Chancellor Rachel Reeves has unveiled a sweeping new Spending Review, pledging billions in public investment across health, defence, and infrastructure in a bid to “renew Britain” and deliver on Labour’s promise of change for working people.
The review outlines spending plans to the end of the decade, with a strong emphasis on long-term growth, national security, and improving living standards — though the Chancellor warned that patience will be key before many of the benefits are felt.
NHS and defence among the big winners
At the heart of the Spending Review is a significant commitment to the NHS, which will receive an additional £29bn a year in England. According to the Resolution Foundation, 90% of the increase in day-to-day departmental spending over the next three years will go to the NHS, highlighting Labour’s ambition to create “an NHS fit for the future”.
Defence has also seen a considerable uplift, with 80% of the boost in capital spending allocated to national security. This includes modernising equipment, upgrading infrastructure, and improving personnel support, amid ongoing global tensions and increasing demands on the armed forces.
Long-term bets on infrastructure and energy
Reeves has also staked the Treasury’s weight behind major infrastructure and energy projects aimed at boosting long-term productivity and energy resilience. Chief among them is the green light for the Sizewell C nuclear power station in Suffolk, expected to create 10,000 direct jobs and thousands more in associated sectors.
The government has so far pledged £17.8bn of public money towards the plant, which will be financed through government borrowing. Interest repayments will be covered by a modest levy on household energy bills, estimated at around £1 per month. Ministers say that in the longer term, Sizewell C will help reduce energy costs significantly by increasing the UK’s supply of domestically generated, low-carbon electricity.
Investing in education and AI
The Spending Review also included a social policy boost, with all children in England whose parents receive universal credit becoming eligible for free school meals from September 2026. This marks a significant expansion of eligibility, bringing England closer in line with devolved administrations in Scotland, Wales and Northern Ireland, where support is more generous.
Reeves also promised additional funding for AI and transport infrastructure, signalling Labour’s intent to position the UK as a leader in digital innovation and future mobility.
Cuts elsewhere and challenges ahead
However, the review was not without sacrifices. Day-to-day budgets for some departments, including the Foreign Office and the Department for Environment, Food & Rural Affairs (DEFRA), will be squeezed. While the headline commitments are substantial, many departments face lean operational budgets, raising questions about the government’s ability to deliver change without compromising frontline services.
The Chancellor defended the overall approach, arguing it would deliver “security, economic growth, and an NHS fit for the future”. But Conservative shadow chancellor Sir Mel Stride dismissed the plans as a “spend now, tax later” strategy, warning of a “cruel summer of speculation” ahead of the autumn Budget—where he predicts tax rises will be announced to balance the books.
A gamble on growth and credibility
The Spending Review marks a pivotal moment for Reeves and the wider Labour government, with Prime Minister Sir Keir Starmer describing it as “the end of the first phase” of their administration, and the beginning of delivering tangible change.
But with high public debt, global economic headwinds, and tight fiscal conditions, the government faces an uphill battle to convince voters that its approach will deliver. By gambling on long-term infrastructure projects and public service investment, Reeves is betting that a strategy of renewal—rather than austerity—can stimulate growth, restore public confidence, and rebuild essential services.
Yet the road to 2030 may not be smooth. With stretched day-to-day departmental budgets and pressure mounting for fiscal discipline, the real test will be whether Labour’s economic strategy can navigate political expectations, international markets, and the needs of everyday people—without losing momentum.
