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The Independent
2 days ago
- Business
- The Independent
Fact check: 2025 spending review claims
This round-up of claims from the 2025 spending review has been compiled by Full Fact, the UK's largest fact checking charity working to find, expose and counter the harms of bad information. On Wednesday Chancellor of the Exchequer Rachel Reeves delivered the Labour Government's first spending review, outlining its spending plans for the next few years. We've taken a look at some of the key claims. How much is spending increasing by? At the start of her speech Ms Reeves announced that 'total departmental budgets will grow by 2.3% a year in real terms'. That headline figure doesn't tell the full story, however. Firstly, 2.3% is the average annual real-terms growth in total departmental budgets between 2023/24 and 2028/29. That means it includes spending changes that have already been implemented, for both the current (2025/26) and previous (2024/25) financial years. The average annual increase between this year and 2028/29 is 1.5%. Therefore, as the Institute for Fiscal Studies (IFS) has said, 'most departments will have larger real-terms budgets at the end of the Parliament than the beginning, but in many cases much of that extra cash will have arrived by April'. Secondly, it's worth noting that the 2.3% figure includes both day-to-day (Resource DEL) and investment (Capital DEL) spending. Capital spending (which funds things like infrastructure projects) is increasing by 3.6% a year on average in real terms between 2023/24 and 2029/30, and by 1.8% between 2025/26 and 2029/30. Day-to-day departmental budgets meanwhile are seeing a smaller average annual real-terms increase – of 1.7% between 2023/24 and 2028/29 and 1.2% between 2025/26 and 2028/29. Which departments are the winners and losers? Ms Reeves touted substantial spending increases in some areas (for example, the 3% rise in day-to-day NHS spending in England), but unsurprisingly her statement did not focus on areas where spending will decrease. Changes to Government spending are not uniform across all departments, and alongside increases in spending on things like the NHS, defence and the justice system, a number of Government departments will see their budgets decrease in real terms. Departments facing real-terms reductions in overall and day-to-day spending include the Foreign, Commonwealth and Development Office (this factors in reductions in aid spending announced earlier this year to offset increased defence spending), the Home Office (although the Government says the Home Office's budget grows in real terms if a planned reduction in asylum spending is excluded) and the Department for Environment, Food and Rural Affairs. Did the Conservatives leave a '£22 billion black hole'? Ms Reeves made a claim we've heard a number of times since it first surfaced in July 2024 – that the previous Conservative government left a '£22 billion black hole in the public finances'. That figure comes from a Treasury audit that forecast a £22 billion overspend in departmental day-to-day spending in 2024/25, but the extent to which it was unexpected or inherited is disputed. The IFS said last year that some of the pressures the Government claimed contributed to this so-called 'black hole' could have been anticipated, but others did 'indeed seem to be greater than could be discerned from the outside'. An Office for Budget Responsibility (OBR) review of its March 2024 forecast found an estimated £9.5 billion of additional spending pressures were known to the Treasury at that point in time, but were not known to the OBR as it prepared its forecast. It's true that this review didn't confirm the £22 billion figure, but it also did not necessarily prove that it was incorrect, because Labour's figure included pressures which were identified after the OBR prepared its forecast and so were beyond the scope of the OBR's review. We've written more about how the Government reached the figure of £22 billion in our explainer on this topic. How big is the increase in NHS appointments? Ms Reeves took the opportunity to congratulate Health Secretary Wes Streeting for delivering 'three-and-a-half million extra' hospital appointments in England. The Government has previously celebrated this as a 'massive increase', particularly in light of its manifesto pledge to deliver an extra two million appointments a year. Ms Reeves' claim was broadly accurate – data published last month shows there were 3.6 million additional appointments between July 2024 and February 2025 compared to the previous year. But importantly that increase is actually smaller than the 4.2 million rise that happened in the equivalent period the year before, under the Conservative government – as data obtained by Full Fact under the Freedom of Information Act and published last month revealed. What do announcements on asylum hotels, policing, nurseries and