Spending review 2025

The question for me is, where is she getting this money?
Reeves has to raise taxes, surely, which will not be a popular move.
Having worked for the NHS I wish they would do a thorough overhaul from top to bottom because eyewatering amounts of money are wasted. Millions could be saved instead of increasing the budget every year.

You will have to wait for the budget in the autumn.

This thread is about the spending review.

But I think that we can agree that few recent chancellors have had such a difficult headwind as this chancellor, given Trump’s proclivities and the threat from Putin etc.

Thanks. I agree with the priorities on the whole but I’d have liked to see more earmarked for education.

And I fear that nothing will touch the sides of the NHS in 5 or even 10 years, esp unless social care is tackled in tandem.
Btw I thought NHS England was being abolished?

Affordable housing, yes.

Defence, yes now that the paucity of our contribution to NATO has been exposed, but I wouldn’t like to see this funded by increased arms trading.

We don’t pay enough tax in this country to fund the services we need. I’d like to see the govt get serious about this soon.

Looking at the NHS for me the big question is - what is going to happen to social care?

If the who caboodle is to operate as it should' then social care needs massive re-organisation and funding.

That question's for me too Sarnia, a spending review especially where there are going to be big increases in some areas, automatically raises the question of where the money will come from.

Unless we know, we can't be certain that what will be announced today will actually happen.

Affordable housing is not really affordable. We need social housing.

I think the 25 billion is from the rise in employer’s NIC announced in last year’s Autumn Statement.

Reeves doesn’t need to raise taxes more to pay for this. It can be done through borrowing. People need to get their heads around how public spending is financed, through the City and anybody else who wants to lend the Goverment money - e.g. Premium Bond holders who have lent the the government £130 billion with no guarantee of a return.

www.taxresearch.org.uk/Blog/2024/04/29/tax-does-not-pay-for-government-spending/

I agree that social care is the big issue, one that is bankrupting local councils. The previous government’s care cap scheme was flawed and would have placed an additional burden on councils around year three in most cases when self-funders care costs would have reached the cap. Labour were right to ditch it (after the Tories had already postponed the implementation) but I am yet to see any proposals. Adult social care needs to be nationalised, no question, so that venture capitalists aren’t creaming off the top as they have been for years.

I would like to see a massive programme of social housebuilding funded by person investors. I would certainly buy government bonds issued for that purpose. If Reeves were to tweak the cash ISA system, to reduce the £20,000 limit, that’s what I would like to see encouraged - a move from personal cash savings to personal investment in public projects.

Like the idea of individual investment in public projects.

The returns would have to be reasonable and secure though.

“A move from personal cash savings to personal investment in public projects”.

That’s really interesting.

Can you explain a bit more please.

I agree that social care is a major issue. I know that I personally am holding money that I could do something with because I worry about care fees in the future.

If you invest in government bonds, or gilts as they are called, you receive interest aka coupon payments along the way. The value of the bond will fluctate over time just as stocks and shares do, but so long as you hold the bonds to maturity, your capital investment is returned.

Here’s a House of Commons guide to how they work:

commonslibrary.parliament.uk/what-are-gilts-a-simple-guide/

To make these attractive to older investors, the term would have to be moderate. Encouraging people to move away from cash savings, which lose their value over time, towards stocks and shares, which should increase in value over time, isn’t necessarily attractive to older people who don't have the years left to wait for long term returns. Two to five year bonds could be attractive.

AJ Bell report that around £726bn is held in ISA accounts across the UK, with the majority in stocks and shares and about £100bn in cash ISA. Just think what could be done if a fraction of that was redirected towards social housebuilding.

www.ajbell.co.uk/group/news/isas-unpacked-who-holds-them-and-how-much-do-they-have

I’ve probably been unlucky but the two times I’ve put a bit into an Investment ISA I’ve actually lost money😱🙄

They were low risk, so low potential gain but there was no gain at all!

It would have to be short term guaranteed return -probably maximum 3 years - for me.

(Even that might be pushing it a bit 😬)

^ People need to get their heads around how public spending is financed, through the City and anybody else who wants to lend the Goverment money - e.g. Premium Bond holders who have lent the the government £130 billion with no guarantee of a return.^

Murphy also points out that the government doesn't need to 'borrow' from anyone at all. The government owns the Bank of England, which is the source of all money in the economy, apart from revenue from overseas earnings. The government can just run up a nominal 'overdraft' with the BoE, the BoE being obliged by law to make any payments that the government directs it to do. It doesn't need to rely on bond sales to finance its spending.

As a follower of Murphy you must know this, Silverbrooks.

Being received with a lot of welcome and optimism, which is good to see.

Yes WW, I’m very pleased with what RR has announced today.

Of course, Beth Rigby🤬 et al at Sky News have tried to put a negative spin on it but, despite their best efforts, they’ve found very little (of consequence) to criticise.

Latest figures show £2.2billion a year is spent on housing migrants in hotels. Rachel Reeves announced yesterday that she will put a stop to this but not until 2029. Why so long? The cynic in me thinks she has worked it out that it will dovetail very neatly with the next General Election when it will very likely become another Party's problem.

But if migrants are not housed in hotels, where will the Govt put them? No answer given to that.

There was an answer given actually.

