Early evening summary
Rachel Reeves has pledged to “renew Britain” with a spending review prioritising health, defence and more than £100bn for long-term capital projects, despite leaving some key areas facing a tough squeeze on funding. Here is Peter Walker’s summary of the key points in the statement.
Here is Jessica Elgot’s assessment of the winners and losers in cabinet.
Here is Heather Stewart’s analysis.
And here is an excerpt from Heather’’s article.
Wednesday’s statement … included significant investment in what Reeves called Labour choices: in particular, rekindling regional economies outside London and the south-east.
Not coincidentally, these include areas that could prove vulnerable to Reform UK. Her plans would “make working people in all parts of our country better off”, she claimed.
She hailed defence investment as a way of creating jobs and growth “in Aldermaston and Lincoln, in Portsmouth and Filton, on the Clyde and in Rosyth”.
There is a rationale behind this capital-heavy approach. Economists broadly agree that a key cause of the UK’s catastrophically weak productivity – the specialist subject of Reeves’s chief economic adviser, John Van Reenen - is low investment.
The US government has condemned the decision by the UK and four other countries to sanction two far-right Israeli ministers. (See 9.46am.)
For a full list of all the items covered here today, scroll through the key events timeline at the top of the blog.
Updated
This is from Ruth Curtice, chief executive of the Resolution Foundation thinktank.
As we crunch the numbers, it is basically clear that the winners are health and defence (and not much else). Of the real growth in spending over the next three years 90% of the increase in day to day spending goes to health; and for capital spending almost 4/5ths goes on defence.
Final go-ahead for Acorn carbon capture scheme in Scotland won't be given until development work finished, minister says
Severin Carrell is the Guardian’s Scotland editor.
There is scepticism about the significance of the chancellor’s pledge to fund the Acorn carbon capture scheme (CCS) in north-east Scotland (see 4.12pm), after ministers said they could not say how much money it involved.
Rachel Reeves said the Acorn scheme, which has been championed for more than a decade by Scottish National party politicians and oil companies, would be added to the group of CCS schemes getting UK government support.
Darren Jones, the chief secretary to the Treasury, told reporters in Scotland he did not have the specific figure to hand, but confirmed it was “development work” to first establish its feasibility and business case.
He also stressed that no decision would be taken on building the Acorn scheme for at least three years, in the next spending review. He said:
The important point here is that we are funding the development work that needs to be done in this spending review period to inform the overall spending commitment which will come in the next spending review period.
Because it just needs to do a little bit more development work first. This is a signal of the intent of the UK government to support that project.
Jones said they would see if a figure could be made available. However, Martin McCluskey, a well-connected Scottish Labour MP and government whip, said during a live BBC interview later that that figure was “commercially sensitive”.
In contrast to that uncertainty, the Treasury was able to list specific figures on Wednesday for a host of other projects it is now funding in Scotland.
Budget for police 'falls far short' of what is needed to fund government's ambitions, say police chiefs
A projected £1.2bn shortfall in police funding will continue to grow, leaving forces facing further cuts, police leaders have warned.
According to the Treasury, police spending will rise by 2.3% between 2023-24 and 2028-29. But Gavin Stephens, chair of the National Police Chiefs’ Council, said this would not be enough. He 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.
A decade of under-investment has left police forces selling buildings, borrowing money and raising local taxes to maintain what we already have, with forces facing a projected shortfall of £1.2bn over the next two years, which is now expected to rise.
This is against a backdrop of increasing crime rates, with new and escalating threats from organised crime and hostile states, and more offenders being managed in the community as a result of an overstretched criminal justice system.
Cutting crime isn’t just about officer numbers, we need specialist skills and people, supported with the right systems and technology, to better protect communities.
In an interview with GB News, Rachel Reeves, the chancellor, has repeated the point made by her deputy, Darren Jones, about the spending review not requiring tax rises. (See 4.30pm.)
But she did not rule out tax rises in the budget in the autumn.
Asked if she could rule out taxes going up again later this year, she replied:
Every penny of this is funded through the tax increases and the changes to the fiscal rules that we set out at last autumn.
We’re not spending a penny more or a penny less than the envelope that we set last autumn.
So all of this is fully funded. I said at the budget last year, and I repeated again in the spring statement in March, that public services now needed to live within the envelope that we have set.
That has meant difficult conversations, it has meant difficult decisions, but we’ve stuck to that spending envelope that we set out in the budget last year.
Updated
Wales still losing out under spending review, Plaid Cymru claims
And this is from Liz Saville Roberts, Plaid Cymru’s leader at Westminster. She describes the spending review as “smoke and mirrors” and claims Wales is still losing out.
The announcement of £44.5 million a year for Welsh rail over the next decade is Labour’s flimsy fig leaf to excuse the multi-billion-pound, multi-decade scandal that is the Welsh rail injustice. Today’s funding is only meaningful if it matches what Wales will continue to lose from HS2 and all other English rail projects in the future.
Labour hopes a few token projects will distract from deep cuts to vital services that hit the most vulnerable hardest, all while shifting the goalposts on Welsh funding. The unfair Barnett formula remains open to manipulation, just as the recent example of the Oxford-Cambridge line displayed, with the Treasury bizarrely claiming that a railway line in the south-east of England would benefit Wales.
For Wales, today’s statement was more smoke and mirrors. It’s time to deliver the fair funding Welsh communities desperately need and deserve.
Green party renews call for wealth tax, saying tough choices in budget are really Labour's political choices
The Green party has renewed its call for a wealth tax in response to the spending review. This is from Adrian Ramsay, its co-leader.
These ‘tough decisions’ are actually ‘Labour’s political choices’.
They are choosing to leave the economy tilted towards those with considerable wealth.
Our front-line services continue to deteriorate through a political choice of decline by design.
By introducing a wealth tax on the super-rich, we could instead properly invest in our children’s future.
We could give them the education they deserve and start now to invest in the climate resilience and preparedness they will need throughout their lives as the climate crisis unfolds.
Reform UK accuses Reeves of 'cratering' confidence in economy with spending review
Reform UK has accused Rachel Reeves of “cratering” the public mood with the spending review. This is from Richard Tice, its deputy leader.
The Chancellor is cratering public mood, economy and jobs.
— Richard Tice MP 🇬🇧 (@TiceRichard) June 11, 2025
Borrowing is soaring, debt costs are rising and wasteful spending is out of control.
Reform by contrast are already saving tens of millions in the councils we now run
Another reason we are leading in national polls pic.twitter.com/adBIJw9j62
Spending review treats Scotland 'as an afterthought', Scotland's SNP government says
Severin Carrell is the Guardian’s Scotland editor.
Rachel Reeves has been accused of “short-changing” Scotland by more than £1bn after the Scottish finance secretary said the chancellor’s financial settlement failed to account for the costs of welfare cuts and tax rises.
The chancellor said the three year funding deal for Scotland’s devolved government meant an annual average of £50.9bn a year, with a total funding uplift of £2.9bn, the highest real terms increase in the history of devolution.
Shona Robison, the Scottish finance secretary, said that while that was equivalent to a 0.8% increase in real terms, it failed to account for the heavy costs to Scotland’s large public sector of funding the rise in employers national insurance, or the costs of meeting increased welfare commitments.