more mean for the Government's pledges? Ms Reeves made a number of announcements that appear to directly impact the delivery of several pre-existing Labour pledges, many of which we're already monitoring in our Government Tracker. (We'll be updating the tracker to reflect these announcements in due course, and reviewing how we rate progress on pledges as necessary). The Chancellor announced an average increase in 'police spending power' of 2.3% a year in real terms over the course of the review period, which she said was the equivalent of an additional £2 billion. However, as police budgets comprise a mix of central Government funding and local council tax receipts, some of this extra spending is expected to be funded by increases in council tax precepts. Ms Reeves said this funding would help the Government achieve its commitment of 'putting 13,000 additional police officers, PCSOs and special constables into neighbourhood policing roles in England and Wales', a pledge we're monitoring here. The spending review also includes funding of 'almost £370 million across the next four years to support the Government's commitment to deliver school-based nurseries across England', which Ms Reeves said would help the Government deliver its pledge to have 'a record number of children being school-ready'. The Chancellor also committed to ending the use of hotels to house asylum seekers by the end of this Parliament, with an additional £200 million announced to 'accelerate the transformation of the asylum system'. When we looked last month at progress on the Government's pledge to 'end asylum hotels' we said it appeared off track, as figures showed the number of asylum seekers housed in hotels was higher at the end of March 2025 than it was when Labour came into Government.
Yahoo
08-05-2025
- Business
- Yahoo
Amid Florida property tax debate, city and county budgets have ballooned
Central Florida county budgets have ballooned since 2020, fueled partly by rising property tax collections that have pumped billions more dollars into municipal accounts. In Orange County, the annual spending plan grew by $1.7 billion in the last five years, with property tax collections up by about 40 percent, according to an Orlando Sentinel analysis. The four other largest local budgets in Central Florida swelled by at least $100 million in that time period. Increases like those — which are happening around the state — have convinced Gov. Ron DeSantis and some other Republicans that the time is now to cut, or even abolish, property taxes. DeSantis is accusing local governments of 'massive expansions' in their spending, built on the backs of struggling homeowners. There is no agreement in Tallahassee on how or if to address that, however. The Legislature went home Friday without agreeing on a budget for the coming year, never mind an overhaul of the tax that provides the bulk of local government budgets, paying for public safety, schools, roads and parks. But lawmakers on Friday also began studying property taxes with an eye to possible changes. There is no doubt that city and county spending has grown rapidly because of higher tax collections, the Sentinel's analysis shows. Since 2020, Orange's budget has grown by about 31%. Around Central Florida, budgets have grown from nearly 22% in Seminole County to up to 93% in Lake County, while tax collections spiked, too, jumping 67% in Osceola County, one of the state's fastest-growing counties. Orlando brought in an extra $100 million in 2024 compared to 2020, a 42% hike in collections. Its budget grew by 26%. But residents' property tax bills, while likely bigger than in 2020, have not faced the same explosive growth. They are protected by homestead exemptions and the Save Our Homes law that holds down property assessment increases for a homeowner's primary residence to no more than 3% a year and therefore limits tax bill hikes. Local officials also insist there isn't bloat in their government accounts. Instead, they argue bigger budgets cover rising costs due to inflation and growth, helping them do everything from building new roads to hiring more police officers. DeSantis disagrees, saying local governments can make do with far less, and homeowners deserve a break. 'People have seen, even with the homestead exemption, it hasn't been enough to protect people from these rising assessments,' DeSantis said in March. 'We have major counties in this state that have had massive expansions of their budgets in the last five or six years, and the reason is they're getting more revenue from the property tax.' But Lee Constantine, a Republican Seminole County Commissioner and former legislator, said local governments feel the strain of inflation as hard as anybody. Projects that recently cost $500,000 now cost $750,000, he said. 'These people who say local government is flush with cash, look at the realities,' he said. 