Labour Spending Review Focuses on NHS Defence and Housing Priorities

Rachel Reeves, the Chancellor, has unveiled a bold spending review, outlining Labour’s ambitions to “renew Britain” with significant investments in health, defence, and social housing. Presented in the House of Commons, this announcement underscores the government’s commitment to reversing the effects of austerity and prioritising infrastructure, security, and public services.

Reeves promised that departmental budgets would grow by 2.3% annually in real terms, a stark contrast to the 2.9% cuts implemented during the Conservative-Liberal Democrat coalition. She criticised austerity policies, describing them as detrimental to both society and the economy, citing their role in stagnating growth and living standards. The spending plan aims to address these effects by focusing resources on key sectors that impact working people directly.

The health service emerged as the biggest winner in the spending plan, receiving a 3% annual increase in real terms, translating to £29 billion extra annually. Defence budgets will also rise to 2.6% of GDP by April 2027, marking an £11 billion boost for defence and £600 million for security services. Reeves also committed £39 billion to social housing over the next decade, asserting that decades of neglect in this sector needed to be addressed. Towns like Blackpool, Sheffield, and Swindon are among those already bidding for the investment.

The Chancellor intends to eliminate the use of asylum hotels by the end of the parliament, predicting a £1 billion saving. While the Home Office’s budget will see an overall increase of £2 billion, this falls short of what many policing leaders deem necessary. Concerns have been raised about the potential impact on crime reduction and recruitment targets, with the Mayor of London, Sadiq Khan, expressing alarm over the constrained policing budget.

Education has also received a notable uplift, with £4.5 billion injected into core school budgets and £2.3 billion allocated to repairing crumbling classroom infrastructure. Additionally, the capital programme includes £2.4 billion annually to support the rebuilding of 500 schools. Investments in transport were highlighted, with £2.5 billion directed to the Oxford-Cambridge east-west rail project and £3.5 billion for the Transpennine Route Upgrade.

In her speech, Reeves addressed the growing importance of sustainability and green technology. Funding commitments include £13.2 billion for home insulation, £8.3 billion for Great British Energy, £14.2 billion for the Sizewell C nuclear project, and £9.4 billion towards carbon capture projects such as Acorn in Scotland. She also delivered plans to fund the development of small modular nuclear reactors with £2.5 billion.

The Chancellor confirmed that R&D expenditure will reach £22 billion per year by the end of the spending review period. The British Business Bank’s capacity will be expanded with £25.6 billion for scaling up UK businesses. Reeves also announced a new growth mission initiative to support up to 350 communities in regenerating public facilities such as parks, libraries, and swimming pools.

The focus on long-term investment has drawn criticism regarding its feasibility under rising borrowing costs. Some analysts warn that Reeves’s fiscal framework, while ambitious, could lead to substantial tax hikes in the upcoming autumn budget. Nonetheless, the spending review demonstrates Labour’s resolve to break from previous austerity measures and focus on making tangible improvements in public life and local infrastructure.