Had it grown in line with increases for other departments, Scotland would have received a further £1.1bn, Robison said. She went on:
This spending review is business as usual from the UK government, which is yet again treating Scotland as an afterthought and failing to provide us with the funding we need.
In effect, Scotland has been short-changed by more than a billion pounds.
The settlement included politically-symbolic funding decisions such as £750m towards a new exascale super-computer at Edinburgh University – set to be the largest in the UK. Funding for that was cancelled by Labour last year because the previous Conservative government had failed to budget for it.
Alongside money for a green port in Inverness and Cromarty Firth, the Treasury has finally pledged development funding for the Acorn carbon capture project in north east Scotland, more than a decade after it was first proposed. Robison said it was odd that ministers had not spelt out how money was involved.
Darren Jones, the chief secretary to the Treasury, said that despite Robison’s complaints, Scotland’s funding was still 20% higher than the UK average. The UK government was also spending £250m upgrading the Clyde nuclear submarine base west of Glasgow, and a further £1.7bn in regional growth deals.
Cuts to Foreign Office budget 'alarming', says Emily Thornberry, chair of Commons foreign affairs committee
Emily Thornberry, the Labour chair of the foreign affairs committee, has said she is “deeply concerned” about the cuts to the Foreign Office’s budget. It is due to fall by 8.3% between 2025-26 and 2028-29. Thornberry said:
At a time when Britain is back on the world stage, and has never been more needed as a force for good, it is very concerning that the FCDO appears to be suffering the harshest real-terms cuts. We will be looking very closely at this to make sure that, once the already-announced ODA cuts have been accounted for, the Foreign Office is not suffering major further cutbacks.
The Foreign Office maintains a presence across the globe and does so with a budget that has been stretched thin over many years. I am deeply concerned about the strain that this spending review will place on the entirety of the department. Real-term cuts to the Foreign Office budget are alarming and inconsistent with the government’s objective to position the UK as a leader on the world stage.
School budgets in England to rise in real terms by just 0.9% per pupil per year, excluding free school meals, Treasury says
Richard Adams is the Guardian’s education editor.
Schools budgets in England will rise by just 0.9% each year between 2025 and 2028, the Treasury’s spending review documents reveal.
Rachel Reeves, the chancellor, said she was providing a “cash uplift” of more than £4.5bn for core school budgets by the end of the spending review period, which will be a real-terms increase of around 1.1% per pupil when including the recent extension of free school meals coverage.
The Treasury document states: “Excluding the funding which the government has provided for the expansion of free school meals, the core schools budget will grow by an average of 0.9% per pupil in real terms each year.”
The Institute for Fiscal Studies described the announcement as “a real-terms freeze” for school budgets but added that falling school rolls in England may allow a further rise in spending per pupil.
Reeves said the government will also spend around £2.4bn a year for the next four years on its school rebuilding programme, and £2.3bn a year by 2029-30 on repairs and improvements to school campuses. Overall the Department for Education will be expected to meet 5% savings and efficiencies target.
The government also announced that its plans for special educational needs reform would be delayed until the autumn.
Julia Harnden of the Association of School and College Leaders said:
Schools are already having to make significant cuts and the spending review announcements will not change that situation in the short-term and won’t be enough to reverse this situation in the longer term either.
This additional funding does not include colleges and sixth forms and we are particularly worried about the financial sustainability of this vital sector. We look forward to seeing the government’s strategy for post-16 education and skills later in the year. This sector is terribly underfunded and this must be addressed if sixth forms and colleges are to play a central role in this strategy.
Scottish secretary Ian Murray says he's 'surprised' as bus firm proposes 400 job cuts during Reeves' statement
Severin Carrell is the Guardian’s Scotland editor.
UK and Scottish ministers are scrabbling to save around 400 jobs at one of the UK’s largest electric bus manufacturers, Alexander Dennis, after its owners announced a consultation on the closure of two Scottish sites.
The company’s owners, NFI, said midway through the chancellor’s spending review statement at Westminster they wanted to consolidate all manufacturing to Scarborough because of the intense competition from Chinese electric bus makers.
The closures raise fresh questions about the UK’s transition to net zero, which the Chancellor prioritised in her statement. Alexander Dennis’ factories are in Falkirk and Larbert, close to Grangemouth oil refinery which has recently closed with the loss of 400 jobs.
Ian Murray, the Scottish secretary, said he was “a bit surprised” at the timing of NFI’s announcement given ministers in both governments were in talks about a deal to protect those jobs. He said that could include putting the workforce on furlough to “buy a little time”.
Murray blamed the Scottish government for failing to give the firm enough orders. Andy Burnham, the mayor of Manchester, had placed an order for 200 of its EV buses while the Scottish government had only bought 44.
Treasury minister says claims spending review will lead to tax rises in autumn 'incoherent'
Darren Jones, the chief secretary to the Treasury, has dismissed as “incoherent” claims that the spending review will lead to tax rises in the autumn.
Speaking on Sky News, he said:
It’s just such an incoherent argument, and let me tell you why.
This spending review is allocating the money that we have already raised at the budget last year and the spring statement. We are essentially dishing out the budget to the departments, and it is living within the budget settlement that the chancellor set.
If that’s the best argument that the oppositon has got, I think they need to go back and do some more homework.
Here is the clip.
"That is just such an incoherent argument."
— Sky News (@SkyNews) June 11, 2025
Darren Jones, the chief secretary to the Treasury, dismisses suggestions from the opposition that the government's spending review will require tax rises in the future.
Live: https://t.co/99mAeBetfi
📺 Sky 501, Virgin 602 and YouTube pic.twitter.com/P0XFayWYsA
Technically, Jones is right. There are no spending commitments being announced today that require the Treasury so find a new source of revenue (tax, or cuts elsewhere) – although we did have one on Monday, when the Treasury announced that it will restore winter fuel payments for most pensioners.
But the opposition – and thinktanks like the Institute for Fiscal Studies – are predicting tax rises not because they believe plans announced today are unfunded, but because they think that those commitments will turn out to be insufficient, and that political pressure will force the government to spend more on areas like the NHS (see 11.51am and 3.58pm), or to shelve welfare cuts that have already been pencilled in (see 12.14pm).
How Acorn and Viking projects will benefit from £9bn investment in carbon capture and storage
Jillian Ambrose is the Guardian’s energy correspondent.
Two major carbon capture projects will move ahead in Scotland and the Humber after Rachel Reeves committed to spend over £9bn to capture the emissions from heavy industry over the rest of the decade.
The latest projects to win the government’s approval include the Acorn carbon capture project near the St Fergus gas terminal in Aberdeenshire, and the Viking carbon capture project in the Humber region which is the UK’s most industrialised area.
The chancellor gave the greenlight to the projects as part of the government’s spending review which also includes plans to spend £14.2bn of taxpayer money on the Sizewell C nuclear power plant in Suffolk and £2.5bn on the UK’s first small modular reactors.
Although the Labour party has set ambitious goals for renewable energy to create a clean power system by 2030, its official advisers have warned that it will need to replace its aging nuclear plants in the 2030s and develop technologies to remove carbon emissions from factories and refineries if it hopes to meet its legally binding net zero target by 2050.
The Acorn carbon capture project is expected to pipe at least 5m tonnes of waste CO2 from refineries in central Scotland to St Fergus using redundant pipelines which previously carried North Sea gas towards the south of the country.
