Chancellor Rachel Reeves has delivered the UK’s first multi-year Spending Review since 2021, outlining departmental budgets for day-to-day operations and long-term investment through to the end of the decade. Here’s a breakdown of the key announcements that may impact businesses, individuals, and the broader economic environment.

🏥 Health

  • NHS England’s operational budget will rise by 3% in real terms annually, reaching £226bn by 2029.

  • Aiming for £17bn in savings over three years through a 2% productivity boost.

🎓 Education

  • Core schools funding to rise by 0.4% per year in real terms, hitting £69.5bn by 2029.

  • Free school meals to expand to 500,000 more children on benefits.

  • £615m allocated this year towards a 4% teacher pay rise, with schools covering part of the cost via efficiency savings.

🛂 Crime, Justice & Borders

  • Home Office to see a 1.7% real-terms cut, but police spending power up 2.3% annually (dependent on local tax increases).

  • Border Security Command to receive up to £280m extra per year.

  • £7bn allocated for new prison places, aiming to add 14,000 by 2031.

  • Ministry of Justice to see 1.8% annual increases in real terms for operational spending.

🛡️ Defence

  • Day-to-day spending to rise by 0.7% in real terms, with capital investment growth averaging 7.3%.

  • Defence budget to increase from 2.3% to 2.5% of GDP by 2027.

🏘️ Housing & Local Government

  • A long-term £39bn commitment to social housing in England between 2026 and 2036 — up from £2.3bn to £3.9bn annually.

🚉 Transport, Energy & Environment

  • £15.6bn earmarked for transport improvements across English regions outside London (2027–2031).

  • £11.5bn pledged for Sizewell C nuclear power project.

  • £3 bus fare cap extended to March 2027.

  • Treasury infrastructure appraisal rules to be updated.

🌍 International Affairs

  • Foreign Office budget to drop 6.8% in real terms, largely from reduced overseas aid.

  • Aid to comprise 0.3% of national income by 2027.

🧪 Science & Technology

  • Department for Science to receive a 7.4% annual increase in real terms.

  • £2bn over three years for the government’s AI action plan.

  • £750m set aside for a new Edinburgh-based supercomputer.

Implications for Our Clients

This Spending Review reflects a continued focus on productivity and infrastructure, alongside targeted cost-saving across departments. Business owners should remain alert to potential downstream effects, such as changes to public sector procurement, local government funding, and energy infrastructure investment opportunities.

Disclaimer: This content is for general information purposes only and does not constitute financial or legal advice. Always consult a qualified professional for guidance specific to your circumstances.