Rachel Reeves pledges £300bn for public services in major UK spending review

The Chancellor has pledged more than £300 billion in funding to transform public services as part of a sweeping spending review.

Speaking in the House of Commons, Ms Reeves said: “We are renewing Britain,” as she outlined her plans to inject £190 billion into the day-to-day running of public services, alongside £113 billion in public investment.

Departmental budgets will increase by 2.3% annually in real terms under the new plans, enabled by recent tax increases and relaxed borrowing rules.

The move marks a defining moment in Labour’s administration, coming nearly a year after their election landslide.

Prime Minister Sir Keir Starmer told Cabinet ministers: “The spending review marks the end of the first phase of this Government, as we move to a new phase that delivers on the promise of change for working people all around the country and invests in Britain’s renewal.”

£280 million more for border security

Amid continued pressure from small boat crossings in the English Channel, Ms Reeves committed to increasing funding by £280 million a year by 2028/29 for the newly established Border Security Command. She also pledged to end the use of hotels for housing asylum seekers before the next general election.

In a sharp rebuke of the Conservative Party’s legacy, the Chancellor said: “The party opposite left behind a broken system: billions of pounds of taxpayers’ money spent on housing asylum seekers in hotels, leaving people in limbo and shunting the cost of failure onto local communities.

“We won’t let that stand.”

She continued: “We will be ending the costly use of hotels to house asylum seekers, in this Parliament,” with additional funding to reduce the asylum backlog, expedite appeal hearings, and increase returns of individuals without legal right to remain.

The plan, Ms Reeves said, is expected to save £1 billion annually.

Rebuilding schools, hospitals and infrastructure

Ms Reeves described her “driving purpose” as “to make working people, in all parts of our country, better off.”

Her review included new cash commitments for school and hospital rebuilds, support for nuclear energy projects, and significant transport upgrades.

The Chancellor announced a “record” cash investment in the NHS with a 3% increase every year, which she said would amount to £29 billion more extra spending.

Rachel Reeves announced £4.5 billion-a-year for the core schools budget by the end of the spending review.

The Chancellor also said there would be investment rising to nearly £2.3 billion per year to “fix our crumbling classrooms”.

She announced a further £3.5 billion for upgrading the TransPennine rail route and said detailed plans for Northern Powerhouse Rail would be released in the coming weeks.

A further £2.5 billion for the continued delivery of East-West rail was also included in transport funding plans.

“Too many people in too many parts of our country are yet to feel it,” she said, “but we are renewing Britain.”

Billions pledged for devolved nations and AI growth

To support the UK’s devolved administrations, the spending review includes £52 billion for Scotland, £23 billion for Wales, and £20 billion for Northern Ireland.

The Chancellor also announced £118 million will be spent on the safety of coal tips in Wales.

Emphasising innovation, Ms Reeves confirmed that annual research and development funding would rise above £22 billion, including £2 billion specifically allocated for an artificial intelligence action plan.

“Home-grown AI has the potential to solve diverse and daunting challenges as well as the opportunity for good jobs and investment in Britain,” she said.

The opposition view

Shadow chancellor Sir Mel Stride said “this is the spend-now, tax-later review” adding Ms Reeves “knows she will need to come back here in the autumn with yet more taxes and a cruel summer of speculation awaits”.

He siad: “She presented herself as the iron Chancellor, but what we have seen is the tinfoil Chancellor. Flimsy and ready to fold in the face of the slightest pressure.

“She said she would not fiddle her fiscal rules. Then she did. She said she wouldn’t make any unfunded commitments, but with the humiliation of the winter fuel U-turn, she just has.

“She looked business leaders in the eye and said ‘no more taxes’. But we all know what happened next, and we all know what is coming in the autumn.

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