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| Spending Review: What is it and what might Chancellor Rachel Reeves announce? | Spending Review: What is it and what might Chancellor Rachel Reeves announce? |
| (about 2 hours later) | |
| Chancellor Rachel Reeves | Chancellor Rachel Reeves |
| Chancellor Rachel Reeves faces difficult choices in this week's Spending Review, which sets the budgets for all government departments over the next few years. | Chancellor Rachel Reeves faces difficult choices in this week's Spending Review, which sets the budgets for all government departments over the next few years. |
| The review will confirm how much taxpayers' money will be spent on the NHS and other public services used by millions. | The review will confirm how much taxpayers' money will be spent on the NHS and other public services used by millions. |
| It will also set out how much money the government plans to invest in projects like new public transport schemes. | It will also set out how much money the government plans to invest in projects like new public transport schemes. |
| What is the Spending Review and when is it? | What is the Spending Review and when is it? |
| The Spending Review will be delivered by Reeves on Wednesday, 11 June. She will make the announcement at around 12:30 BST, after Prime Minister's Questions. | |
| In October she set department budgets for 2025-26, and will now confirm how much they have to spend over the following three to four years. | In October she set department budgets for 2025-26, and will now confirm how much they have to spend over the following three to four years. |
| Reeves has already set out what how much total government spending will rise by over the period. | Reeves has already set out what how much total government spending will rise by over the period. |
| On Wednesday this will be broken down by department. | On Wednesday this will be broken down by department. |
| The review covers two categories of spending: | The review covers two categories of spending: |
| Day-to-day spending, which includes things like salaries, supplies and other administration costs. This is known as "resource" spending | Day-to-day spending, which includes things like salaries, supplies and other administration costs. This is known as "resource" spending |
| Investment, which includes funding for infrastructure as well as building things like new schools, hospitals and roads. This called "capital" spending | Investment, which includes funding for infrastructure as well as building things like new schools, hospitals and roads. This called "capital" spending |
| Wednesday's Spending Review will set out day-to-day expenditure for three years and investment spending for four years. | Wednesday's Spending Review will set out day-to-day expenditure for three years and investment spending for four years. |
| Which departments will get a boost to spending? | Which departments will get a boost to spending? |
| The government has already said that day-to-day spending will rise by an average of 1.2% for each of the three years covered by the review. Investment will increase by an average of 1.3% a year for four years. | |
| The "relatively modest" rise could mean that "sharp trade-offs are unavoidable" when setting the budget for each department, according to the Institute for Fiscal Studies (IFS) think tank. | The "relatively modest" rise could mean that "sharp trade-offs are unavoidable" when setting the budget for each department, according to the Institute for Fiscal Studies (IFS) think tank. |
| The government has said it wants to increase investment. Reeves has changed the way that debt is measured to free up more than £100bn to fund building, research and development as well as other major projects. | The government has said it wants to increase investment. Reeves has changed the way that debt is measured to free up more than £100bn to fund building, research and development as well as other major projects. |
| As Wednesday approaches, here is what we know so far: | As Wednesday approaches, here is what we know so far: |
| Winter fuel payments will be made to three quarters of pensioners this year. Reeves confirmed a U-turn on the government's controversial decision to limit the payments to those receiving means-tested benefits. The government said the change will cost around £1.25bn in England and Wales | Winter fuel payments will be made to three quarters of pensioners this year. Reeves confirmed a U-turn on the government's controversial decision to limit the payments to those receiving means-tested benefits. The government said the change will cost around £1.25bn in England and Wales |
| Defence spending will rise from 2.3% of gross domestic product (GDP) to 2.5% by 2027 - an increase of around an extra £5bn a year. This will be paid by cutting the overseas aid budget. Ministers want to increase defence spending to 3% by 2034 | Defence spending will rise from 2.3% of gross domestic product (GDP) to 2.5% by 2027 - an increase of around an extra £5bn a year. This will be paid by cutting the overseas aid budget. Ministers want to increase defence spending to 3% by 2034 |
| There are suggestions that the NHS will get an extra £30bn over three years | There are suggestions that the NHS will get an extra £30bn over three years |
| Free school meals will be expanded to 500,000 children whose parents are receiving Universal Credit, regardless of their income. Across education, day-to-day spending will rise by £4.5bn a year by 2028-29, according to The Observer | Free school meals will be expanded to 500,000 children whose parents are receiving Universal Credit, regardless of their income. Across education, day-to-day spending will rise by £4.5bn a year by 2028-29, according to The Observer |
