
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.
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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.
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.
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.
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.
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.
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.
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. More Trending
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.
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.
Get in touch with our news team by emailing us at webnews@metro.co.uk.
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Telegraph
15 minutes ago
- Telegraph
Khan accuses Reeves of ‘levelling down London'
Sir Sadiq Khan has accused Rachel Reeves of 'levelling down' London after she refused to hand over billions for infrastructure projects. The Labour Mayor of London has been battling with the Treasury for funding to pay for the extension of the Bakerloo line and the Docklands Light Railway. He also wanted the Chancellor to give him the green light to impose a tourist tax on visitors to the capital, and to provide millions extra for the Metropolitan Police. But Ms Reeves's spending review, to be unveiled on Wednesday, is not expected to include most of Sir Sadiq's demands. A source close to the Mayor said he would continue 'battling' to get more money out of the Treasury even if he fails at the spending review. They said: 'Over the past nine years as Mayor, Sadiq has fought to deliver for London – in the best interests of Londoners and the whole country. 'We know that when London does well it means the whole country does well, and that it will simply not be possible to achieve national growth ambitions without the right investment and growth in our capital. 'We must not return to the damaging, anti-London approach of the last government, which would not only harm London's vital public services, but jobs and growth across the country.' The spokesman added: 'Sadiq will always stand up for London and has been clear it would be unacceptable if there are no major infrastructure projects for London announced in the spending review and the Met doesn't get the funding it needs… 'It's also important to recognise that parts of London still have some of the highest levels of poverty anywhere in the UK. 'Sadiq will always stand up for London and has been crystal clear that the way to level up other regions is not to level down London.' Reeves's policies A source at the Treasury pointed out that in the year since the Government came to power, Ms Reeves had come out in favour of a third runway at Heathrow and the expansion of Gatwick, Luton and City airports. The Treasury has also expanded late licencing in the capital, given approval to the pedestrianisation of Oxford Street, allocated money so that HS2 will run to London Euston and provided money for free school meals. Last week, Ms Reeves announced £15 billion more to be spent on transport infrastructure outside London and the south-east, part of what was seen as a rebalancing of government priorities away from the capital Research released on Monday from IPPR North found that if the north of England had received the same per person spending as the capital in the past decade, it would have received £140 billion more – enough to build seven Elizabeth lines. Over the decade to 2022/23, each year London received £1,183 per person, while the north of England got £486 per person and the Midlands £455.


North Wales Chronicle
19 minutes ago
- North Wales Chronicle
Spending review is ‘settled', says Downing Street
Chancellor Rachel Reeves is expected to announce funding increases for the NHS, schools and defence along with a number of infrastructure projects on Wednesday, as she shares out some £113 billion freed up by looser borrowing rules. But other areas could face cuts as she seeks to balance manifesto commitments with more recent pledges, such as a hike in defence spending, while meeting her fiscal rules that promise to match day-to-day spending with revenues. On Monday morning, Home Secretary Yvette Cooper was the last minister still to reach a deal with the Treasury, with reports suggesting greater police spending would mean a squeeze on other areas of her department's budget. Speaking to reporters on Monday afternoon, the Prime Minister's official spokesman said: 'The spending review is settled, we will be focused on investing in Britain's renewal so that all working people are better off. 'The first job of the Government was to stabilise the British economy and the public finances, and now we move into a new chapter to deliver the promise and change.' The Government has committed to spend 2.5% of gross domestic product on defence from April 2027, with a goal of increasing that to 3% over the next parliament – a timetable which could stretch to 2034. Ms Reeves' plans will also include an £86 billion package for science and technology research and development. Last week the Chancellor admitted that she had been forced to turn down requests for funding for projects she would have wanted to back, amid the Whitehall spending wrangling. Mayor of London Sir Sadiq Khan's office is concerned that Wednesday's announcement will include no new funding or projects for London. The mayor had been looking to secure extensions to the Docklands Light Railway and Bakerloo line on the Underground, along with the power to introduce a tourist levy and a substantial increase in funding for the Metropolitan Police. A source close to the mayor said on Monday that ministers 'must not return to the damaging, anti-London approach of the last government', adding this would harm both London's public services and 'jobs and growth across the country'. They said: 'Sadiq will always stand up for London and has been clear it would be unacceptable if there are no major infrastructure projects for London announced in the spending review and the Met doesn't get the funding it needs. 'We need backing for London as a global city that's pro-business, safe and well-connected.'