The Viking carbon capture project plans to use a 34-mile pipeline to take up to 15m tonnes of carbon a year from industrial sites on Humberside and lock it under the North Sea.
The projects are both backed by North Sea oil company Harbour Energy. It will develop the Viking project alongside oil giant BP, while the Acorn project will be developed by a consortium including Shell, Storegga and North Sea Midstream Parners.
Here are verdicts on the spending review from a Guardian panel, with contributions from Polly Toynbee, Kirsty Major, Sahil Dutta, Dhananjayan Sriskandarajah and Jonny Roberts.
Spending increases for health and defence 'substantial', says IFS, but some departments face outright cuts
The Institute for Fiscal Studies has published its initial response to the spending review, in the form of a statement from its outgoing director, Paul Johnson. He says health and defence are the biggest winners.
In pounds and pence, these two departmental behemoths – health and defence – were the big winners. But even here, one has to wonder whether this will be enough. Aiming to get back to meeting the NHS 18 week target for hospital waiting times within this parliament is enormously ambitious – an NHS funding settlement below the long-run average might not measure up. And on defence, it’s entirely possible that an increase in the NATO spending target will mean that maintaining defence spending at 2.6% of GDP no longer cuts the mustard.
Still, the funding increases for health and defence are substantial. The corollary, of course, is a less generous settlement elsewhere. 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.Some departments – like Environment, Food and Rural Affairs and Culture, Media and Sport – are facing outright budget cuts.
The Treasury says overall departmental spending is going up 2.3% in real terms. (See 1.35pm.) The IFS says that it is broadly flat. (See 2.06pm.) How can they both be right? Well, it depends whether you take this year (2025-26) as the baseline, or last year.
Johnson explains:
To make sense of today’s spending review, you need to understand what the government is calling Phase One and Phase Two. Phase One is last year and this year, 2024–25 and 2025–26. Phase Two starts next year, 2026–27, covers the rest of the parliament, and is the focus of today’s announcements. Take Phase One and Phase Two together, as the government does, and growth in government spending looks rather strong. Take Phase Two only and things look tighter.
The crux is that 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. Eight departments will actually see cuts to their budget between this year and the end of the parliament. This is not an austerity spending review, though much of the government’s largesse, such as it is, was focused on the first two years of the parliament.
Government will save £14bn by 2028-29 through efficiency measures, Treasury says
Rachel Reeves said in her speech that she was introducing efficiency savings to make government “leaner” and “more productive”. She did not give many details, but the Treasury has published a document saying how these will be achieved department by department.
It says:
The departmental delivery plans have identified total annual efficiency gains of almost £14bn by 2028-29, the final year of the SR [spending review] period, through a combination of improved outcomes and reduced cost. This exceeds the initial expectation of £12bn efficiencies by 2028-29, measured against 2025-26 planned day-to-day budgets. Most departments developed efficiency plans to deliver at least 3% efficiency gains by 2028-29, with some delivering over 8%. Those departments that have not yet developed plans to deliver 3% efficiencies by 2028- 29 will continue to identify opportunities over the coming period.
Transport, energy and HMRC are all promising efficiency savings of 8% or more.
Robert Peston, ITV’s political editor, is sceptical of these figures. He says:
Here is an extraordinary government claim. Of £13.8bn of efficiency savings it is promising each year by 2028/9, health and social care is promising to provide more than £9bn of them. Is that credible? The second biggest promiser of efficiency gains is defence
The Treasury says the Deparment of Health and Social Care will achieve savings of £9bn through its productivity plan and IT modernisation.
Millions of homes and businesses in rural areas at risk of being left behind in the digital revolution will have to wait until the next decade to get high speed broadband, after the government extended the timeline for spending its multi-billion pound budget to get them upgraded.
Four years ago the government launched the £5bn “Project Gigabit” to help get superfast broadband connections to homes and businesses located in rural areas, from the Scottish Highlands to the Welsh valleys, where providers have been reluctant to build faster networks because of high costs and low commercial returns.
Under the plan the target was to use the funding to connect five million homes and businesses by 2030.
So far the government has awarded contracts worth £3.1bn, to reach just 1.2m premises, with gigabit speed broadband available to 75% of UK properties.
Chancellor Rachel Reeves’s spending review has now pushed the timeline for spending the final £1.9bn to 2032, meaning many homes and businesses will now have to wait an extra two years to get the opportunity to connect to gigabit or full fibre speed broadband.
The government said that Building Digital UK (BDUK), which is delivering the £5bn investment programme, will focus on “achieving greater coverage in Scotland and Wales” and said it intends to “refresh” delivery plans ahead of the next spending review in 2027.
Last week, Clive Selley, the chief executive of Openreach, voiced concerns that the government might look to cut back on the £5bn commitment to cut costs.
Instead the government is maintaining its commitment but spreading out the annual financial commitment over two more years than originally planned.
Treasury review finds no 'conclusive evidence' its green book rulebook for spending is biased against north
In her speech Rachel Reeves said that she would revise the Treasury “green book” to encourage more investment in projects outside London and the south-east. The green book gives guidance to officials on how it should evaluate whether projects represent value for money, and it has long been accused of being biased against the north (on the grounds that a new train station on the edge of London will normally look like better value for money, in a green book terms, than a new train station on the edge of Newcastle, given the value of incomes and economic activity in both areas).
The Treasury has today published its review of the green book. It proposes changing it in various ways to improve it.
But the review also concluded that there is no conclusive evidence the green book is biased against the north.
It says:
Many stakeholders claimed that over-emphasis on BCRs [benefit-cost ratios] is not merely bad practice, but that it also directly introduces regional bias into decision making. Stakeholders contended that BCRs are higher in London and the south-east of England than elsewhere in the country, due to factors such as higher population densities and land values. The review has not found conclusive evidence that the green book appraisal methodology is biased towards certain regions, nor that BCRs are systematically greater for proposals in London and the south-east compared to elsewhere.
But it also says the rules could be more transparent.
However, the poor transparency around government business cases makes it difficult for HM Treasury to demonstrate that BCRs are not biased towards London and the south-east of England. It also makes it difficult to demonstrate that any such bias, should it exist, would not materially skew government spending decisions. This lack of transparency undermines confidence in government decision making.
Rachel Reeves referenced her own 2024 Mais Lecture today, when she told MPs that “the signs of our age of insecurity are everywhere”.
The Centre for Policy Studies (CPS), the right-leaning thinktank, argues that the chancellor is actually embedding the UK into the “age of insecuronomics”.
They, like NIESR earlier, predict that taxes will need to be raised higher.
CPS director Robert Colvile says:
‘Given the state of the public finances, we need politicians from all parties to be honest with the public about our situation – in particular, the cavernous imbalance between tax and spending, the ever-rising costs of an ageing population, and the hazards of relying on borrowing to fill the gap.
‘Sadly, the Chancellor today kept us on the same precarious path, with billions poured into an unreformed NHS at the expense of other public services and day-to-day and capital spending alarmingly frontloaded.
‘As a result of Labour’s choices in government, more tax increases are inevitable - not just in the Autumn Budget but for years to come.’
Reeves succeeds in not scaring the City
The financial markets have taken Rachel Reeves’s spending review firmly in their stride.