| Investment worth £15.6bn will fund extensions to trams, trains and buses in Greater Manchester, the Midlands and Tyne-and-Wear, after criticism that too much infrastructure spending targeted London and the South East | Investment worth £15.6bn will fund extensions to trams, trains and buses in Greater Manchester, the Midlands and Tyne-and-Wear, after criticism that too much infrastructure spending targeted London and the South East |
| The government will spend £86bn on the science and technology sector by the end of the parliament, including funding research into areas such as drug treatments and longer-lasting batteries | The government will spend £86bn on the science and technology sector by the end of the parliament, including funding research into areas such as drug treatments and longer-lasting batteries |
| There have also been reports that Reeves could announce a new nuclear power station in Suffolk. | There have also been reports that Reeves could announce a new nuclear power station in Suffolk. |
| Sizewell C, a project that is jointly owned by the UK government and the French state-owned energy giant EDF, wants to begin construction of a power station that will be funded by taxpayers and private investors. | Sizewell C, a project that is jointly owned by the UK government and the French state-owned energy giant EDF, wants to begin construction of a power station that will be funded by taxpayers and private investors. |
| The government may also set out detailed plans to build small modular reactors (SMRs) - mini nuclear power stations - in England and Wales. | The government may also set out detailed plans to build small modular reactors (SMRs) - mini nuclear power stations - in England and Wales. |
| How is the UK economy doing and how much room for manoeuvre does Reeves have? | How is the UK economy doing and how much room for manoeuvre does Reeves have? |
| Government borrowing - the difference between how much it spends and how much it raises from taxes - grew to £20.2bn in April. | Government borrowing - the difference between how much it spends and how much it raises from taxes - grew to £20.2bn in April. |
| That was £1bn higher than the same month in 2024, and more than some economists expected. | That was £1bn higher than the same month in 2024, and more than some economists expected. |
| Although tax revenue increased in April, notably as a result of the increase in the amount of National Insurance Contributions (NICs) paid by employers, so did spending. | Although tax revenue increased in April, notably as a result of the increase in the amount of National Insurance Contributions (NICs) paid by employers, so did spending. |
| This was largely because of increases in pensions and other benefits, pay rises and higher borrowing costs. | This was largely because of increases in pensions and other benefits, pay rises and higher borrowing costs. |
| Meanwhile, the financial buffer that allows Reeves to meet the government's two self-imposed fiscal rules is very slim. | Meanwhile, the financial buffer that allows Reeves to meet the government's two self-imposed fiscal rules is very slim. |
| The rules are that: | The rules are that: |
| Day-to-day government spending should be paid for with tax revenue, not borrowing | Day-to-day government spending should be paid for with tax revenue, not borrowing |
| The amount of government debt should fall as a share of national income by the end of the current parliament in 2029-30 | The amount of government debt should fall as a share of national income by the end of the current parliament in 2029-30 |
| The government is currently forecast to have a budget surplus of £9.9bn at that point, which is the third-smallest on record. | The government is currently forecast to have a budget surplus of £9.9bn at that point, which is the third-smallest on record. |
| This surplus is often referred to as "headroom" and theoretically acts as buffer against an economic shock or an increase in spending. | This surplus is often referred to as "headroom" and theoretically acts as buffer against an economic shock or an increase in spending. |
| But because the projected surplus is so small, it is very vulnerable. | But because the projected surplus is so small, it is very vulnerable. |
| Between the Autumn Budget and Spring Statement in March, it was wiped out mostly because of higher debt interest payments as well as sluggish economic growth. | Between the Autumn Budget and Spring Statement in March, it was wiped out mostly because of higher debt interest payments as well as sluggish economic growth. |
| As a result, Reeves announced a £14bn package of savings in March, including £4.8bn of welfare cuts. | As a result, Reeves announced a £14bn package of savings in March, including £4.8bn of welfare cuts. |
| The latest official data suggests that the UK economy could be strengthening. It grew by 0.7% between January and March, which was better than expected. | The latest official data suggests that the UK economy could be strengthening. It grew by 0.7% between January and March, which was better than expected. |
| However, it is not clear whether that growth will continue, especially as US President Donald Trump's US tariffs hit the UK and wider global economy. | However, it is not clear whether that growth will continue, especially as US President Donald Trump's US tariffs hit the UK and wider global economy. |