ that exists due to the £140bn of missing investment in northern transport since 2009/10. The think tanks also highlights that London receives on average 2.43 times as much public transport spending per capita than the North.
The Government needs to rewire its institutions for the ‘coming age of superintelligent technologies’, according to a new research paper by Policy Exchange. The report argues that current political, bureaucratic, and regulatory systems are fundamentally out of sync with the rapid pace, vast scale, and broad impact of ongoing technological change, and warns that the UK risks falling behind both economically and geopolitically, if reforms are not put in place.
It’s been 11 months since the election and the new cohort of MPs are still trying to make an impression with constituents. The target last week was National Fish & Chip Day, with MPs across the political spectrum making a splash online to mark the day in the hope of rallying both the left and right behind a cause close to Brits’ hearts. Unfortunately for Labour MP Earley and Woodley, Yuan Yang, a few salty constituents were more eagle-eyed than she had anticipated… A number of local residents were less than peased about her post on the day, after noticing the chippy she claimed she had visited to celebrate, was in fact closed. In a later clarification, Yang explained that her schedule was too busy on the day so she and her team had visited a few days prior to ensure that she cod still send a message of support out on the day itself… Who said MPs had better things to do than pre-plan a social media post about National Fish & Chip Day, eh?
