8 things you should worry about in spending review - from schools to pay packets

Daily Mirror

a day ago

While there were big wins for the NHS and the Ministry of Defence, experts warn that things are not as rosy for other departments with a row brewing over policing
Rachel Reeves today unveiled her long-awaited Spending Review, saying public finances are finally on an even keel.
She told MPs that unpopular measures in Labour's first year had cleared up a lot of the mess left by the Tories. It came after Keir Starmer told his top team the review "marks the end of the first phase of this government".
‌
But experts have said that although there were big wins for the NHS and the Ministry of Defence, there were "less generous" settlements for other departments. And numbercrunchers warned that despite cash being ploughed into schools, headteachers still face headaches.
‌
There are also questions over public sector pay increases, and a row is brewing over funding for police services. Here we look at some of the key points.
1. Alarm over police funding
One of the first out the traps to react to the statement was London Mayor Sir Sadiq Khan, who voiced his alarm about the impact on police.
He said he is concerned the spending review could result in "insufficient funding for the Met and fewer police officers". Ms Reeves announced police spending will rise by 2.3% per year in real times up until 2029.
The Lib Dems went further, accusing the Government of "sleight of hand". Numbercrunchers said the review's figures presume council tax will rise by £395 for the average Band D home by 2029. This would see a £14 rise for policing each year.
The party's home affairs spokeswoman, Lisa Smart, said: 'The Government is relying on a hidden council tax bombshell to fund their half-hearted rise in police funding as they pass the buck to local families.
‌
'After frontline policing was neglected for years under the Conservatives, local communities deserve better than this sleight of hand."
Figures within the spending review reveal that core police spending power will go up by just 1.7% between 2025/26 and 2028/29.
2. Defence spending questions
Ms Reeves said that defence spending will go up to up to 2.6% of GDP from 2027 - which we already knew.
‌
But she did not go any further on the Government's pledge to get to 3% - which she described as an "ambition". It comes after NATO chief Mark Rutte said member states should be aiming for 5%.
And earlier this week he ominously warned that if cash is not committed, people might need to start learning Russian.
‌
3. School budgets 'squeezed by free school meals'
School budgets will remain under pressure in spite of today's cash injection - with much of it swallowed up by expanding free school meals, announced last week.
Paul Whiteman, general secretary of the NAHT union - which represents school leaders - said "this is not a time for celebration". He added: "In light of ever-increasing costs, we are already seeing signs of schools having to make cutbacks, including to staff numbers.
"We also know that some of the increase in funding will be absorbed by the increased free school meal costs schools will be facing after last week's announcement. There is no escaping the fact that despite the funding announced in this statement, schools will be operating in a challenging financial climate for some years to come."
‌
Institute for Fiscal Studies (IFS) director Paul Johnson added: "The schools settlement in England is tight. Strip out the cost of expanding free schools meals, and you get a real-terms freeze in the budget.
"With falling pupil numbers, this would in principle allow a rise in spending per pupil. Instead, the Government may have to freeze spending per pupil in order to meet rising demand for special education needs provision."
4. What will the civil service have to stop doing?
Cuts to unprotected departments risk having a "genuine impact on the government's ability to deliver on its missions", a union chief warned.
‌
Mike Clancy, general secretary of Prospect, said: 'The government will need to articulate much better what it wants the civil service to stop doing, given many essential government agencies are already facing recruitment and retention crises, particularly for specialist digital, scientific and technical staff.
'Only by investing in the skills it needs will it be able to achieve its objectives and undo the damage of the last 15 years.'
‌
5. No leeway for public sector pay rises
Another thorny issue that Government departments will have to face in future years is how to fund pay rises.
The spending review document makes it clear that no more cash will be forthcoming from the Treasury - meaning bosses will have to find savings if their staff get a raise. The document says: "There will be no reserve access for public sector pay, if the PRBs (pay review bodies) recommend pay increases above the level departments have budgeted for, departments will need to carefully consider the justification for these awards.."
It went to say bosses would need to "determine whether these additional costs can be borne either through off setting savings or through further productivity gains".
‌
6. Looming questions over tax rises
Ms Reeves closed off her speech by claiming the Government has turned a corner after a tricky Budget last autumn.
She went as far as to say: "We will never have to complete a Budget like that again." But economists have warned that tax rises will inevitably follow. Stephen Millard, interim director of the NIESR economic research institute, said: "The Chancellor has yet again said that her fiscal rules are non-negotiable.
"But, given the small amount of headroom at the time of the spring statement and the increases in spending announced since then, it is now almost inevitable that if she is to keep to her fiscal rules, she will have to raise taxes in the autumn budget."
‌
Raj Badiani, economics director at S&P Global Market Intelligence, said: "The goal of balancing books is likely to require a series of painful fiscal announcements… This year's autumn budget could be another tough fiscal event, should the UK economy falter amid heightened domestic and external tensions."
7. Fears raised over affordable homes pledge
Housing campaigners welcomed the huge £39billion boost to affordable housing over the next decade - but warned that building social homes must be a priority.
‌
Currently, various types of housing are classed as 'affordable homes', including shared ownership, affordable rent, social rent, first homes Research by homelessness charity Shelter found that the current Affordable Homes Programme had delivered over 74,000 grant-funded affordable homes by March 2024. Only around 11,000 - just 15% - of these were genuinely affordable social rent homes.
Speaking about the £39billion investment in a new Affordable Housing Programme, housing campaigner Kwajo Tweneboa said: "This announcement has potential - but without clear social housing targets, it risks becoming another promise that won't deliver change for the children and families who need it most."
Mairi MacRae, director of campaigns & policy at Shelter, said the £39bn investment' is a watershed moment in tackling the housing emergency'.
‌
But she added: 'To truly tackle rising homelessness, it must come alongside a clear target for delivering social rent homes. For too long, past governments allowed thousands of social homes to be lost each year, while funnelling public money into so called 'affordable homes' which are priced far out of reach for many.'
8. Asylum hotel spending to continue
One of the headline grabbing announcements in Ms Reeves' statement was that the use of asylum hotels will end by 2029.
This will save £1billion a year, she told the Commons. But ministers have been urged to move faster, with Enver Solomon, chief at the Refugee Council, stating: "The deadline of 2029 feels far away, and we urge government to make it happen before then."
And Gideon Rabinowitz, director of policy and advocacy at Bond - a UK network for international development organisations - hit out at the use of aid money to pay for accommodation in the meantime. He said: "While it is welcome that the Chancellor has committed to ending the use of hotels for asylum accommodation by the end of this Parliament, planning very slow reductions and diverting £5.76 billion of UK aid over the next three years to cover these costs is a political choice that comes at the direct expense of the world 's most marginalised people."