In an address to Parliament, Chancellor Rachel Reeves has laid out a comprehensive and ambitious spending review that signals a new era of investment, stability, and national renewal under the Labour government. Her speech was not just a fiscal roadmap—it was a declaration of intent to rebuild Britain’s economy, infrastructure, and public services.
Reeves began by highlighting the state of public finances inherited from the previous government, citing a “£22 billion black hole.” She emphasised that her priority as Chancellor was to restore stability:
She said
“At the budget last October and again in the spring, I made the choices necessary to fix the foundations of our economy.”
Key reforms included:
- Overhauling the planning system.
- Launching Britain’s first National Wealth Fund.
- Reforming pensions to unlock billions in investment.
These efforts, she noted, are already bearing fruit:
“Real wages have grown more in the first 10 months of this Labour government than they did in the first 10 years of Conservative rule.”
Fiscal Rules and Investment
Reeves introduced two non-negotiable fiscal rules:
- Stability Rule: Day-to-day spending must be funded through tax receipts.
- Investment Rule: Public investment must support economic renewal while reducing debt.
These rules enabled:
- £190 billion more for public services.
- Over £100 billion in public investment in the autumn, and an additional £13 billion in the spring.
Defence, Borders, and Security
In response to global instability, Reeves announced a significant uplift in defence and security spending:
- Defence spending to rise to 2.6% of GDP by April 2027.
- £11 billion increase for defence.
- £600 million for intelligence agencies.
- £4.5 billion for munitions production.
- Over £6 billion to upgrade nuclear submarine production.
On border security:
- Funding for the new Border Security Command will rise to £280 million per year.
- Ending the use of hotels for asylum seekers, saving £1 billion annually.
Energy and Industrial Strategy
Reeves positioned energy security as national security:
- £30 billion for nuclear power.
- £14 billion for Sizewell C, powering 6 million homes.
- £2.5 billion for small modular reactors, with Rolls-Royce as the preferred partner.
- £2.5 billion for nuclear fusion.
- Support for carbon capture projects in Aberdeenshire and Humberside.
- Creation of Great British Energy, a publicly owned energy company headquartered in Scotland.
Backing British Industry
Reeves emphasised the importance of domestic manufacturing:
- Intervention to save British Steel in Scunthorpe.
- £500 million grant to Tata Steel in Port Talbot.
- Heathrow Airport’s expansion to use British steel.
- £22 billion annual R&D funding.
- £2 billion for AI development.
- British Business Bank’s capacity increased to £25.6 billion.
Skills and Education
To address skills shortages:
- £1.2 billion per year for training and apprenticeships.
- Extension of free school meals to over 500,000 children.
- £370 million for school-based nurseries.
- £555 million for children’s social care.
- £130 million from dormant assets for youth facilities.
- £4.5 billion per year uplift in core school funding.
- £2.3 billion per year to fix school buildings.
- £2.4 billion per year to rebuild 500 schools.
Housing and Infrastructure
Reeves announced the largest investment in social housing in half a century:
- £39 billion for the Affordable Homes Programme.
- £10 billion in financial investments through Homes England.
Transport investments included:
- £15 billion for local transport.
- £3.5 billion for the Transpennine Route Upgrade.
- £2.5 billion for East West Rail.
- Funding for the Midlands Rail Hub and £445 million for Welsh railways.
Community Renewal
To revitalise communities:
- Funding for 350 communities to improve parks, libraries, and youth facilities.
- Establishment of a Growth Mission Fund for local regeneration projects.
Health and Social Care
Reeves reaffirmed Labour’s commitment to the NHS:
- £29 billion per year increase in NHS day-to-day spending.
- Recruitment of 1,700 new GPs and 3.5 million extra appointments.
- £10 billion for NHS digital transformation.
- Mental health support in all schools by the end of Parliament.
Cost of Living and Public Services
To ease the cost of living:
- Extension of the £3 bus fare cap until March 2027.
- Expansion of the Winter Warm Homes Plan.
- Upgrades to millions of homes, saving families up to £600 per year.
- Ban on exploitative zero-hour contracts and fire-and-rehire practices.
Efficiency and Accountability
Reeves announced a zero-based review of government spending:
- Closure and sale of government buildings.
- Cuts to consultancy and back-office costs.
- Every penny saved reinvested into public services.
Rachel Reeves concluded with a powerful message:
“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.”
This spending review marks a bold shift in Britain’s economic and social policy. With record investments across defence, energy, education, health, and infrastructure, Reeves has laid the foundation for what she calls “the renewal of Britain”—a vision rooted in stability, fairness, and opportunity for all.
Image credit: iStock
