Rachel Reeves has set out her spending plans for the coming years in the Commons, announcing boosts for the NHS, defence and schools.
Reeves laid out her plans for “securonomics” and said an extra £29 billion will be provided per year for the NHS. Major investment was also announced for nuclear energy and regional transport projects.
The government also said it would take forward plans for Northern Powerhouse Rail in the coming weeks, alongside an additional £3.5 billion to upgrade the TransPennine route.
A new four-year settlement was also announced for Transport for London but Sir Sadiq Khan said it was “disappointing” that there had been no commitment from the Treasury “to invest in new infrastructure London needs”.
There were only a handful of references to London throughout the Chancellor’s speech.
Reeves’ room for manoeuvre has also been further constrained by the Government's U-turn on winter fuel payments, which will see the benefit paid to pensioners receiving up to £35,000 per year at a cost of around £1.25 billion to the Treasury.
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Chancellor fails to rule out autumn tax hikes
Rachel Reeves has not ruled out tax rises in her next autumn budget.
Asked if she could rule out taxes going up again later this year, the Chancellor told GB News: “Every penny of this is funded through the tax increases and the changes to the fiscal rules that we set out at last autumn.
“We’re not spending a penny more or a penny less than the envelope that we set last autumn.
“So all of this is fully funded. I said at the budget last year, and I repeated again in the spring statement in March, that public services now needed to live within the envelope that we have set.
That has meant difficult conversations, it has meant difficult decisions, but we’ve stuck to that spending envelope that we set out in the budget last year.”
Chancellor hints 5 per cent council tax hikes every year
“The previous government increased council tax by five per cent a year, and we have stuck to that,” Rachel Reeves told ITV. “We won’t be going above that.
“That is the council tax policy that we inherited from the previous government, and that we will be continuing. And of course, that money goes into those local public services, including social care, and in case of the police precept, it goes into our local policing.”
Reform: Reeves of 'cratering' confidence in economy
Spending review ‘all about state control’
Ewen Stewart, a member of Growth Commission, which was founded by former Tory prime minister Liz Truss, said: “Today’s Spending Review shows scant evidence that the Chancellor understands how sustainable growth is achieved. It focused on centralised spending rather than seeking to grow the cake.
“There was nothing to encourage private endeavour and no rolling back of regulation, at a time when the Government is saddling the country with more employment regulation without any sign of an improvement in public sector productivity.
“It was all about state control and direction, which will do nothing to strengthen the weak edifice that is the UK economy.”
Cuts to Foreign Office budget 'alarming'
Dame Emily Thornberry, Labour MP and chair of the foreign affairs committee, said she is “deeply concerned” about cuts to the Foreign Office’s budget.
It is due to fall by 8.3 per cent between 2025/26 and 2028/29.
She said: “At a time when Britain is back on the world stage, and has never been more needed as a force for good, it is very concerning that the FCDO appears to be suffering the harshest real-terms cuts. We will be looking very closely at this to make sure that, once the already-announced ODA cuts have been accounted for, the Foreign Office is not suffering major further cutbacks.
“The Foreign Office maintains a presence across the globe and does so with a budget that has been stretched thin over many years. I am deeply concerned about the strain that this spending review will place on the entirety of the department. Real-term cuts to the Foreign Office budget are alarming and inconsistent with the government’s objective to position the UK as a leader on the world stage.”
Tax rise fears 'incoherent', Treasury minister claims
Asked whether the measures announced by the Chancellor’s spending review will lead to tax rises in the autumn, Darren Jones, the chief secretary to the Treasury, told Sky News: “It’s just such an incoherent argument, and let me tell you why.
“This spending review is allocating the money that we have already raised at the budget last year and the spring statement. We are essentially dishing out the budget to the departments, and it is living within the budget settlement that the chancellor set.
“If that’s the best argument that the oppositon has got, I think they need to go back and do some more homework.”
Jenrick: Labour ‘bankrupting Britain’
Tax rises 'all but inevitable'
Tax rises are “all but inevitable” following the Chancellor’s spending review, the Institute of Chartered Accountants in England and Wales has claimed.
Alison Ring, its director of public sector and taxation, said: “Tax rises are now all but inevitable following the Chancellor’s decision to significantly bolster defence and health spending, no matter what measures are taken between now and the Autumn Budget,” she said.
“The government’s sticking plaster strategy remains an obstacle to addressing the deep-set challenges facing the country. Instead, we need a clear, long-term plan to fix and futureproof the UK’s balance sheet, and without this there is little hope of achieving the transformative change needed to propel the country forward.
“While investment in infrastructure projects is a positive move, overall transformative investment is relatively small which reflects the Chancellor’s lack of wriggle room.”
London loses in Rachel Reeves' Spending Review despite bumper deal for TfL and HS2 funding
TfL will receive its "largest multi-year settlement in over a decade", Rachel Reeves has said as she faces a growing row with City Hall over deteriorating funding for the Metropolitan Police and infrastructure projects.
London’s transport network will get £2.2bn over the next five year for its capital renewals programme, the Chancellor confirmed in her Spending Review on Wednesday.
However, Sir Sadiq Khan said he was “concerned” that Britain’s largest police force could be left with fewer officers because of squeezed budgets.
Sadiq Khan says Reeves' spending review is 'disappointing'
Sadiq Khan has said the Government's failure to fund new transport projects in London is "disappointing".
The mayor of London pledged to "continue to fight for the investment we need" as he said there must never be an attempt to "level down London".
Sir Sadiq is frustrated that Chancellor Rachel Reeves did not use her spending review to support proposed projects such as the extension to the Docklands Light Railway (DLR) and the Bakerloo Tube line.
He did welcome the decision to provide Transport for London (TfL) with a long-term funding settlement, which it has sought for a number of years.
This set out £2.2 billion in capital funding over four years.
Sir Sadiq said: "It's ... disappointing that there is no commitment today from the Treasury to invest in the new infrastructure London needs.
"Projects such as extending the Docklands Light Railway not only deliver economic growth across the country, but also tens of thousands of new affordable homes and jobs for Londoners.
"Unless the Government invests in infrastructure like this in our capital, we will not be able to build the numbers of new affordable homes Londoners need.”