Quick overview -

Health

In pure numbers, health is the biggest winner of the spending review. Wes Streeting’s department will get almost £30bn extra a year for its budget, a rise of 3% for the NHS. Of that, £10bn will be allocated overall for technology and digital transformation.

Defence

One of the key priorities of the review was a big rise in the defence budget and it was one we knew was coming because of pledges in the strategic defence review to get spending to 2.6% of GDP by 2027, though that includes funding for the intelligence services.

Social Housing

Angela Rayner has one of the biggest wins of the spending review with her big new budget for affordable homes – but it reflects that fact she has one of the toughest targets to meet, a manifesto pledge to build 1.5m homes by the end of the parliament.

But there will be very tight settlements for local councils – the Ministry of Housing, Communities and Local Government is facing a 1.4% real-terms cut over the course of the spending review. The Local Government Association has warned councils “will remain under severe financial pressure” and that council tax increases are likely as well as possible future service cuts.

Home Office

Yvette Cooper’s department is one of those leaving the spending review with the biggest headache – and was the last to settle with the Treasury. Reeves said that the government will save £1bn from ending the use of asylum hotels by the end of the parliament, heaping pressure on the home secretary.

But the biggest headache is police funding – which senior police officials have warned will mean the government will miss its police recruitment target of 13,000 neighbourhood officers, as well as being unable to meet pledges on knife crime and violence against women and girls.

Funding for police will rise by 2.3% a year in real terms over the spending review period, but some of this will be met locally, presumably then by council tax increases.

Education

Education will get a cash uplift of £4.5bn in the core schools budget, as well as £2.3bn in investment to fix school classrooms, especially those with crumbling concrete. From the capital budget, there will be £2.4bn a year to continue the rebuilding of 500 schools.

And there was further investment in the government’s big priorities – the delivery of free school breakfast clubs and of new nurseries based in schools, as well as free school meals for all children on universal credit, which has delighted Labour MPs.

Net Zero

Ed Miliband has walked away from the spending review one of its biggest winners, with by far the biggest increase in capital spending of all the departments, though starting from a lower base.

It will mean £13.2bn to continue an ambitious programme of home insulation – widely reported to be heading for cuts – as well as £8.3bn for Great British Energy. That pot will now include the government’s investment in small modular reactors, which Labour sources have claimed was always on the cards but which has taken some industry figures by surprise.

Miliband also secured considerable cash for energy infrastructure, including building Sizewell C and £2.5bn to invest in fusion research.

Environment

The biggest win for the department was a large boost in flood defence funding – about £1.4bn each year and a 5% increase compared to the current period. There will also be increased cash in nature recovery and an overall budget of £7bn for schemes like environmental farming, peatlands and tree planting.

Transport and Infrastructure

Further announcements are expected for Northern Powerhouse Rail and East West Rail, and funding for the Midlands rail hub, as well as an investment in Welsh rail projects of more than £400m. Overall, it will mean a fourfold increase in local transport grants for areas outside London.

Foreign Office

The Foreign, Commonwealth and Development Office appears to be suffering the harshest real-terms cuts of the spending review – almost 7%. The main reason for that are the cuts to overseas aid which have been funnelled into defence spending. Aid should in theory get some cash returned if the asylum hotel spend falls but no one believes the Treasury would allow overseas aid to recoup that money.

A number of charities have raised alarm at the cuts and what it will mean for the UK’s international efforts, including funding the British Council and World Service, as well as diplomatic efforts as the wars in Gaza and Ukraine rage.

Guardian provided the information.

Sparklefizz

But if migrants are not housed in hotels, where will the Govt put them? No answer given to that.

New accommodation is going to be built for them.

Calendargirl

Sparklefizz

But if migrants are not housed in hotels, where will the Govt put them? No answer given to that.

New accommodation is going to be built for them.

I also think that it is expected that the home office will get a grip and reduce the waiting list to a manageable size.

Once a decision has been made the asylum seekers should follow one of two routes.
First they are declared refugees and are then able to seek employment, pay tax and find a home.

Or

They are rejected and should be sent back whence they came.

Calendargirl

Sparklefizz

But if migrants are not housed in hotels, where will the Govt put them? No answer given to that.

New accommodation is going to be built for them.

Will that be before or after our homeless veterans?

Whitewavemark2

Calendargirl

Sparklefizz

But if migrants are not housed in hotels, where will the Govt put them? No answer given to that.

New accommodation is going to be built for them.

I also think that it is expected that the home office will get a grip and reduce the waiting list to a manageable size.

Once a decision has been made the asylum seekers should follow one of two routes.
First they are declared refugees and are then able to seek employment, pay tax and find a home.

Or

They are rejected and should be sent back whence they came.

It's easy when you say it quickly, isn't it?

Premium Bond holders who have lent the the government £130 billion with no guarantee of a return.

Premium Bond holders are not guaranteed a return on their investment but the original capital is safe, so the 3 x £1 bonds I have from 1957 are still worth £3 and have never gained a penny in interest.
Inflation means that I'd need £62.64 to purchase the same goods I could have bought for £3 then.
But at least I still have £3 and didn't spend it on something frivolous!

New accommodation is going to be built for them

Calendargirl where did you get this information from?