The yield, or interest rate, on UK government bonds (or gilts) held steady during the chancellor’s speech, showing that Britain has not suffered a Truss-style bond selloff today.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, says the chancellor’s spending plans have been greeted by “a calm reaction from financial markets,” adding:
Key to the Spending Review was not scaring away investors in UK government debt. The UK needs to keep them onside, to keep the costs of borrowing lower, as if the UK is seen as fiscally untrustworthy, gilt holders demand more bang for their buck to bankroll the nation. For now, it seems to have done the trick.
Hopes appear to be kept alive that the focus on infrastructure spending will provide the essential ingredient to boost growth, which could increase the tax take and relieve pressure on government finances ahead.
Gilt yields fell at 1.30pm UK time, just after Reeves’s speech, which will be welcomed by the Treasury as it lowers the cost of borrowing.
But that’s mainly due to the latest US inflation report, which has shown prices rose more slowly than expected across the Atlantic in May. That’s led to a wider rally in bonds, pushing down yields.
But, it’s worth noting that that yield on 30-year UK bonds, at 5.28%, is higher than after Liz Truss’s mini-budget statement fiasco, when they surged to 5%. The bond market panic in autumn 2022 was due to the rapid surge in borrowing costs, rather than the absolute level.
The British Business Bank is being deployed to give financial injections to start-ups and growing businesses, with its funding capacity set to rise by two thirds to £2.5bn per year, up from £1.5bn, as part of the spending review.
Most people will know the state-owned economic development bank for its work during the Covid outbreak, having administered support programmes to keep businesses from tipping over.
The BBB is now tasked with ramping up its support for growing firms, amid fears that companies are looking elsewhere - particularly to US investors - to scale up and become a global success.
But how the money will be used is TBC until the Department for Business and Trade publishes its industrial strategy at the end of the month.
At that point, we’ll know how much of that money will be used to take stakes in start-ups versus to give state-guarantees on loans, where the government promised to absorb some of a commercial bank’s losses if a company fails to repay (that’s meant to encourage lenders to take more risk on growing businesses).
We’ll also find out which sectors they’ll target and at what stage of growth they need to be to qualify.
The only other info we have is that the British Business Bank is set to be ‘working with’ the new UK Sovereign AI Unit “to support the emergence of national AI champions” - an ongoing obsession of prime minister Kier Starmer.
But ministers would be wise to call for careful scrutiny of those firms given prior controversies involving BBB programmes.
That includes the £47bn bounceback loan scheme, which saved small businesses across the country, but also became synonymous with fraud and mismanagement of taxpayer cash. It also managed former prime minister Rishi Sunak’s controversial Future Fund, which supported start-ups - including companies linked to his wife - during the pandemic.
Commenting on the new funding capacity, BBB’s CEO Louis Taylor said:
“[It] is a strong endorsement of the British Business Bank’s 10-year track record, market access and capabilities, including our position as the largest investor in UK venture and venture growth capital funds and the most active late-stage investor in UK life sciences and deeptech.
“To deliver the government’s growth mission it is critical that our most promising entrepreneurs can access the finance they need to grow their businesses, no matter what their background or where they are located.”
Spending review 'missed opportunity' because it does not address 'black hole for social care', say Lib Dems
Daisy Cooper, the Lib Dem deputy leader and Treasury spokesperson, has said the spending review is a “missed opportunity” because it does not address social care. She said:
This spending review was a missed opportunity to repair the damage done by the Conservatives and finally deliver on the promise of change.
Behind the smoke and mirrors is a potential black hole for social care as local government budgets remain at breaking point. Putting more money into the NHS without fixing social care is like pouring water into a leaky bucket.
The chancellor must also raise her ambition for the country and boost growth through a much closer trade deal with the EU. That’s the best way to improve people’s living standards and unlock billions of pounds more for our public services.
Treasury claims only wealthiest 10% have lost out from Reeves' decisions, with poorest gaining most in relative terms
Only the wealthiest 10% have lost out from the Labour government’s decisions on tax, benefits and public spending, the Treasury says. And, proportionately, the poorest have gained the most, it says.
The Treasury has published a distributional impact analysis and it includes these two charts, estimating the impact on households, by income, of government decisions relating to tax, welfare and public services. (The ‘benefits-in-kind’ calculation tries to capture the extent to which if, for example, education spending goes up, families with children at school benefit.)
The Treasury says:
On average, households in the lowest income deciles in 2028-29 will benefit the most from policy decisions as a percentage of net income and increases in tax will be concentrated on the highest income households. On average, all but the richest 10% of households will benefit as a percentage of income from policy decisions in 2028-29.
Here is the chart showing the impact as a proportion of income.
And here is the chart showing the impact in cash terms.
Thinktanks also produce their own charts showing distributional impact analysis, and they might produce different results. That might be because they ignore the impact of public spending decisions, and just focus on tax and welfare changes.
Updated
Paul Johnson, the outgoing head of the Institute for Fiscal Studies, is not impressed by today’s spending review.
Posting on X, Johnson warns that the spending plans are not as generous as a listener might think, saying:
Not sure I’ve ever listened to a chancellorial speech so hard to work out what is happening. Rattling off huge number of figures making it look like big increases in spending on everything.
Bear in mind current spending on average on all other than NHS not rising over SR period.
Exactly. https://t.co/sKDxDfAHN9
— Paul Johnson (@PJTheEconomist) June 11, 2025
Sadiq Khan says it is 'disappointing' spending review does not fund infrastructure London needs
Earlier this week Sadiq Khan, the Labour mayor of London, let it be known he was unhappy about the spending review.
He has now issued a statement confirming his concerns on the record. He says:
I‘ve been determined to stand up for London and it’s good news that we have won extra resources for transport and housing. I have been campaigning for years for a multi-year deal for City Hall and for Transport for London and I welcome this agreement.
However, I remain concerned that this spending review could result in insufficient funding for the Met and fewer police officers. It’s also disappointing that there is no commitment today from the Treasury to invest in the new infrastructure London needs. Projects such as extending the Docklands Light Railway not only deliver economic growth across the country, but also tens of thousands of new affordable homes and jobs for Londoners. Unless the government invests in infrastructure like this in our capital, we will not be able to build the numbers of new affordable homes Londoners need.
How spending is going up or down, department by department, up to 2028-29 - in cash terms
Although the Department for Energy Security and Net Zero has got the biggest funding increase in percentage terms (see 1.35pm), health has got the biggest increase – by far – in cash terms. That is because it is a far bigger spending department. This chart from the spending review document illustrates this.
Interestingly, the Treasury has decided in this chart to separate police spending (up 2.3%) from other Home Office spending (down 4.5%).
Alert readers may notice that the spending review document says health spending is going up 2.8%, while Rachel Reeves used the figure 3% in her speech to MPs. (See 1.17pm.)
That is because Reeves was talking specifically about NHS spending. The Department of Health and Social Care spends most of its money on the NHS, but it also funds some other health-related spending, and these bits of the budget are not getting 3%, which brings down the overall figure.
How spending is going up or down, department by department, up to 2028-29
Here is the table from the main spending review document (on pages 44 and 45) showing the spending figures for the spending review period, department by department.
It shows that, if you look at growth between 2023-24 and 2028-29 as the metric for success, Ed Miliband, the energy secretary, is the real winner. His department’s spending is going up 16%.
The Treasury has revealed the 25 “trailblazer neighbourhoods” who will receive long-term investment through a new fund announced in the spending review.
