Good morning. It’s spending review day. After weeks of tense negotiations between ministers and the Treasury, Rachel Reeves is set to unveil exactly how the government will allocate the spending it announced in last year’s budget.
If you’re wondering what this actually means, Archie helpfully explained when the process began six months ago. In short: departments outline how they want to spend money over the next few years, then negotiate with the Treasury over how much they will actually get.
We already have a good idea of what will be in this spending review. The government has given the go-ahead to the Sizewell C nuclear plant; announced £15bn in transport spending across the north of England; expanded free school meals for all children whose parents receive universal credit; and unveiled a £4.7bn plan to build three new prisons.
We also know which ministers settled quickly and which were deeply unhappy. Angela Rayner, the deputy prime minister and housing secretary, won out after a fraught and drawn-out process to secure more funding for social housing, while the home secretary, Yvette Cooper, warned that the government would not meet its manifesto promises on crime. The energy secretary, Ed Miliband, was able to keep cash for a major programme of insulation, but it is unclear whether other schemes will be scaled back as a result.
After a troubled start in government, will this spending review give Labour the reset so desperately needed? I spoke to Jessica Elgot, the Guardian’s deputy political editor. But first, the headlines.
Five big stories
Israel-Gaza | The UK placed sanctions on two extreme-right Israeli ministers over their “monstrous” comments on Gaza. Itamar Ben-Gvir and Bezalel Smotrich will face travel bans and freezing of assets.
Austria | Ten people died and 12 were injured in a school shooting in Graz, Austria. The interior minister, Gerhard Karner, confirmed the 21-year-old suspect, who killed himself, was a former student at the school.
US | The city of Los Angeles is instituting a curfew in downtown on Tuesday night as tensions between the Trump administration and California escalate over immigration raids, as governor Gavin Newsom warns democracy “under assault”.
Health | Children are growing up “sedentary, scrolling and alone” because of a dramatic decline in play in their lives, say a panel of experts who have spent a year investigating play and childhood in England.
Michelle Mone | The high court will on Wednesday begin hearing the government’s multimillion-pound legal claim against the company awarded two personal protective equipment (PPE) contracts during the Covid pandemic after the Conservative peer Michelle Mone recommended it to ministers.
In depth: Is Britain decisively breaking from austerity?
The UK has not had a full three-year spending review since 2015 because of the political turmoils of Brexit and the pandemic. There is a hugely important number that the Treasury wants front and centre this time: £113bn of capital spending. This is money for infrastructure, building schools and hospitals, that was unlocked by the change in fiscal rules before the October budget, which allowed more borrowing for long-term investment.
“For most ordinary voters, all they see the government committing to is political pain: whether that’s winter fuel allowance or welfare cuts, the tough line that was taken at the budget and the spring statement,” Jessica explains. “On lots of different issues, people have heard that there’s a return to fiscal discipline, which is a phrase they associate with austerity. And every bit of polling tells you that people have just had enough of that.”
This spending review, therefore, is “some kind of recognition that while they can still be seen to be fiscally responsible to avoid a Liz Truss-style crisis, they do have to present a more positive vision. They have to try and get some political benefit.”
The way they will attempt to do this, she says, is by pointing out investing in infrastructure generates economic growth and a return on that money spent, unlike day-to-day departmental spending. So expect to hear a lot of ministers talk about “choosing investments over decline”.
Jessica goes further: “The Treasury has felt particularly aggrieved that they haven’t got credit for making this change in the fiscal rules and framing up this cash. You still get people saying they need to raise taxes and the grumpy retorts to that is ‘we raised £40bn worth of tax for the last budget and we changed the fiscal rules to pay for £100bn pounds of capital spending’. So this is them belatedly trying to claim credit for that in order to cover up what we expect to be a very tight spending review for departments on day-to-day spending.”
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Starting from scratch
The process for the spending review is brutal. Departments must justify their entire budgets from scratch, known as a zero‑based review approach, then negotiate with the Treasury.
Jessica adds that there is the idea during this process that departments deploy what is known as a “bleeding stump” strategy – where, for example, they tell the Treasury that they will have to stop providing an essential service, such as cancer treatments or free school meals, if there is no change to the budget. In 2011, then Conservative minister Eric Pickles had accused Labour councils of doing this in the midst of austerity.
Some ministers settled early with the Treasury, including the justice secretary, Shabana Mahmood, so she could announce her prison building programme. Wes Streeting’s department is also set to be one of the big winners of the spending review: it will lay the groundwork for the NHS’s 10-year plan. So is Angela Raynor, with the chancellor announcing nearly £40bn worth of grants to be spent over 10 years for local authorities, private developers and housing associations. Other holdouts, including the Department of Education, and Department for Environment, Food and Rural Affairs, settled recently with some decent wins.
“Some of the big beneficiaries are the defence industry. You will see capital spent on some schools and hospitals, actually slower than the ones the Tories promised, but Labour will say that that’s because the Tories didn’t have any money to fund things they committed to,” Jessica says. But, most importantly, “all of these things take time to filter through”.
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Will voters feel better off?
The multibillion-pound investment at Sizewell C on the Suffolk coast has been billed by the government as the biggest nuclear programme in a generation, and one that will “get Britain off the fossil fuel rollercoaster”.
