Spending review: Extra cash for NHS, defence, schools and a promise to end asylum hotels by 2029

ITV News

a day ago

The chancellor has outlined her spending plans for the next three years, as ITV News Political Correspondent Shehab Khan reports
Chancellor Rachel Reeves has delivered her first multi-year spending review in the House of Commons, with more cash revealed for the NHS, defence and schools, while other areas are squeezed.
She has laid out the government's spending plans for the next three years - showing us what the government's priorities are and shaping the direction of travel until 2029.
The chancellor told MPs: "We are renewing Britain. But I know that too many people in too many parts of our country are yet to feel it.
"This government's task, my task as chancellor, and the purpose of this spending review, is to change that."
Reeves stressed the decisions made in the spending review are her decisions about the direction of government, concluding her speech by saying: "These are my choices, these are Labour's choices, these are the choices of the British people.'
Shadow Chancellor Sir Mel Stride said "the chancellor has completely lost control", saying Reeves "will need to come back here in the autumn with yet more taxes, and a cruel summer of speculation awaits."
What is the spending review and who are the biggest losers?
Alongside setting out her plans for departmental spending, the chancellor has also outlined £113 billion of investment in infrastructure and other capital projects over the next four years.
Because of the chancellor's 'iron-clad' fiscal rules, she's got a limited amount of cash to play with for day-to-day spending, and expected spending increases on health and defence mean it's likely budgets in other areas will be squeezed.
But last year Reeves also changed the rules to allow her to borrow more money for investment in infrastructure - that's why we've seen increased spending on big projects but some departmental budgets reduced.
Among the eight departments facing real-terms cuts over the next three years are the Home Office (down 1.7% a year), Foreign Office (down 6.9% a year), Transport (down 5% a year), Environment and Rural Affairs (down 2.7%), and Business and Trade (down 1.8% a year).
When pressed by ITV News Political Correspondent Carl Dinnen on the cuts, Reeves accepted "there are things that we're not able to do, there are areas where there will be reductions in spending."
Defence
Rachel Reeves began her speech by talking about defence spending - which is one of the areas getting the biggest increase.
"We will make Britain a defence industrial superpower," she told MPs.
Reeves said the UK will spend 2.6% of GDP on defence by 2027, which includes spending on intelligence.
But the government also has a goal of hitting 3% of GDP on defence by the end of the next parliament, and it's expected Nato countries will agree later this month to increasing defence spending further to 3.5%.
Home Office
The Home Office is one of the departments being particularly squeezed. Home Secretary Yvette Cooper was the last cabinet minister to agree to spending plans with the Treasury, after reports of a fierce row.
Reeves revealed police spending would increase by 2.3% a year in real terms, which equates to £2 billion.
Cooper had pressed for extra funding for police, after police bosses warned they wouldn't be able to meet the government's anti-crime pledges without extra cash.
Chairman of the National Police Chiefs' Council Gavin Stephens said: 'It is clear that this is an incredibly challenging outcome for policing.
'In real terms, today's increase in funding will cover little more than annual inflationary pay increases for officers and staff.
'Whilst we await further detail on allocation to individual forces, the amount falls far short of what is required to fund the government's ambitions and maintain our existing workforce.
Conservative Police and Crime Commissioner for Leicestershire, Rupert Matthews, told ITV News: "If I'm going to match the promises made by national government, I'm going to have to stop doing something else locally. That's not how I think we should be running police services."
Despite that, Reeves told ITV News she's "confident we can deliver on the plans we set out in our manifesto."
Reeves also revealed funding of up to £280 million more per year for the government's Border Security Command to help them tackle the small boats crisis.
She also pledged the government will end the "costly use of hotels to house asylum seekers in this Parliament."
Housing
Deputy PM and Housing Secretary Angela Rayner was also in a battle with the Treasury over funding, with negotiations going down to the wire before the budget was settled.
Rayner secured £39 billion for affordable housing to be spent over ten years, as the government seeks to hit its pledge to build 1.5 million homes by the next election.
"I am proud to announce the biggest cash injection into social and affordable housing in 50 years," Reeves told MPs.
Health
The NHS is the biggest winner in the spending review, with health getting a boost of £30 billion and day-to-day spending rising by 3% a year.
That represents 60% of the total allocated spending envelope, according to the IFS.
'If we want a strong economy, where working people can fulfil their potential, then we must have a strong NHS,' Reeves said.
Reacting to the settlement, NHS England boss Sir Jim Mackey said the NHS has done 'really well'.
'It's a huge amount – (the) government has done us a really good turn compared to other parts of the public service.
'But it's not going to allow us all to just take our feet off the pedal and just run loose and do what we want to do in this next period, we have still got an awful lot of difficult things to do," he said.
Investment
Most of the announcements on projects funded by the £113 billion for infrastructure had already been announced before the spending review.
Last week the chancellor revealed £15.6 billion for mayoral authorities, including funding to extend the metros in Tyne and Wear, Greater Manchester and the West Midlands, along with a renewed tram network in South Yorkshire and a new mass transit systems in West Yorkshire.
On Tuesday Reeves also announced £16.7 billion for nuclear power projects, which will mainly go towards funding the new Sizewell C plant in Suffolk.
The chancellor also announced an extension of the £3 bus fare cap until March 2027 and an extra £445 million for upgrading Welsh railways
But London Mayor Sadiq Khan says he is "disappointed" with the money for projects in the capital.
"The way to level up other regions will never be to level down London", he said in a statement.
Winter fuel
Reeves revealed this week the extent of the government's u-turn over winter fuel payments - with 7.5 million pensioners set to have the payments restored.
After a fierce backlash from voters and backbenchers, the government announced pensioners with an annual income of £35,000 or less will have their winter fuel payments restored this year.
The u-turn will cost the government £1.25 billion - with many warning the move could lead to fresh tax hikes in the autumn.
Addressing the eligibility change in her speech, Reeves also confirmed £13.2 billion promised in the manifesto to make homes energy efficient. She said the plan would save families and pensioners "up to £600 off their bills."
Education
The chancellor spoke at length about education during her speech, as she announced day-to-day funding for schools will increase by £4.5 billion a year.
'I joined the Labour Party almost thirty years ago because I knew that the Conservative government when I grew up didn't care very much about schools like mine, or the kids I grew up with,' she told MPs.
Reeves confirmed cash to give half a million more children access to free school meals - the government set out last week that they would expand the provision of free school meals to all children whose families claim universal credit.
The chancellor also said there would be investment rising to nearly £2.3 billion per year to 'fix our crumbling classrooms'.
She announced £370m for schools-based nurseries and £555m for children's social care.
The total funding increase for schools will also partially cover the £615 million pot allocated to schools to give teachers a 4% pay rise. Schools are expected to fund a quarter of the pay rise through "improved productivity".
Paul Johnson, Director of the Institute for Fiscal Studies, said: "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."
Environment
Day-to-day spending in the Department for Environment, Food and Rural Affairs has been cut in real terms by 2.7% a year.
One of the main areas being hit is schemes to promote sustainable farming - with subsidies for nature-friendly farming practices only made available to small farms.
Justice
The Ministry of Justice will se an average real-terms increase in day-to-day spending of 1.8% a year.