They will receive up to £20m each. The Treasury says:
This investment will support communities to drive forward the changes they want to see in their neighbourhoods. It will support improvements people can see on their doorstep, champion local leadership, foster community engagement and strengthen social cohesion.
Here’s the list:
Orchard Park, Kingston upon Hull,
Little Layton and Little Carleton, Blackpool
Brinnington, Stockport
Bentilee and Ubberley, Stoke-on-Trent
Speke East, Liverpool
Thorntree, Middlesbrough
Batemoor and Jordanthorpe, Sheffield
Hartcliffe, Bristol,
Benchill South and Wythenshawe Central, Manchester
Warndon West, Worcester
Birkenhead Central, Wirral
Middleton Park Avenue, Leeds
Penhill, Swindon
Parkwood and Senacre, Maidstone
Walker North, Newcastle upon Tyne
Bootle South, Sefton
Pendleton, Salford
Birchwood West, Lincoln
Central Stockton and Portrack, Stockton-on-Tees
Barrow Central, Westmorland and Furness
In addition, the five trailblazers in Scotland, Wales and Northern Ireland will be a neighbourhood in each of the following:
Glasgow
Fife
Swansea
Cardiff
Belfast
Treasury publishes spending review documents
The Treasury has now published all its spending review documents.
They are here.
Tories accuses Reeves of announcing 'spend now, tax later' spending review
Mel Stride, the shadow chancellor, is responding on behalf of the Tories.
He starts by saying the spending review is not worth the paper it is written on.
It is a “spend now, tax later” review, he says.
He says Reeves has “completely lost control”.
He says people face a cruel summer waiting to see where taxes will go up.
UPDATE: Stride said:
This spending review is not worth the paper that it is written on, because the chancellor has completely lost control.
This is the spend now, tax later review, because [Reeves] knows she will need to come back here in the autumn with yet more taxes and a cruel summer of speculation awaits. How can we possibly take this chancellor seriously after the chaos of the last 12 months …
These spending plans are a fantasy, and is it not the truth that the chancellor has to maintain this fiction because she has left herself no room for manoeuvre?
She is constantly teetering on the edge of blowing her fiscal rules, which she already changed to allow even more borrowing.
And the only way she can claim to be meeting her rules is by pretending that she can control spending over the coming years.
Updated
Autumn tax rises 'almost inevitable', warns NIESR
Rachel Reeves’s announcement has all been about explaining how money will be spent, rather than how it will be raised (it’s not a budget).
But looking ahead, the National Institute of Economic and Social Research suspects the chancellor may be forced to raise taxes at the next fiscal event, in the autumn, to keep within her borrowing rules.
Stephen Millard, NIESR interim director, explains:
“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.”
Reeves is now wrapping up.
I have made my choices. In place of chaos, I choose stability. In place of decline, I choose investments. In place of pessimism, division and defeatism, I choose national renewal. These are my choices, these are Labour choices, these are the choices of the British people, and I commend this statement to the house.
Reeves says NHS spending to increase by 3% a year
Reeves says the government will soon publish its 10-year plan for NHS renewal.
To back that plan, she can announce she is making a record cash investment, in the NHS, increasing spending by 3% a year in real terms for every year of the spending review.
That is more than the 2.8% real terms increase that was expected.
Reeves says “finally” she is addressing the NHS.
A strong economy relies on a strong NHS.
But not as the Reform party have called for, an insurance model, she says.
She says Nigel Farage should spend less time in the Westminster Arms. Although, after this week, the Two Chairmen (another Westminster pub – the one favoured by Treasury officials) might be more appropriate, she jokes.
Reeves says the government will continue to rollout breakfast clubs.
She will spend £370m on school-based nurseries, she says.
And there will be £550m of transformation funding during the review period so children do not go into care if that is not needed.
And £130m from the dormant assets fund will be for arts events for underprivileged children at school.
Overall, the schools budget is going up by £4.5bn a year, she says.
Reeves says spending review includes efficiency savings
Reeves says this spending review was as line by line review. The Tories did not do one like this, she says.
And it means she has found savings, she says.
I have found savings from the closure and sale of government buildings and land, cutting back office costs and reducing consultancy spend – all which the previous government failed to do, reforms that will make public services more efficient, more productive and more focused on the user. I have been relentless in driving out inefficiencies.
Reeves does not give a figure for how much has been saved.
Reeves says the warm homes plan is being expanded.
Millions of homes will be improved, she says.
Reeves says police funding will rise by 2.3% in real terms
Reeves says she is paying for more prison places.
And she says police spending power will increase by an average 2.3% in real terms.
This will fund the 13,000 extra police officer promised, she says.
Reeves says she is establishing a growth mission fund. This will fund local project. She gives examples.
We will establish a growth mission fund to expedite local projects that are important for growth projects, projects like Southport pier, an iconic symbol of coastal heritage, which has stood empty since 2022, Kirkaldy’s seafood, seafront and high street, where investment would create jobs and new business opportunities and plans for Peterborough new sports quarter to drive activity and community cohesion.
She says 350 communities will get funding.
Housebuilder shares cheered by affordable housing pledge
Rachel Reeves’s pledge to almost double the grants to support affordable housing to £39bn over the next decade has lifted shares in UK housebuilders today.
Barratt Redrow (+1.7%), Persimmon (+1.66%), and Berkeley (+1%) are all among the top rises on the FTSE 100 share index today in the City.
Smaller rival Vistry, which is focused on affordable housing, are up over 8%.
Rachel Reeves confirms almost doubling of spending on affordable housing to £39bn over next decade. All the detail in story by @kiranstacey here 👇🏼 https://t.co/2bboKeTG2d
— Pippa Crerar (@PippaCrerar) June 11, 2025
The construction sector are hopeful that the spending boost will lift housebuilding (as well as trickling down into housebuilders’ profits).
Richard Beresford, chief executive of the National Federation of Builders (NFB), says:
“Rachel Reeves is backing up her planning reforms with the funding required to build the social and affordable homes the nation so desperately needs.
This is a significant step in the right direction and demonstrates that both the Prime Minister and Chancellor have a long-term plan to fix the housing crisis and are not afraid to share the limelight for the good of the nation.”
Reeves says she is allocating £118m over several years to keep coal tips safe in Wales.
Reeves confirms Treasury green book rules to be changed to allow more investment in regions
Reeves says today she is publishing the outcome of the review of the Treasury’s green book, the document setting out the rules that decide how the government funds investment.
She says this will ensure the rules do not work against investment in the regions.
Reeves says in the coming weeks she will be setting out plans for Northern Powerhouse rail.
She is also allocating £2.5bn for the continuing development of East-West rail.
She also announces the extra £445m for rail in Wales. (See 10.17am.)
Reeves say Transport for London to get four-year funding settlement
Reeves says Transport for London will get a four-year settlement, to provide it with certainty.
And there will be a four-fold increase in local transport grants in other parts of the country, she says.
Reeves turns to social housing.
She says she can announce the biggest cash injection into social and affordable housing in 50 years. This includes money for social rent.
She says she has changed rules to allow more investment infrastructure. She is allowing £10bn for financial investments, including by Homes England, to crowd in private investment.
Reeves says young people need skills to succeed.
Too often ambition is stiffled, she says.