Labour has also committed to big infrastructure projects in the north of England that should benefit populations there, but it will be a long while before those benefits are felt, Jessica says.
“That’s a problem in terms of political cycles about who gets credit for what. None of this stuff is going to be built before the next election. I think that Sizewell C isn’t going to be built until the end of the 2030s.”
The government would argue it is building infrastructure that demonstrates the UK is a good solid place to invest. People should therefore start feeling the benefits of a growing economy. “Your daily life should start getting less expensive, your wages should be rising, interest rates should be coming down, inflation should be coming down. That’s the theory,” Jessica says. “But you can see through the rise of Reform in the polls that people are frustrated they’re not feeling that effect quickly enough.”
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‘Big, visible benefits’
The partial U-turn on winter fuel allowance for pensioners and sluggish growth means Rachel Reeves has very little fiscal headroom for her day-to-day spending, Jessica explains. But though departments have had very tight settlements, the published accounts are not as bad as previously feared.
Are there any other surprises on welfare coming, particularly on disability benefits and child poverty? “I wouldn’t expect any announcements on that front,” Jessica says. “A lot of decisions have been deferred. On disability benefits, we’re expecting very difficult welfare cuts to come at the end of June.”
Labour MPs are being told that the major investments they are seeing in their constituencies are only possible because of these tough decisions, Jessica adds, with the Treasury framing it as “making hard choices so we can afford big, visible projects that benefit everyone”.
It is unclear if it will work. “Maybe they’ll be won over by that, but at the moment, not many of them are. That will be a very difficult moment.”
On child poverty, the imminent taskforce report is likely to strongly recommend lifting the two-child benefit cap. There are suggestions that the prime minister is open to it. But again, it belongs in a different category of policy decisions, separate from the spending review. “There’s lots of suggestions out there that the PM himself is minded to act on that. But again, that’s not a decision for tomorrow.”
What else we’ve been reading
Nadeine Asbali responds to the calls from Tory and Reform MPs to ban the burqa. She argues that the real issue isn’t what Muslim women wear, but how deeper societal issues are being ignored. Sundus Abdi, newsletters team
Gaby Hinsliff’s sharp critique of Sarah Vine’s memoir about life as a Westminster Wag may end up outshining the book itself. Aamna
Going away but worried your plants won’t survive the week without you? This week’s houseplant clinic covers hacks like using self-watering devices to avoid returning to a plant graveyard. Sundus
Okinawa, Japan’s subtropical island, witnessed the Pacific War’s bloodiest battle. This stunning piece of visual journalism follows one man’s relentless quest to recover the fragments of a forgotten history. Aamna
Bad Bunny, PinkPantheress and Bon Iver’s recent releases have all made the Guardian’s list of best albums of 2025 so far. Critics have also named Erika de Casier, Japanese Breakfast and many more. Sundus
Sport
Football | Thomas Tuchel insisted England should not panic over their World Cup prospects despite being humbled by Senegal one year and one day before the tournament starts. Tuchel suffered the first defeat of his reign at the City Ground and England their first loss to African opposition in 22 matches as Senegal ran out deserving 3-1 winners.
Cricket | Ben Duckett hit 84 off 46 balls in England’s 120-run opening stand as the hosts beat West Indies to wrap up their T20 series 3-0.
Football | Arsenal have announced that all of the club’s home Women’s Super League matches will be played at the Emirates Stadium next season. “I’m so proud of the journey we’ve been on with our supporters this season,” manager Renée Slegers said. “For us this is just the beginning, and bringing every WSL match to the Emirates is another step for more supporters to be part of this special journey.”
The front pages
“UK imposes sanctions on Israeli ministers for ‘inciting violence’” says the Guardian, and that’s on the front of the Times too, though the splash is “NHS ‘won’t hit targets’ even with extra £30bn”. Top story in the Mirror is “Social housing boost – £39bn new build” and we get more of an idea from the Financial Times: “Reeves puts £39bn affordable homes drive at heart of bid to ‘renew Britain’”. “Come on Rachel, now for family farm tax U-turn!” pleads the Express while the Mail says “Reeves rocked by jobs slump”. The Telegraph’s top story is “Rayner drops law on rough sleepers”. The grim news from Austria – “Revenge massacre at school” – covers the front page of the Metro.
Today in Focus
250 days on hunger strike: Can Laila Soueif secure her son’s freedom?
Who is Alaa Abd el-Fattah and why are British diplomats trying to obtain his release? Patrick Wintour reports
Cartoon of the day | Rebecca Hendin
The Upside
A bit of good news to remind you that the world’s not all bad
Just over two hours from Glasgow, a six-day hike on the Isle of Arran doubles as a journey through 500 million years of Earth’s history. Newly recognised as a Unesco Geopark, the island holds traces of rocks formed by ancient magma and cliffs shaped by tectonic plate shifts.
If you’re lucky, you might find yourself placing your hand in a 240-million-year-old footprint left by a reptile older than dinosaurs, like Stuart Kenny did. Kenny hikes the 65-mile Arran Coastal Way, and in his words: “I abandon the geological hunt altogether and stop to watch otters fishing.”
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Bored at work?
And finally, the Guardian’s puzzles are here to keep you entertained throughout the day. Until tomorrow.
