Spending Review- June 2025

The Spending Review:


On Wednesday, Reeves laid out the latest Spending Review. Personally, I appreciated the government’s commitment to increasing defence spending; investing in national security is essential, especially in today’s global climate. However, I’m less convinced by the extension of free school meals to all families on Universal Credit. While well-intentioned, it risks expanding welfare too broadly and should be more targeted to those in real need.


What actually is the spending review?

The spending review is the process the government carries out to set the budgets for different department for the future, which occurs, at a minimum, once every three years. There are two main areas that this covers: current resource and capital spending. The former including day-to-day spending on aspects such as the NHS, education and defence and the latter including investment into energy security and infrastructure to drive economic growth across the country.

In general we will see a growth in spending: Overall departmental budgets will grow by 2.3% annually in real terms over the Spending Review period. 


Summary of the key details: 

Health and Education:

  • Health: The Department of Health and Social Care's budget will increase by an average of 2.8% in real terms over the Spending Review period, totaling £246.7 billion by 2028/29. 

  • Education: The education budget will see a real-term increase of 0.4%, amounting to a £4.5 billion rise. 

  • Free School Meals: Starting in 2026, all families receiving Universal Credit will be eligible for free school meals. 

Defence and Crime/Borders:

  • Defence: An £11 billion increase in funding will raise defence spending to 2.6% of GDP by 2027. 

  • Crime & Borders: The police budget will grow by 2.3% annually, while the Home Office faces real-term cuts. 

Energy, Environment, Transport, and Housing

  • Energy: A £30 billion investment in nuclear and net-zero technologies is planned. 

  • Environment: The environment budget will be reduced by 0.5%, though investment in green initiatives will increase by 2.6%. Transport: £15 billion is allocated for regional transport improvements.

  • Housing: £39 billion is designated for affordable housing, aiming to build 1.5 million new homes by 2029

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