She says she is providing £1.2bn by the end of the spending review for training and upskilling.
On skills, she says we should all recognise Kemi Badenoch’s commitment to lifelong learning.
That is a joke about Badenoch saying she is getting better at PMQs.
Reeves says business people want the chance to innovate, access to finance, and a deep pool of talent.
On innovation, she says she wants high-tech industries to continue to lead the world.
R&D funding will rise to a record high of £22bn by the end of the spending review, she says.
And she says there will be £2bn for an AI action plan.
Raising UK defence spending by 2.6% of GDP by April 2027, as Reeves just outlined, will provide an extra £11bn increase, plus £600m for security and intelligence agencies.
But it will probably not satisfy demands from Nato.
The alliance’s leader, Mark Rutte, is pushing members to boost defence spending to 3.5% of GDP and commit a further 1.5% to broader security-related spending.
In January, US president Donald Trump declared he would ask all NATO nations to increase defense spending to 5% of GDP.
Reeves says the government was not willing to allow Scunthorpe lose its steel factory. She is proud of that, she says.
And she says Heathrow airport has signed the steel charter, so the third runway will be built with British steel.
And travel infrastructure spending will also generate orders for British steel, she says.
She says “things built to last, things built here in Britain” is her choice.
Reeves backs two new carbon capture and storage projects, Acorn in Scotland and Viking in Humberside
Reeves says funding for two carbon capture and storage plants were announced last year.
And today she can announce that the government will back the Acorn carbon capture and storage project in Scotland, and the Viking project in Humberside.
Updated
Reeves says the government is also investing £2.5bn in nuclear fusion.
Reeves says where things are made matters. That is what she means by securonomics.
Energy security is national security, she says.
So the government is investing in the biggest rollout of nuclear power for 50 years.
She refers to yesterday’s Sizewell C announcement. And there is £2.5bn for a small modular reaction programme, with Rolls-Royce as the preferred partner.
Updated
Reeves says use of hotels for asylum seekers will end 'in this parliament'
Reeves says the Tories lost control of the border.
She says last year she set aside £150m for Border Security Command. This will increase by up to £280m a year, she says.
And she says the government is tackling the asylum backlog.
The government will end the use of hotel for asylum seekers “in this parliament”.
She says this will save the taxpayer £1bn a year.
Reeves says the govermment is making investments in Scotland opposed by the SNP.
Defence spending is support jobs across the UK, she says. The government will make the UK “a defence industrial superpower”.
Reeves attacks Tories and Reform UK, saying Reform have made unfunded spending commitments worth £80bn
Reeves says the Tories crashed the economy because they wanted to cut taxes for the rich. She will never do that, she says.
And she says Reform UK would do the same thing.
But Nigel Farage described the Liz Truss budget as “the best Conservative budget since the 1980s”.
And she says Reform have alread racked up unfunded spending commitments worth £80bn since the election.
Updated
Reeves says her first rule is that day to day spending must be paid for from tax receipts.
She says she can allocate £190bn more for day to day services than the Tories were planning.
Her second rule is that debt must fall over the long term. This allows £113bn more for investment.
The opposition parties opposed these plans, she says.
Reeves says she is allocating the spending envelope set out in the spring.
She says total departmental budgets will grow by 2.3% in real terms.
But the Tories cut budgets by 2.9% in 2010, she says.
They left a legacy of a decade of lost growth.
She says her choices are different. And they are only possible because of her commitment to stablity.
The Tory fiscal rules guaranteed neither stability nor investment.
Reeves says the government is renewing Britain.
But too many people don’t feel it, she says.
She wants to ensure people do feel that renewal.
Her priorities are those of working people.
Rachel Reeves delivers statement on spending review
Rachel Reeves is speaking now.
My driving purpose since I became chancellor is to make working people in all parts of our country better off, to rebuild our schools and our hospitals, to invest in our economy so that everyone has the opportunity to succeed after 14 years of mismanagement and decline by the party opposite.
Joani Reid (Lab) asks about the Labour win in the Hamilton byelection. She asks about the report about John Swinney facing a leadership challenge. (See 11.24am.) Does the PM agree that, given Swinney’s record against Labour, he should stay.
Starmer says the Scots want real change.
Darren Paffey (Lab) asks what the government is doing to limit the access children have to social media and the internet.
Starmer says the Online Safety Act will protect children, and the government “will not hesitate” to take further action if necessary, he says.
Sarah Bool (Con) asks about screening for type 1 diabetes.
Starmer says his mother had diabetes. He says there is a screening programme. But he praises Bool for campaigning on this.
Chris Webb (Lab) asks the government to invest more in social housing.
Starmer says this is happening. The National Housing Association has called the housing settlement transformative, he says.
Claire Young (Lib Dem) says it is outrageous that parents are punished when special needs children miss school.
Starmer says SEND pupils face more complex needs. He says the government will consider the Lib Dem amendment to the schools bill mentioned by Young that would stop these parents being punished. But the government must “strike the right balance”, he says.
Yasmin Qureshi (Lab) says the UK acted to stop mass killing in Kosovo. Why is Gaza different?
Starmer says the government acted yesterday. The humanitarian situation is dreadful, he says. Israel’s plan to deliver aid into Gaza is insufficient. He says the UK is working with allies to get aid in.
Sorcha Eastwood (Alliance) condemns the violence in Ballymena and asks the government to introduce a duty of candour bill.
Starmer echoes what Eastwood says about Ballymena. And he says the government will introduce a duty of candour.
Starmer says there is 'no easy answer' to finding way of seizing frozen Russian assets to support Ukraine
Ed Davey, the Lib Dem leader, welcomes the sanctioning of the two Israeli ministers.
He asks for an assurance that social carers and family carers will be prioritised in the spending review.
Starmer says social care does need to be fixed. But he says Davey cannot welcome extra funding while opposing the policies that fund it.
Davey says better and fairer funding models are available.
There are £25bn of frozen Russian assets in the UK, he says. At the G7 will the PM seek agreement to seize them and use them to support Ukraine.
Starmer says he is talking to allies about this. But it is complicated. He goes on:
But I don’t want to pretend to the house that there’s an easy answer on this, because there isn’t.
Richard Burgon (Lab) says he cannot support the proposed welfare cuts. Will the PM drop those?
Starmer says the welfare system needs reform. The government will protect those with the most severe disabilities, he says.
Badenoch says people have lost their jobs because of the bad choices made by Rachel Reeves.
Starmer says the wrong choice the Tories made was making Badenoch leader of the opposition.
Badenoch says Starmer did not rule out tax rises. They are going to go up.
She asks why the government should pay for tax cuts in Mauritius.
Starmer says Diego Garcia is a vital asset. It needs legal certainty. That is why the Tories started negotiations on a deal, he says.
He says the UK’s allies have backed the deal, and countries like Russia and Iran are opposed. And the Tories and Reform UK are in that category too, he says.
Badenoch says she is getting better every week.
That provokes a lot of Labour jeering. The Speaker tells them to be quiet, saying shouting down Badenoch is not a good look.
She asks if Starmer will admit that taxes will go up.
Starmer says, in her interview with Matt Forde this week for his podcast, Badenoch said she rehearses her fury ahead of PMQs.
He says the Tories have not said whether or not they will back Labour’s investment.
Badenoch says Starmer loves talking about Truss because he does not want to talk about his record.
