Fact check: 2025 spending review claims

Yahoo

a day ago

On Wednesday Chancellor of the Exchequer Rachel Reeves delivered the Labour Government's first spending review, outlining its spending plans for the next few years.
We've taken a look at some of the key claims.
How much is spending increasing by?
At the start of her speech Ms Reeves announced that 'total departmental budgets will grow by 2.3% a year in real terms'. That headline figure doesn't tell the full story, however.
Firstly, 2.3% is the average annual real-terms growth in total departmental budgets between 2023/24 and 2028/29. That means it includes spending changes that have already been implemented, for both the current (2025/26) and previous (2024/25) financial years.
The average annual increase between this year and 2028/29 is 1.5%.
Therefore, as the Institute for Fiscal Studies (IFS) has said, 'most departments will have larger real-terms budgets at the end of the Parliament than the beginning, but in many cases much of that extra cash will have arrived by April'.
Secondly, it's worth noting that the 2.3% figure includes both day-to-day (Resource DEL) and investment (Capital DEL) spending.
Capital spending (which funds things like infrastructure projects) is increasing by 3.6% a year on average in real terms between 2023/24 and 2029/30, and by 1.8% between 2025/26 and 2029/30.
Day-to-day departmental budgets meanwhile are seeing a smaller average annual real-terms increase – of 1.7% between 2023/24 and 2028/29 and 1.2% between 2025/26 and 2028/29.
Which departments are the winners and losers?
Ms Reeves touted substantial spending increases in some areas (for example, the 3% rise in day-to-day NHS spending in England), but unsurprisingly her statement did not focus on areas where spending will decrease.
Changes to Government spending are not uniform across all departments, and alongside increases in spending on things like the NHS, defence and the justice system, a number of Government departments will see their budgets decrease in real terms.
Departments facing real-terms reductions in overall and day-to-day spending include the Foreign, Commonwealth and Development Office (this factors in reductions in aid spending announced earlier this year to offset increased defence spending), the Home Office (although the Government says the Home Office's budget grows in real terms if a planned reduction in asylum spending is excluded) and the Department for Environment, Food and Rural Affairs.
Did the Conservatives leave a '£22 billion black hole'?
Ms Reeves made a claim we've heard a number of times since it first surfaced in July 2024 – that the previous Conservative government left a '£22 billion black hole in the public finances'.
That figure comes from a Treasury audit that forecast a £22 billion overspend in departmental day-to-day spending in 2024/25, but the extent to which it was unexpected or inherited is disputed.
The IFS said last year that some of the pressures the Government claimed contributed to this so-called 'black hole' could have been anticipated, but others did 'indeed seem to be greater than could be discerned from the outside'.
An Office for Budget Responsibility (OBR) review of its March 2024 forecast found an estimated £9.5 billion of additional spending pressures were known to the Treasury at that point in time, but were not known to the OBR as it prepared its forecast. It's true that this review didn't confirm the £22 billion figure, but it also did not necessarily prove that it was incorrect, because Labour's figure included pressures which were identified after the OBR prepared its forecast and so were beyond the scope of the OBR's review.
We've written more about how the Government reached the figure of £22 billion in our explainer on this topic.
How big is the increase in NHS appointments?
Ms Reeves took the opportunity to congratulate Health Secretary Wes Streeting for delivering 'three-and-a-half million extra' hospital appointments in England.
The Government has previously celebrated this as a 'massive increase', particularly in light of its manifesto pledge to deliver an extra two million appointments a year.
Ms Reeves' claim was broadly accurate – data published last month shows there were 3.6 million additional appointments between July 2024 and February 2025 compared to the previous year.
But importantly that increase is actually smaller than the 4.2 million rise that happened in the equivalent period the year before, under the Conservative government – as data obtained by Full Fact under the Freedom of Information Act and published last month revealed.
What do announcements on asylum hotels, policing, nurseries and more mean for the Government's pledges?
Ms Reeves made a number of announcements that appear to directly impact the delivery of several pre-existing Labour pledges, many of which we're already monitoring in our Government Tracker. (We'll be updating the tracker to reflect these announcements in due course, and reviewing how we rate progress on pledges as necessary).
The Chancellor announced an average increase in 'police spending power' of 2.3% a year in real terms over the course of the review period, which she said was the equivalent of an additional £2 billion. However, as police budgets comprise a mix of central Government funding and local council tax receipts, some of this extra spending is expected to be funded by increases in council tax precepts.
Ms Reeves said this funding would help the Government achieve its commitment of 'putting 13,000 additional police officers, PCSOs and special constables into neighbourhood policing roles in England and Wales', a pledge we're monitoring here.
The spending review also includes funding of 'almost £370 million across the next four years to support the Government's commitment to deliver school-based nurseries across England', which Ms Reeves said would help the Government deliver its pledge to have 'a record number of children being school-ready'.
The Chancellor also committed to ending the use of hotels to house asylum seekers by the end of this Parliament, with an additional £200 million announced to 'accelerate the transformation of the asylum system'.
When we looked last month at progress on the Government's pledge to 'end asylum hotels' we said it appeared off track, as figures showed the number of asylum seekers housed in hotels was higher at the end of March 2025 than it was when Labour came into Government.