Chancellor Rachel Reeves unveiled the government’s Spending Review, detailing departmental budgets for the next three years. Key highlights include a 3% annual increase in NHS funding, alongside boosted investment in defense and housing.
Conversely, several departments face budget reductions: the Home Office (1.7%), the Department for Environment, Food and Rural Affairs (Defra) (2.7%), and the Foreign Office (6.9%).
BBC analysis examines the impact on key services. Education receives a substantial funding increase, encompassing school improvements, particularly for dilapidated buildings, and investment in training and upskilling. This includes previously announced initiatives like expanding free school meals and breakfast clubs.
The core schools budget will rise by £2bn in real terms by 2029, according to the Department for Education, though much will cover existing commitments. While declining pupil numbers allow for savings, significant funding needs remain.
The growing demand for special educational needs and disabilities (SEND) support remains largely unaddressed in terms of existing council deficits, although approximately £700m is allocated for system reform. The £2.4bn annual investment for the school rebuilding program may prove insufficient for the many schools still awaiting repairs.
The 3% annual real-terms increase in NHS spending, while generous compared to other departments, covers day-to-day operational costs. The Department of Health’s overall annual increase is 2.8%, among the highest, encompassing NHS spending, medicines regulation, and pandemic preparedness.
It’s crucial to note that the NHS requires consistent real-term growth to manage an aging population and rising costs. Historically, annual UK health spending has grown at approximately 3.5%. Capital spending, however, will remain stagnant, raising questions about capacity for increased procedures.
Achieving Labour’s pledge of ensuring over 90% of patients commence treatment within 18 weeks (currently under 60%) presents a considerable challenge given competing demands.
The Department for Transport (DfT), despite a 5% reduction in its annual day-to-day budget – the largest cut in the review – expressed optimism. This reduction primarily reflects the phasing out of pandemic-related train company subsidies. However, capital expenditure on transport infrastructure is increasing by 3.9%, among the highest.
Long-term infrastructure investment is central to Labour’s “national renewal” plan. The chancellor highlighted various upgrades, some previously announced, others new. These include a new Liverpool-Manchester rail line, a bus fare freeze until March 2027, and over £15.6bn for trams, trains, and buses outside London.
The Conservatives criticize this as rehashed announcements lacking detail. The government promises further specifics during its “infrastructure week”. Beyond the bus fare continuation, the review’s projects are ambitious but with long-term timelines, extending into the 2030s.
The £39bn allocated for social and affordable housing has been welcomed by social landlords, addressing concerns about meeting the 1.5 million home building target. This investment, described as a “game changer,” provides the long-term rental certainty needed for housing associations to plan effectively.
Shelter, a housing charity, called it a “watershed moment,” noting it’s 70% more than previous government investment, yet insufficient to eliminate homelessness entirely. They advocate for a clear target for social rent homes.
A 2.3% real-terms increase in policing funding for England and Wales, while better than anticipated, may be largely consumed by pay rises, necessitating “ruthless prioritisation,” according to police forces.
The chancellor highlighted that the increase exceeding £2bn will allow for the fulfillment of crime reduction and police recruitment pledges.
Immigration-related funding sees a significant increase for Border Security Command (£280m annually), with plans for new technology including drones. The government also aims to end the use of hotels for asylum seekers by 2029.
However, the 1.7% annual cut to the Home Office budget raises concerns about achieving these goals. Recent reports of early release of recalled offenders due to prison overcrowding underscore the urgency.
The government plans to build three more prisons, with the allocated budget rising to £7bn (up from £4.7bn earlier this month), reflecting the scale of the problem. Completion, however, will take years.
Further investment includes £700m for probation service reform, supplementing the 1,300 officer recruitment already announced. While welcomed, probation officers express concerns about increasing workloads and the timeline for new hires.
The chancellor leveraged the increased £113bn in capital spending from revised borrowing rules. Many projects were previously announced, and completion will take years. This includes £14.2bn for the Sizewell C nuclear plant, £39bn for affordable housing, £10bn for energy efficiency upgrades, and a new carbon capture project in Scotland. Significant transport investments (£16bn outside London) are also included but won’t yield immediate results.
Business groups generally support these ambitious plans, though the full impact will only be apparent over time. Detailed infrastructure and industrial strategies are awaited.
Science and research and development (R&D) funding will reach over £22.6 billion annually by 2029/30, encompassing various departments. The Department for Science, Innovation and Technology (DSIT) receives £16bn annually, with £2bn allocated to AI from 2026/27 to 2029/30.
While hailed as a “record,” this aligns with projected inflation. The Campaign for Science and Engineering welcomed the protection of the R&D budget, but the Royal Society noted the UK’s continued lag behind G7 competitors in research and innovation investment. High visa costs are identified as a deterrent to attracting global talent.