Winners and Losers from the Spending Review by Rachel Reeves
From the Ashes: A Fresh Take on the UK's Spending Review
"It's a big ol' deal for this current government," says Simon Case with a chuckle. "It's a clear indication of their plans upcoming the general election. This is their chance to say, 'This is what we're bringing to the table.' "
Speaking as the former cabinet secretary, Mr. Case oversaw the civil service during the 2021 spending review. Cut to Wednesday, as Rachel Reeves unveils the Labour government's priorities for the next three years. However, the question remains - will this review provide a clear, concise answer about the true heart of the government?
Unlike the Autumn budget, the spending review won't highlight where taxes will be raised or debt will be incurred to fund overall spending levels. Instead, it will outline in detail how the allocated funds are divided among different government departments.
Since December, these departments have battled it out for their slice of the budget pie, proposing their budgets in a negotiation that's set to drag on until the last minute. This review is being conducted with a meticulous level of detail, with every penny of spending scrutinized to ensure it provides value for money and aligns with the government's objectives.
Healthcare and defense are anticipated to be the major winners in this game of budgetary roulette. With pre-existing promises to prioritize the health sector, a boost of up to £30 billion is expected, while defense spending is projected to rise.
On the bright morning of last Sunday, the government boasted an "£86bn boost" to research and development (R&D), celebrating it as record-breaking investment. This impressive-sounding claim, though, demands closer scrutiny. It's not £86bn in new funding. That £86bn represents the accumulated R&D investment across all government departments for the next three years. The total will reach an annual figure of £22.5bn by 2029-30, barely a fraction over the already set £20.4bn for this year.
Some may argue that the schools budget is to be given a much-needed boost, with a £4.5bn injection. Sounds like a healthy increase, right? But that translates to just £1.5bn a year over the next three years – a small drop in the ocean when you consider the existing budget of £63.7bn. Furthermore, this budget must cover the cost of extending free school meals and providing increases in teachers' pay.
Every game of budgetary dominoes has both winners and losers. Departments like the Home Office and the Department of Communities and Local Government brace themselves for a tightening of the purse strings. Fears of "austerity 2.0" loom large, as warnings ring out about potential cuts to social services, homeland security, and local government funding.
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Despite these ominous predictions, the chancellor aims to signal her dedication to responsible fiscal management. She has committed to balancing the books for day-to-day spending, while loosening the rules around borrowing for capital investments. This allows her to pour money into long-term infrastructure projects.
So, watch out for the chancellor traversing the countryside this week, promoting the £15.6bn she's shelling out on regional transport projects. The Treasury team is keen to emphasize the generosity of these investments.
In the days to come, we'll hear more as the spending review plays out. But, the real story may well be about the departments losing out – and the promises hanging in the balance.
The spending review, while not explicitly stating where taxes will be raised or debt incurred, is a significant event in UK politics, as it determines how allocated funds will be divided among various government departments, including potential increases in healthcare and defense expenditure. (war, politics, finance, business)
Amidst the anticipated cuts to social services, homeland security, and local government funding, the chancellor maintains a focus on responsible fiscal management, committing to balancing day-to-day spending while investing in long-term infrastructure projects. (politics, finance, general-news)
