On 11 June 2025, the Chancellor of the Exchequer, Rachel Reeves, presented her first Spending Review (SR) to Parliament. Budget allocations for Whitehall departments for the next four years have been set, with day-to-day spending set for three years. Overall day-to-day spending will be held to a growth rate of 1.5% a year in real terms between 2026-27 and 2028-29. Health and social care is the biggest winner in terms of day to day spending increase, while defence is the biggest winner in terms of investment growth.
This is ‘Phase II’ of the SR. ‘Phase I’ was released on 30 October 2024 as a one-year spending plan, during which the Chancellor raised National Insurance Contributions (NICs) paid by employers but held off from broader tax increases. Tweaks to fiscal rules on capital spending last year allowed an extra £113bn of borrowing for investment over this parliament.
The ADS Policy and Economics teams have analysed the announcements, and members can log in to read the briefing here. The highlights are summarised below…
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