North Wales Chronicle
20 minutes ago
- North Wales Chronicle
Labour MPs in call for benefits U-turn after change to winter fuel payment cut
Ms Reeves' £1.25 billion plan unveiled on Monday will see automatic payments worth up to £300 given to pensioners with an income less than £35,000 a year. It followed last year's decision to strip pensioners of the previously universal scheme, unless they claimed certain benefits, such as pension credit. Nadia Whittome, the Labour MP for Nottingham East, warned ministers they risked making a 'similar mistake' if they tighten the eligibility criteria for personal independence payments, known as Pip. Leeds East MP Richard Burgon called on pensions minister Torsten Bell to 'listen now' so that backbenchers can help the Government 'get it right'. In her warning, Ms Whittome said she was not asking Mr Bell 'to keep the status quo or not to support people into work' and added: 'I'm simply asking him not to cut disabled people's benefits.' The pensions minister, who works in both the Treasury and Department for Work and Pensions, replied that the numbers of people receiving Pip is set to 'continue to grow every single year in the years ahead, after the changes set out by this Government'. In its Pathways to Work green paper, the Government proposed a new eligibility requirement, so Pip claimants must score a minimum of four points on one daily living activity, such as preparing food, washing and bathing, using the toilet or reading, to receive the daily living element of the benefit. 'This means that people who only score the lowest points on each of the Pip daily living activities will lose their entitlement in future,' the document noted. Mr Burgon told the Commons: 'As a Labour MP who voted against the winter fuel payment cuts, I very much welcome this change in position, but can I urge the minister and the Government to learn the lessons of this and one of the lessons is, listen to backbenchers? 'If the minister and the Government listen to backbenchers, that can help the Government get it right, help the Government avoid getting it wrong, and so what we don't want is to be here in a year or two's time with a minister sent to the despatch box after not listening to backbenchers on disability benefit cuts, making another U-turn again.' Mr Bell replied that it was 'important to listen to backbenchers, to frontbenchers'. Opposition MPs cheered when the minister added: 'It's even important to listen to members opposite on occasion.' Liberal Democrat MP Mike Martin warned that 'judging by the questions from his own backbenchers, it seems that we're going to have further U-turns on Pip and on the two-child benefit cap'. The Tunbridge Wells MP asked Mr Bell: 'To save his colleagues anguish, will he let us know now when those U-turns are coming?' The minister replied: 'What Labour MPs want to see is a Labour Government bringing down child poverty, and that's what we're going to do 'What Labour MPs want to see is a Government that can take the responsible decisions, including difficult ones on tax and on means testing the winter fuel payment so that we can invest in public services and turn around the disgrace that has become Britain's public realm for far too long.' Conservative former work and pensions secretary Esther McVey had earlier asked whether the Chancellor, 'now that she and the Government have got a taste for climbdowns', would 'reverse the equally ridiculous national insurance contribution (Nic) rises, which is destroying jobs, and the inheritance tax changes, which is destroying farms and family businesses'. Mr Bell said: 'This is a party opposite that has learned no lessons whatsoever, that thinks it can come to this chamber, call for more spending, oppose every tax rise and expect to ever be taken seriously again – they will not.' Labour MP Rebecca Long-Bailey pressed the Government to make changes to the two-child benefit cap, which means most parents cannot claim for more than two children. 'It's the right thing to do to lift pensioners out of poverty, and I'm sure that both he and the Chancellor also agree that it's right to lift children out of poverty,' the Salford MP told the Commons. 'So can he reassure this House that he and the Chancellor are doing all they can to outline plans to lift the two-child cap on universal credit as soon as possible?' Mr Bell replied: 'All levers to reduce child poverty are on the table. 'The child poverty strategy will be published in the autumn.' He added: 'If we look at who is struggling most, having to turn off their heating, it is actually younger families with children that are struggling with that. 'So she's absolutely right to raise this issue, it is one of the core purposes of this Government, we cannot carry on with a situation where large families, huge percentages of them, are in poverty.'