She asks him to admit he made a mistake cutting the winter fuel payment.
Starmer says the Tories left a black hole. He says he is pleased he has given pensioners the assurance they need. He is happy to talk about his record, he says.
He says Badenoch said recently she was getting better at PMQs. She should apologise for the Truss budget, he says.
Badenoch says unemployment has increased every month Labour has been in power.
And the deficit is forecast to be higher than it was when the budget took place.
Starmer says Badenoch has missed interest rate cuts, the strategic defence review, local transport, free school meals, sizewell, and social housing.
She says the spirit of Liz Truss lives in the Conservative party.
Badenoch starts by saying there is only one hospital in her constituency.
She asks why Starmer says the economy is improving.
Starmer says she is talking the economy down.
UPDATE: Badenoch said:
Since Labour took office, inflation has nearly doubled, growth has halved and unemployment has surged. Is this what the prime minister meant when he tweeted that the economy is improving?
And Starmer replied:
Since the general election 500,000 more people are in work. I know that she doesn’t mention that, she’s fixated on talking Britain down.
We’re investing in the future. Even in the last two weeks the strategic defence review, 30,000 new jobs building submarines, yesterday the Sizewell announcement 10,000 new jobs, tens of thousands of construction jobs building the social and affordable housing that was announced this morning.
That’s the difference that Labour makes in government.
Updated
Simon Opher (Lab) says waiting lists are falling in Gloucestershire. He says he recently chaired a meeting advocating comedy on prescription, as a means of dealing with mental health. Will the PM back this?
Starmer says the government is investing more in the NHS. And two hospitals in Kemi Badenoch’s constituency are getting new scanners, he says.
Ann Davies (Plaid Cymru) asks about the murder of a constituent. She asks if the government will legislate to make desecrating a body an offence.
Starmer says this is a horrific case. He pays tribue to those campaigning on this, and says a justice minister will look at this.
Keir Starmer starts PMQs by wishing Lindsay Hoyle, the Speaker, a happy birthday for yesterday.
He commends carers, given it is carers week.
And he says this week marks the eight anniversary of the Grenfell Tower tragedy.
He also mentions the sanctioning of the two extremist Israeli ministers.
Keir Starmer told cabinet this morning today’s spending review “marks the end of the first phase of this government, as we move to a new phase that delivers on the promise of change for working people all around the country and invests in Britain’s renewal”, a No 10 spokesperson said.
Starmer faces Badenoch at PMQs
Here is the list of MPs down to ask a question at PMQs.
Internal modelling says NHS on course to miss hospital operations waiting time target, report says
Health is set to be one of the biggest winners from the spending review. But today the Times is running a story saying that even with extra money, the NHS is not set to meet a key performance target. In their story, Chris Smyth and Steven Swinford report:
Starmer’s central promise on the NHS is to hit a routine operations target of treating 92 per cent of patients within 18 weeks, a goal that has not been met for a decade.
But The Times understands that internal Department of Health modelling shows that the NHS is on course to hit only about 80 per cent by the end of the parliament. Officials say the figures can only come close to 92 per cent by using “implausible” and “over-optimistic” assumptions.
The NHS is expected to get a 2.8% real terms increase. But the Times quotes Matthew Taylor, chief executive of the NHS Confedertion as saying:
There are fears that this uplift will not be enough to achieve all the government’s manifesto pledges, including hitting the stretching 92 per cent 18 weeks elective waiting time target by March 2029.
Currently, only around 60% of routine operations take place within 18 weeks.
Rachel Reeves, the chancellor, has left Downing Street for the Commons.
Keir Starmer has been tweeting about the spending review this morning. Here are his messages.
My government was elected on a mandate for change.
Our first job was to stabilise the economy and public finances.
Now, we move into a new chapter to deliver on our promise of change.
We’re investing in Britain’s renewal, so you and your family are better off.
I am determined to make the dream of homeownership a reality.
We are fixing the housing crisis with the biggest boost to affordable housing in a generation – to build the 1.5 million new homes this country needs.
Green party MPs and activists joined a protest outside parliament today saying the government should use the spending review to announce a wealth tax. In a post on social media, Adrian Ramsay, the party’s co-leader, said:
We expect the chancellor to take another axe to public spending today: decline by design from a govt that refuses to tax wealth to properly fund our overstretched public services & support the most vulnerable. We need to invest in a secure & fairer future. #TaxExtremeWealth
UPDATE: The caption has been changed because originally Maskell was wrongly identified as a Green MP.
Updated
At Westminster it is assumed that Kemi Badenoch is the party leader most likely to lose her job. But today the Herald is running a story by Andrew Learmonth, its political editor, saying some senior SNP figures would like to replace John Swinney, Scotland’s first minister. Learmonth says:
Senior SNP figures held a secret meeting on Monday night to discuss removing John Swinney as party leader, The Herald has learned, following last week’s defeat in the Hamilton, Larkhall and Stonehouse byelection.
One of the 25 attendees said the first minister had two weeks to come up with a new strategy on independence — or risk facing a leadership challenge at the SNP conference in October.
UN human rights panel criticises Chagos Islands deal, as Mauritius says it will cut taxes with money from UK
We’ve got PMQs before the spending review, and there is a good chance that Kemi Badenoch will ask Keir Starmer about the Chagos Islands. There are two stories around this morning she could use.
Mauritius has said that it is using the revenue it is getting from the UK under the Chagos Islands deal to cut taxes and reduce the national debt. Under the sovereignty transfer agreement, the UK will pay Mauritius £90m a year to rent Diego Garcia, the site of a major military base, for another 99 years. As Tony Diver reports in the Telegraph, Mauritians have been told they will benefit directly.
Navin Ramgoolam, the Mauritian prime minister, has now announced that the money paid by the UK will help Mauritius cut taxes, so that 81 per cent of people in the African island nation will not pay any income tax …
The Mauritian reforms were announced in a budget speech by Mr Ramgoolam on Wednesday, when he said that the UK’s Chagos payments for the next three years would be used to help pay off the country’s national debt, which has reached 90 per cent of GDP.
He said that to reach a long-term debt level of 60 per cent, the government would adjust “both the expenditure side and the revenue side of the budget”, and raise the minimum salary before an employee pays income tax to £1,774 a year.
The Conservatives are opposed to the deal, and now they can argue that Keir Starmer is cutting taxes for people in Mauritius but not in the UK. (The population of Mauritius is just over one million, and so £90m a year goes a lot further there than here.)
A panel of experts appointed by the UN Human Rights Council has criticised the deal on the grounds that it does not fully respect the rights of Chagossians. In their statement, they say:
By maintaining a foreign military presence of the United Kingdom and the United States on Diego Garcia and preventing the Chagossian people from returning to Diego Garcia, the agreement appears to be at variance with the Chagossians’ right to return, which also hinders their ability to exercise their cultural rights in accessing their ancestral lands from which they were expelled.
The Conservatives are not always minded to side with foreign human rights experts criticising the UK government, but on this occasion they have. Priti Patel, the shadow foreign secretary, said:
We have been warning from the start that this deal is bad for British taxpayers and bad for the Chagossian people.
Now even the United Nations is saying the very same.
Labour has completely ignored this community from the get-go, and failed to consult with them at every step of the way.
