Spending review 2025: winners and losers

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UK chancellor Rachel Reeves has set out day-to-day departmental spending until 2029 and capital budgets until 2030, in Labour’s first comprehensive spending review for 16 years.

“The renewal of Britain must be felt everywhere,” she said on Wednesday. Here are the winners and losers from the spending review.

Winners

Health: The NHS in England has received a 3 per cent real-terms rise in annual day-to-day spending, above health leaders’ expectations but below the long-term growth rate of 3.6 per cent a year.

However, the capital budget of the Department of Health and Social Care will be flat in real terms between 2025-26 and 2029-30.

A rise of 2.8 per cent in the day-to-day budget of the DHSC, which funds the NHS, will take up more than half of the cash increase in the government’s overall expenditure plans.

Defence: Defence spending will rise to 2.6 per cent of GDP by April 2027, including intelligence, from 2.3 per cent now, with more cash for military spending and the security and intelligence agencies.

Between 2025-26 and 2029-30, the Ministry of Defence’s capital budget will increase 7.3 per cent.

This month a long-awaited strategic defence review urged Britain to move to “warfighting readiness” in view of rising threats, while US President Donald Trump has called on European countries to boost military expenditure.

Schools: The core schools budget in England will grow by an average of 0.4 per cent a year between 2025-26 and 2028-29. A shrinking school-age population will result in a rise in per pupil spending by the end of the current parliament.

All children with a parent receiving universal credit will be eligible for free school meals under an expansion of the scheme, at an estimated cost of £410mn a year by 2028-29.

Consultants: Ministers have delayed plans to halve Whitehall spending on consultancies by three years.

The government on Wednesday said it expected to save £700mn a year by 2028-29 on consultants. Last year, it pledged to halve spending from 2025-26.

Housing: Reeves announced a £39bn boost for affordable housing over 10 years, to help fund the construction of housing for people who cannot afford to buy or rent at market prices.

She also said the government would make a further £10bn available for financial investments to be made by Homes England, an arm’s length body.

Industry figures voiced scepticism about whether the extra investment would help the government meet its target to build 1.5mn homes by the end of this parliament.

Losers

Home Office: Average annual day-to-day spending at the Home Office will fall 1.7 per cent between 2025-26 and 2028-29, according to spending review documents. Excluding forecast asylum system costs, Home Office spending would rise by 0.4 per cent overall over the same period.

Ministers have so far failed to cut the asylum budget, with a record number of irregular migrants crossing the English Channel in a single day last month.

The department is responsible for policing, border security and immigration, and home secretary Yvette Cooper was the last minister holding out for more cash earlier this week.

Foreign Office: Average annual day-to-day spending at the Foreign, Commonwealth & Development Office will fall 6.9 per cent between 2025-26 and 2028-29, making it the biggest loser among Whitehall departments.

The overseas aid budget, which is managed by the FCDO, has been slashed to fund higher military spending, and the Financial Times reported last month that senior managers were facing a major cull as part of an efficiency drive.

Environment: Average annual day-to-day spending at the Department for Environment, Food and Rural Affairs will drop 2.7 per cent. Defra’s capital budget will fall 1.8 per cent in real terms up to 2029-30.  

The government’s independent adviser on climate change warned in April that the UK’s preparations for flooding were “inadequate”. However, officials pointed to an investment of £4.2bn over three years in flood defences across the country and more than £2.7bn a year towards “farming and nature recovery”.

Transport: Day-to-day spending each year by the Department for Transport will fall by an average of 5 per cent.

Meanwhile spending on the flagship HS2 project will fall by an average of 9.3 per cent a year between 2025-26 and 2028-29.

The high speed rail project has been beset by delays and cost overruns and was slashed by the previous Conservative government, meaning it will now run between London and Birmingham only.

Council taxpayers: The public are set for higher council tax bills to pay for the planned increase in “police spending power”, which will rise by an average 2.3 per cent a year in real terms over the spending review period.

Paul Johnson, director of the Institute for Fiscal Studies, said on X: “Note wording on police funding. Increase in ‘spending power’. Implies that higher precepts from local taxes will play their part.”

This article has been amended to clarify details around Home Office day-to-day spending between 2025-26 and 2028-29