Chancellor Rachel Reeves is preparing to present her much-anticipated spending review, which will detail funding allocations for key public services like the NHS, education, and policing over the next few years. Her plan includes an additional £113 billion investment in infrastructure, particularly in energy and transport, aimed at revitalizing the UK. While health and defence are set to receive priority, some departments may face real-terms budget cuts. The review will lay out day-to-day spending for the next three years and capital investment for the next four, stretching through to the likely 2029 general election.

Negotiations between ministers and the chancellor have been tense, with Home Secretary Yvette Cooper and Housing Secretary Angela Rayner only recently finalizing their funding agreements. Rayner’s department is expected to receive £39 billion to expand affordable housing, supporting the government’s goal of building 1.5 million new homes by 2030.

Reeves is also expected to extend the £3 bus fare cap in England until March 2027. Despite ministerial pressure for more funding, she has maintained strict fiscal discipline, blaming economic constraints such as weak growth, high borrowing costs, and global uncertainty. Last year, Reeves announced £40 billion in tax increases to support the NHS and other public services. She argues that current spending plans are only feasible due to the fiscal stability she has introduced. However, the Institute for Fiscal Studies (IFS) warns that difficult decisions are inevitable, with some departments likely to face cuts unless more taxes are raised.

The NHS’s funding will be one of the most critical decisions, with its budget projected at £202 billion in 2025–26, consuming 39% of total day-to-day departmental spending. The IFS cautions that significantly increasing NHS funding could force cuts elsewhere or prompt further tax hikes. Reeves has so far stuck to Labour’s pledge not to raise income tax, National Insurance, or VAT, though she has increased employer National Insurance contributions. She also refuses to relax her borrowing rules, insisting that routine government costs be covered by tax revenues and that debt must fall relative to national income over five years.

IFS director Paul Johnson noted that while Reeves’ fiscal rules permit considerable borrowing, there’s a risk that national debt won’t decrease even with modest economic growth. In her upcoming speech, Reeves will reaffirm her commitment to stability and renewal, contrasting her approach with previous government uncertainty. She will highlight major infrastructure commitments, such as £14 billion for the Sizewell C nuclear plant and £15.6 billion for local transport improvements.

Reeves will emphasize that the spending priorities reflect the needs of working people and aim to strengthen national security, healthcare, and the economy. Meanwhile, Conservative shadow chancellor Mel Stride criticized Labour for planning unaffordable spending without a clear funding strategy, warning of more debt and tax rises. The Liberal Democrats also cautioned that the Labour government risks falling short of its promises, urging immediate action to stimulate growth and avoid cuts to vital public services.