Seven key things that will be decided in Rachel Reeves’ spending review

This Wednesday is going to be one of the most important days for Keir Starmer’s government since they took over power almost a year ago.

The words ‘comprehensive spending review’ might not suggest edge-of-your-seat excitement, but the decisions announced by Chancellor Rachel Reeves will have a massive impact.

She will be setting out the budgets for different government departments until 2030 – making it clear to the public where her priorities lie.

After last year’s budget, we’ve become used to the language of ‘difficult choices’. Think of the changes to the winter fuel payment and inheritance tax, both cited as ways to get the economy back on track.

This time around, expect a new approach from the Chancellor. She’ll be announcing billions of pounds to help ministers achieve what they want to.

But while there will be high-profile winners, it’s inevitable there will also be painful cuts to other areas of government.

That’s because the spending review is not a budget: Reeves won’t be announcing any changes to how the Treasury raises cash. She can only allocate the cash it has, or knows it is going to get.

NHS

Health and social care is already comfortably the most expensive single item that the government spends money on.

According to the Office for Budget Responsibility, the expected spend on health and social care for 2024/25 is £193.3 billion.

But of course, it’s not like the NHS is in an ideal state at the moment. It’s expected that Health Secretary Wes Streeting will get a significant financial boost to his department to pay for his ambitious plans.

Police

Home Secretary Yvette Cooper is believed to still be in negotiations with the Treasury, barely 48 hours before the spending review is unveiled.

That’s because an increase in funding to areas like health, defence and education is expected to come at the expense of cuts to her already-stretched department.

Yesterday, it was reported in the Sunday Times that police budgets were expected to receive a real-terms rise, but that’s likely to mean other parts of the Home Office will face serious cuts.

Defence

It’s no secret that this government is keen to pour a significant amount of money into defence, with the main disagreement over how significant it should be.

After last week’s strategic defence review grabbed headlines, there’s a question mark over whether Keir Starmer will accept Nato recommendations to raise his defence spending target from 3% of GDP to a massive 5% of GDP.

Such a huge rise – in 2024, the UK spent 2.3% of GDP on defence – would, of course, force cuts to other parts of government. But even the existing commitments are causing a serious squeeze.

Science and tech

The Chancellor’s biggest announcement over the weekend was the science and tech budget, which will be £86 billion.

Drug and battery technology will be among the areas set to benefit, while local leaders across the country will be sent cash to develop what are described as ‘innovation clusters’.

Expect to hear a lot about AI on Wednesday too – not just how it’ll be funded for sectors around the country, but also how government department will be encouraged to use the shiny new tech.

Education

Alongside health and defence, education is expected to be one of the big winners from Wednesday’s announcement.

Last week, Education Secretary Bridget Phillipson revealed the expansion of free school meals for all pupils in families that receive universal credit, with the aim of tackling child poverty.

In an interview with the Observer, Reeves said schools will get an additional £4.5 billion a year, which will go towards teachers’ pay rises and reforms to Special Educational Needs and Disabilities (SEND) provision.

Transport

Another major pre-spending review announcement last week was investment in buses, trams and local train infrastructure for England’s city regions.

There is also speculation one of the big projects included in the review may be a high-speed rail link between Liverpool and Manchester.

However, the squeeze could mean plans such as the DLR and Bakerloo extensions in London may be scrapped and schemes like the bus fare cap could come under pressure.

Local government

Like Yvette Cooper, Local Government Secretary Angela Rayner has also been locked into negotiations with the Treasury – though she reportedly reached an agreement yesterday.

The government has very ambitious targets for housing over the next few years, and those plans could fall short if serious cuts are made.

Greater Manchester Mayor Andy Burnham and London Mayor Sadiq Khan are among the local leaders who are asking for powers to introduce a tourist levy, though a source close to Khan said this looks unlikely.

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