'Do we do a good job in trying to be as efficient with the taxpayer dollars as we can? Absolutely.' He said he's heard more from people opposing fluoride in the county's drinking water than from those wanting to do away with property taxes. Most residents, he said, understand their taxes pay for county services. Like most other local counties, Seminole has not raised its property tax rate in more than a decade; Orange has not raised its rate since 2006. But county and city budgets can balloon even if the tax rate stays the same, driven by land-value increases in non-residential properties and new homes and businesses that are added to the tax rolls. In Lake, for example, the county estimated that last year alone it saw $2.4 billion in new construction. Local officials could choose to lower their property tax rates when collections increase – but they rarely do. State law requires cities and counties to disclose the so-called rollback rate, or the property tax rate if the government would collect the same amount of money as the year prior. The Republican Party of Florida launched a campaign last week pushing for all counties to adopt that rollback rate. 'Local governments have reaped windfalls from rising property values for too long. Enough is enough,' party chairman Evan Power said in a news release. 'Every Florida county should adopt the rollback rate or lower the millage rate.' Statewide, legislative estimates show property taxes since 2020 have increased by $17 billion, nearly double the pace they had in the five years prior. Bill Hyde of Oviedo would like property tax relief. Hyde, 75, a retired Navy veteran, and his wife Hope paid off their 3-bedroom, 2-bath home about 25 years ago, but still write a check for taxes to the government, more every year. That frustrates him. 'A $200 or $300 increase might seem like a nothing bill to somebody who's working, but that's $200 or $300 less we have to buy food with,' he said. 'We're able to pay our taxes every year, but it's frustrating, you know…We have to live within our means, and the government should, too. As long as the money comes in, the government is going to spend it.' Hyde appeared alongside DeSantis in March when the governor pitched his idea of a $1,000 property tax rebate on homesteaded properties. In the governor's view that was just a short-term proposal until the tax could be abolished altogether. DeSantis' suggestions to date have not been embraced by Legislative leaders, however, and abolishing property taxes would require voter approval. House Speaker Daniel Perez, though he prefers lowering the state sales tax, put together a panel to study how property tax changes might work. The panel may consider adding new homestead exemptions and requiring every municipality to hold separate voter referendums on their property tax rates — or other ideas. Any cuts to property taxes are almost certain to require other taxes or fees to make up at least some of that lost revenue. Some economists have suggested Florida would need to double its sales tax to 12% if it abolished property taxes. 'What are we going to backstop this tax with that will help our cities?' said Rep. Dianne Hart, D-Tampa, on Friday during the first meeting of a House committee studying property taxes. 'How do we pay for our police and fire and all of the things we have to consider?' Local officials contend their increased property tax revenue covers higher costs, especially in construction, and the impact of new businesses and housing developments that need roads and other infrastructure. The arrival of more people to one of the nation's fastest growing regions also requires more services to accommodate them, particularly police and firefighters. For example, Orlando's spending plan this year included 34 new police positions, 29 new firefighters and 12 paramedics – as well as wage increases for its union employees. Like Orange, Seminole and Osceola counties, the city will also pay its share of operating expenses for SunRail for the first time. In recent years, Orange has spent $50 million on a training facility for its fire department, increased to $16 million funding to its affordable housing trust fund and increased its spending on homelessness initiatives by $10 million as the region grapples with a surge of unsheltered people. Osceola plans to spend about $910 million on infrastructure projects, including $628 million on roads and other transportation initiatives. Its tax collections were also bolstered by $2.5 billion in new construction. Esteban Leonardo Santis, who studied the issue for the Florida Policy Institute, said the policy debate seems to have shifted away from abolishing the tax, and toward providing more targeted relief. 'I think people are more cognizant that, like them or not, property taxes generate about $55 billion on aggregate for local governments,' he said. 'Without them, you would effectively be forcing some governments to make significant cuts.' Stephen Hudak of the Sentinel staff contributed. rygillespie@
