Rachel Reeves is about the deliver the spending review. What could be in it – and what should be?

On Wednesday (June 11), Chancellor Rachel Reeves will deliver the government’s first multi-year spending review.

It’s a big deal. Laying out plans for everything from education and the NHS to prisons and housing, it will shape the political terrain until the end of the decade. In short: the government is about to show us what (and who) it really prioritises.

“The spending review will set the trajectory for the rest of this parliament,” says Rachael Henry, head of advocacy at Institute for Public Policy Research think tank. “And there will be winners and losers. There’ll be really difficult trade-offs.”

Health, defence, and growth-boosting infrastructure projects are in line for a cash injection – but there could be serious cuts elsewhere. Here’s what’s at stake. 

• An investment in public transport is the right direction of travel
• Labour’s disability benefit cuts will force nearly half a million people to turn to food banks

What is a spending review?

Spending reviews – as the name suggests – allocate government spending.

“It’s probably the biggest single set-piece event in terms of economic policy this year,” says James Smith, research director at the Resolution Foundation. There will be two “big bits” of the review, he explains.

The first allocates day-to-day public service spending for 2025-26 to 2029-30, covering operational costs for services like the NHS, education, and prisons. Think salaries for doctors and soldiers.

The second ‘big bit’ concerns capital spending – longer-term investment: “Building roads, rail, big infrastructure projects, hospitals, schools.”

One thing that isn’t included is social security spending. Things like universal credit, disability benefits, and the state pension are less predictable. They’re more sensitive to things like employment market fluctuations, so they’re handled separately. 

But we may still get related announcements – say, specifics of the winter fuel payment uplift or other benefits – laying out how they impact budgets.

What could and should be in it?

The short answer is hard choices. The government is in a difficult financial position. Low growth, high borrowing costs, and Trump tariff chaos have wiped out the slender £9.9 billion fiscal headroom Reeves gave herself to balance the budget by 2029–30.

And after 15 years of “really sustained cuts across public services”, Henry says, the country is facing a stack of crises: overwhelmed hospitals, overcrowded prisons, crumbling schools, and a children’s social care system in disarray.

“It’s not just one public service, where there’s an obvious elephant in the room that needs fixing,” she added. “Overall, there is a palpable sense that the country isn’t working.”

Every sector is clamouring for more money, from local government to social housing to agriculture.

Faced with this suite of problems, the government needs a success story – especially as public approval continues to tank. They’re betting, it seems, on big infrastructure projects.

The spending review will contain £113 billion in capital spending – money for prison construction, housebuilding, rebuilding schools, and upgrading hospitals. The Sizewell C nuclear power station will probably get greenlit, as will East West Rail linking Oxford and Cambridge.

Today (June 9), the government announced an £86 billion investment in science and tech, including a £500 million pot for the regions and their mayors. That covers artificial intelligence, batteries, pharmaceuticals, and more.

To enable such big cash promises, the government has made technical changes to how debt is measured, allowing it to borrow more money for infrastructure without breaking its pledge to balance the books on day-to-day spending.

An increased investment spend is welcome, both Henry and Smith sat capital spending in the UK has trailed the OECD average since 1995.

But it will leave day-to-day spending in the firing line. Exactly where the axe will fall is not yet clear but, in December, Reeves called for all departments to identify “efficiency savings” of 5%.

“Where exactly the cuts will come from – that’s a choice for the chancellor that I genuinely do not envy,” Henry says.

The government has made some announcements on day-to-day spending. Schools will receive an extra £4.5bn a year, covering increased pay awards for teachers and an expansion of free school meals to all children from families on universal credit. 

But compromises are everywhere. Take the NHS. Health is the largest single area of government spending, representing almost £1 in every £5 spent. That means decisions on the NHS will “largely dictate” how much wiggle room the government has elsewhere.

“The health budget is so big that a billion in the NHS is almost a rounding error,” Henry continues. “But for another department, it could be their entire budget.”

NHS desperately needs capital spending, says Smith: the UK has “particularly low levels of health kit”, from beds to diagnostic equipment. But though health investment is “very, very important”, Smith suggests the government should look for savings in the NHS’s day-to-day budget. This is because lower-income families would be benefitted by more targeted policies. 

“Historically, we’ve had this sort of 3.5% increase in spending each year on health,” Smith says. “If you ease that growth rate on day-to-day spending, say to 2%, that means you could find some extra for those other more impactful pieces of public spending that could really make a difference for lower-income families.”

Such policies could include free school meals for all families on universal credit, he said – a policy that has since been announced. It could also provide funding for adult social care and special educational needs support.

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