Shelter welcomes extra funding in spending review as 'watershed moment' for housing emergency
Shelter, the housing charity, has warmly welcomed the overnight announcement that the spending review will include £39bn for affordable housing. Mairi MacRae, director of campaigns and policy at the charity, said:
This increased investment is a watershed moment in tackling the housing emergency. It’s a huge opportunity to reverse decades of neglect and start a bold new chapter for housing in this country. 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. The result has been record homelessness, and families, young people, and key workers priced out of their communities.
Social homes are the only genuinely affordable homes by design with rents tied to local incomes and around two thirds lower than private rents. They keep communities together, save public money and provide the stability people need to thrive. To ensure this funding tackles homelessness at its root, the government must now set a target for how many social rent homes it will deliver through this programme.
But Ruth Curtice, chief executive of the Resolution Foundation thinktank, is sceptical. She posted this on Bluesky.
News this morning dominated by money for affordable housing. The TOTAL funding of £39bn over ten years is being completed to the EXTRA capital investment by this government over five years. I’m reserving judgement on whether housing is a winner until we see more detail.
Lib Dems call for £2 bus fare cap in England to be restored
One of the more popular decisions taken by the last Conservative government was capping bus fares in England at £2. The policy was introduced at the start of 2023, but the government did not commit to funding it permanently and it was only due to last until the end of 2024.
When Labour came to office, it said that a new £3 cap would apply – but just until the end of 2025.
Last night LBC reported that this will be extended at least until March 2027.
The Liberal Democrats say the cap should be restored to £2. Paul Kohler, the Lib Dem transport spokesperson, said:
Household budgets are still really feeling the squeeze, so many will be really disappointed to see that the government is moving to make the bus fare hike permanent.
This will hit those who rely on public transport to get around to their local high street or to work and school in the pocket. People have been telling them they got this wrong, but Labour clearly isn’t listening.
Meanwhile, vital local bus services are in a death spiral, with rural communities particularly badly hit as routes are slashed. The government should be heeding Liberal Democrat calls to scrap the bus tax and bring the cap back to its previous level.
In Wales politcians from almost all parties have been complaining for years about the UK government’s decision to categorise HS2 as a project for England and Wales, even though the line does not go through Wales at all. Treating it as a project that nevertheless benefit Wales means Wales does not get equivalent money for its own infrastructure, under the Barnett formula.
According to a report by ITV Cymru, Wales will get £445m for rail in the spending review. ITV quotes a Welsh Labour source as saying:
This investment is more than Wales would have had so far had HS2 been Barnettised. It will make a massive difference economically and politically.
Updated
Reeves and Cooper says Border Security Command to get funding boost worth up to £280m a year by 2029
Yvette Cooper, the home secretary, was the last minister to settle in the spending review negotiatons and there have been reports that her talks with Rachel Reeves, the chancellor, got acrimonious. The police have claimed the financial settlement they have been offered is not high enough.
But Cooper and Reeves have put on a united front in the Sun, where they have both put their names to a joint article saying there will be a significant increase in spending on border security. They say:
We need to go much further and faster to get one step ahead of the tactics used by small boat gangs.
That is why we will boost investment to secure our borders, with up to £280m per year in the Border Security Command by 2028/29.
With this funding we will invest in new specialist investigators, new technology and cutting-edge surveillance equipment to disrupt and destroy this criminality.
The Sun says £580m is being spent over three years on border security, with some of the money funding drones to monitor small boats in the Channel.
Trump administration condemns decision by UK and others to sanction far-right Israeli ministers
The US government has condemned the decision by the UK and four other countries to sanction two far-right Israeli ministers.
In a post on X, Marco Rubio, the US secretary of state, said:
The United States condemns the sanctions imposed by the governments of United Kingdom, Canada, Norway, New Zealand, and Australia on two sitting members of the Israeli cabinet. These sanctions do not advance U.S.-led efforts to achieve a ceasefire, bring all hostages home, and end the war.
We reject any notion of equivalence: Hamas is a terrorist organization that committed unspeakable atrocities, continues to hold innocent civilians hostage, and prevents the people of Gaza from living in peace.
We remind our partners not to forget who the real enemy is. The United States urges the reversal of the sanctions and stands shoulder-to-shoulder with Israel.
This is a rare example of the Trump administration and the UK government disagreeing publicly over an issue. While the two governments are worlds apart politically, Keir Starmer has invested a lot of time in trying to develop a good relationship with Donald Trump and he has been reluctant to criticise almost anything the Trump regime has done, arguing that getting on with the White House is in the national interest.
Five charts that explain background to spending review decisions
When it comes to the public finances, graphs normally explain far better than words. Richard Partington has five charts explaining the context for the choices Rachel Reeves is making.
Good morning. The government plans to be spending almost £1.4tn in 2026-27, rising to almost £1.5tr in 2028-29. Those annual limits are already agreed. Today, when Rachel Reeves, the chancellor, stands up at 12.30pm to present the spending review, she will explain how she has decided to divvy up that money between government departments over the next three years.
This is not a budget, and she will not be announcing changes to tax policy. But it will feel like a budget because, like a budget, it will involve decisions that affect the public services people rely upon. And it is bound to intensify speculation about whether taxes will have to go up in the next budget, in the autumn.
Public spending is hideously complicated, and Reeves needs a clear, simple narrative that will land with the public at large. We know what it is because the Treasury sent out a press release last night with words from the statement where Reeves will sum up what she is trying to achieve. She will say:
This government is renewing Britain. But I know too many people in too many parts of the country are yet to feel it.
This government’s task – my task – and the purpose of this Spending Review – is to change that. To ensure that renewal is felt in people’s everyday lives, their jobs, their communities.
So that people can see a doctor when when they need one. Know that they are secure at work. And feel safe on their local high street …
I have made my choices. In place of chaos, I choose stability. In place of decline, I choose investment. In place of retreat, I choose national renewal.
These are my choices. These are this government’s choices. These are the British people’s choices.
The government differentiates between current, day-to-day spending (“resource” spending, in Treasury jargon) and capital spending. In so far as Reeves has “good news” to announce, much of it is in the capital spending area, because she changed her fiscal rules last year to allow more borrowing for infrastructure projects. That is why she is saying “In place of decline, I choose investment”, not “I choose spending”. Some government departments will face real-terms spending cuts.
But there is an obvious political problem with this, well summarised by John McDonnell, shadow chancellor when Jeremy Corbyn was Labour leader, in this comment to the Financial Times.
Capital spend takes years to produce political results, while cuts in revenue spending on services like council services are felt adversely quickly.
It is easy to promise national renewal, but it is a lot harder to make people believe it is happening. Today’s decisions will have a big effect on what voters do end up concluding about this, but it will take a while to know for sure what that effect will be.
Here is Aamna Modhin’s assessment of what to expect in the spending review in her First Edition briefing.
And here is our overnight preview story, by Kiran Stacey, focusing on the proposal to spend £39bn on affordable housing.
Here is the agenda for the day.
9am: Keir Starmer chairs cabinet, where Rachel Reeves, the chancellor, will be briefing colleagues on what is in the spending review.
Noon: Starmer faces Kemi Badenoch at PMQs.
12.30pm: Reeves makes a statement to MPs about the spring statement.
4pm: The Institute for Government thinktank holds a briefing on the spring statement.
4.15pm: The National Police Chiefs’ Council gives its response to the spending review.
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