Chancellor Rachel Reeves Puts NHS At The Heart Of "Labour's Choice" Spending Review
Chancellor Rachel Reeves announced the spending review to the House of Commons on Wednesday afternoon (Alamy)
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Chancellor Rachel Reeves has announced significant spending boosts to the NHS, social housing, defence and border security – declaring these funding increases were “my choices” and “Labour’s choices”.
In a House of Commons statement on Wednesday, Reeves used a series of spending announcements to set out electoral battle lines with the Tories and Nigel Farage's Reform UK, using the word “choice” a total of 72 times.
Reeves announced that total departmental budgets will grow by 2.3 per cent a year in real terms.
However, some individual departments will see real-terms cuts to their budgets.
The independent Office for Budget Responsibility (OBR) is not announcing its own assessment of the Spending Review, as it would for a Budget announcement. This makes it more difficult to assess how the government will fund the spending changes and determine whether higher taxes or increased borrowing will be needed as a result. It is also unclear where exactly trade-offs might have to be made through savings and spending cuts elsewhere.
Health was the big winner in the government's spending plans, with Labour seemingly putting NHS improvement at the heart of its strategy.
“In contrast to our increase of 2.3 per cent, [the Tories] cut spending by 2.9 per cent per year in 2010,” she said.
“So let’s be clear, austerity was a destructive choice for the fabric of our society. And it was a destructive choice for our economy too, choking off investment and demand, creating a lost decade for growth, wages and living standards.”
In her statement, the Chancellor highlighted her top priorities as health, security and the economy. Several announcements had already been trailed ahead of the Chancellor’s statement to the House of Commons.
A key announcement was £30 bn of additional NHS funding – a rise of 2.8 per cent in real terms – aimed at reducing waiting lists. Reeves also announced an extra £4.5bn for schools, primarily for teacher pay and special educational needs.
Reeves announced funding of up to £280m more per year by the end of the spending review for the new Border Security Command, which was initially pledged £150m of funding in the Budget last year.
“Alongside that, we are tackling the asylum backlog,” Reeves said.
She confirmed that the government would be ending the “costly use of hotels to house asylum seekers” in this Parliament.
“That is my choice, Mr Speaker. That is Labour’s choice. And that is the choice of the British people.”
One of the biggest announcements was £39bn of funding over the next decade for social and affordable housing, nearly doubling previous support, which Reeves described as the “biggest cash injection into social and affordable housing in 50 years”.
Reeves said that police spending power will rise by an average 2.3 per cent per year in real terms over the spending review period, “to protect our people, our homes and our streets”.
“That is more than £2bn supporting us to meet our Plan for Change commitment of putting 13,000 additional police officers, PCSOs and special constables into neighbourhood policing roles across England and Wales,” she said.
The spending review also confirmed that defence spending will be boosted to reach 2.6 per cent of GDP by 2027, with increased investment also supporting submarine and military infrastructure.
A £113 bn capital-investment package focusing on regional infrastructure, including across the transport, energy, tech sectors – with a particular focus on regions outside London and the southeast of England. £15.6bn has also been earmarked for regional transport projects over the next five years.
Alongside London mayor Sadiq Khan, London Labour MPs have expressed concern to PoliticsHome over suggestions that the capital is set to miss out some of its key funding demands, including extensions to the Bakerloo Line and Docklands Light Railway.
Speaking after Reeves' statement, Khan said he was concerned that the settlement for London could mean "insufficient funding for the Met and fewer police officers", and that the lack of commitment to invest in new infrastructure in the capital was "disappointing".
“As Mayor, I’ll continue to make the case to the government that we must work together for the benefit of our capital and the whole country," he said in a statement.
There will also be £14.2bn additional funding for Sizewell C power plant, bringing total investment to £17.8 billion, and £2bn for the government’s AI Action Plan, to build AI infrastructure and support AI adoption throughout the private and public sectors.
Based on early estimates, the Home Office, as well as the departments for culture, transport and the environment, look to be among the biggest losers in the Spending Review.
Reeves has announced the spending review in a climate of high public dissatisfaction with the government. Polling by Merlin Strategies this week showed that 48 per cent of voters expected the Spending Review to hurt rather than help working families, compared to only 25 per cent who expected it to help.
In response to Reeves' announcement, Shadow Chancellor Mel Stride accused her of being a "tin foil chancellor", describing her as "flimsy and ready to fold".
He claimed that it was inevitable that the Labour government would announce tax rises in the Autumn Budget to fund this increase in public spending.
Paul Johnson, director of the Institute of Fiscal Studies, told Sky News: "The big picture is genuinely big increases in spending in this year and last, much slower increases over the second half of this parliament.
"The political judgement is, by the time we get to the end of this parliament, we'll have felt the benefit of the upfront increases."
