When is the spending review and what might Rachel Reeves announce?

Telegraph

a day ago

All eyes are on the Treasury this week as Rachel Reeves is set to lay out her spending review to Parliament on Wednesday.
She'll announce the Government's day-to-day spending commitments up to 2028-29, and investment spending plans to 2029-30 – but there have been varying reports of what we can expect.
Here, Telegraph Money takes you through what we know and what the plans could mean for you.
What is the spending review?
Spending reviews take place every few years, and it is when the Government lays out all spending that can be reasonably planned.
The plans account for around 40pc of all public spending, according to the House of Commons Library, with the rest dependent on demands such as the benefits bill. The last multi-year spending review was in 2021 under Boris Johnson's Conservative administration.
In the run-up to the review, government departments have been in negotiations with the Treasury to try to secure as much funding as they can. The current review process was launched in December last year, and the Institute for Fiscal Studies has said it could be 'one of the most significant domestic policy events of this parliament'.
However, Ms Reeves has warned that 'not every department will get everything that they want', as she has had to 'say no' to things that she would support in an ideal world.
Many departments are expecting a real-terms cut in their funding.
The Government previously said that the review is 'zero-based', meaning that decisions will be made based on an assessment of spending line by line, rather than an overall increase or decrease to the current budget.
What time will Rachel Reeves announce it?
The Chancellor will stand up in the House of Commons on Wednesday June 11 after Prime Minister's Questions, at roughly 12.30pm.
Once Ms Reeves has finished speaking the review will be published on the government website, along with any accompanying documents.
What is likely to be included?
Some government spending plans have already been announced. Last week, Reeves announced £15.6bn of funding for regional transport, and the Government has confirmed a partial U-turn on the decision to remove winter fuel payments from all but the poorest pensioners. The Treasury has today announced that nine million pensioners will receive winter fuel payments this winter as a result.
It has also been reported that the Chancellor will focus on three priorities in the spending review: health, security and the economy. This means spending on the NHS, defence and infrastructure, with Home Secretary Yvette Cooper understood to be putting in a final plea for more police funding.
There are also suggestions that the two-child benefit cap may be lifted, and schools are understood to be in line for £4.5bn uplift.
Funding these plans may be tricky, however. Ms Reeves has confirmed she will be sticking to the Government's non-negotiable fiscal rules on borrowing. At the same time, the Organisation for Economic Co-operation and Development (OECD) said 'momentum is weakening' in the economy, as they told Ms Reeves that efforts to cut government borrowing must be 'stepped up'.
If more borrowing is off the table, it may mean cuts for some departments. The IFS has warned that 'because headline real growth rates [over the period] are relatively modest, sharp trade-offs are unavoidable. Achieving stated objectives in some areas will likely require real-terms cuts elsewhere.'
Deutsche Bank is a little more optimistic. In a recent analyst note Sanjay Raja, senior economist, said the bank is seeing more 'resilience than expected' in the UK economy, and their forecasts for growth until the end of 2027 currently sit above the consensus. But, in short, Reeves still needs to find more money.
Will any tax changes be announced?
No, there will be no tax rises in the spending review on Wednesday. As tax increases demand new legislation through a finance bill, we won't hear about any changes until the Budget in the autumn – but there is already speculation that any additional spending will necessitate a higher tax burden unless a spur in economic growth helps to boost the Treasury's coffers.
Tom Selby, director of public policy at AJ Bell, said: 'Of course, a lot can happen between now and the Budget and we have a number of economic data points that could influence the Chancellor's decisions come the autumn, but speculation about what may be on the table is naturally already rife.
'Perhaps the most drastic decision the Government could make would be to walk back on its manifesto commitment not to tax 'working people' and consider increasing income tax, national insurance or VAT.'
Mr Selby added that ideas for a wealth tax may also be considered, along with speculation of further pensions reform.
Another option Ms Reeves could be weighing up is extending the current freeze on income tax thresholds.
The Finance Act 2025 extended the freeze on inheritance tax thresholds until 2030 – and the Chancellor will be under pressure to do the same to other allowances and thresholds, too.
The latest forecasts suggest eight million workers will be pulled into higher rates of tax by 2028, raising an extra £38bn per year for the Treasury. Extending the threshold would also allow the Chancellor to keep to Labour's manifesto commitment not to raise taxes on working people.
Lindsay James, investment strategist at Quilter, said as there were no tax rises in the Spring Statement, investors are expecting to see rises in the autumn Budget if growth continues to 'lag'.
Angela Rayner, the Deputy Prime Minister, made a series of suggestions in a leaked memo – including reinstating the pensions lifetime allowance and removing more inheritance tax reliefs, which were calculated to raise approximately £3bn in total.
Chris Etherington, tax partner at RSM UK, added: 'It may already feel pretty claustrophobic at the Treasury, with limited headroom below the fiscal ceiling. The hope will be that economic growth will ease this pressure, and the next few months could be crucial to the Chancellor's plans.
'As it stands, the foundations may need further stabilisation and another sizeable rise in tax receipts to fund that.'