UK government hopes to regain political initiative as Treasury chief outlines spending plans

Winnipeg Free Press

a day ago

LONDON (AP) — Britain's Labour government hopes to regain the political initiative Wednesday when Treasury chief Rachel Reeves sets out her spending plans for the coming years, with big increases expected for health, defense and housing.
Reeves, who has been blamed by many for Labour's decline in popularity since it returned to power after 14 years in July, will outline the government's spending and investment priorities for lawmakers. There will be no tax announcements.
Reeves is expected to argue the government is on the path to 'renewing Britain' but that 'too many people in too many parts of the country are yet to feel it,' according to remarks issued by the Treasury.
'This government's task — my task — and the purpose of this spending review is to change that, to ensure that renewal is felt in people's everyday lives, their jobs, their communities,' she is expected to tell lawmakers.
Labour won a landslide victory last year on a slogan of 'change' and voter anger at the Conservative administration in power at the time, but its vote share was historically low for a winning party at 35%.
In the months since, Labour has been overtaken in opinion polls by the anti-immigration and recently formed Reform U.K. Reeves has been blamed by many for Labour's struggles, not least her decision in July to withdraw a winter fuel subsidy to all but the poorest retirees.
The outcry, which contributed to Labour's poor performance in recent local elections, prompted Reeves to about-turn and raise the threshold at which retirees will get the subsidy.
She and Prime Minister Keir Starmer will hope the change will stem the anger and focus voters on other issues, such as its spending priorities.
Among the main announcements is expected to be a 30 billion-pound ($41 billion) increase in funding for Britain's cherished but struggling National Health Service, as well as a rise in defense spending that will account for 2.5% of national output by 2027. Billions more are expected for social housing as the government aims to meet its target of building 1.5 million new homes by the next election.
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However, some departments are set to lose out after accounting for inflation, including local government, the justice system and the Home Office.
Reeves has insisted she won't go on a big splurge, arguing that all her spending plans will meet her self-imposed fiscal rules.
After raising taxes on business in her first budget last October, Reeves will find it difficult to swell the Treasury's coffers further in coming years as Labour won the election on a promise it would not increase income or sales taxes.
And with the British economy still growing at historically low levels, the tax take is not expected to get a big lift.
Reeves will hope her investment plans can help change that.