{"id":289034,"date":"2025-06-12T00:18:30","date_gmt":"2025-06-12T00:18:30","guid":{"rendered":"https:\/\/peraltafinancing.com\/uncategorized\/reeves-gambles-on-renewing-britain-to-win-trust-of-voters-and-see-off-reform-spending-review-2025\/"},"modified":"2025-06-12T00:18:30","modified_gmt":"2025-06-12T00:18:30","slug":"reeves-gambles-on-renewing-britain-to-win-trust-of-voters-and-see-off-reform-spending-review-2025","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=289034","title":{"rendered":"Reeves gambles on \u2018renewing Britain\u2019 to win trust of voters and see off Reform | Spending review 2025"},"content":{"rendered":"


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Rachel Reeves has gambled billions of pounds of infrastructure spending on \u201crenewing Britain\u201d<\/a> before the next election but faces a challenge to convince voters Labour can deliver change amid deep cuts to everyday spending.<\/p>\n

The chancellor admitted that \u201ctoo many people in too many parts of our country\u201d were yet to feel the benefits of the change they voted for when Labour<\/a> was swept to power with a huge majority last year.<\/p>\n

With many Labour MPs already feeling unsettled about the electoral threat of Reform UK<\/a>, she has already launched a charm offensive to convince them that her spending review on Wednesday was not a return to austerity.<\/p>\n

Economists warned that mounting pressures on spending, including the U-turn on winter fuel payments for pensioners<\/a> and Labour MPs\u2019 backlash against disability benefit cuts, meant Reeves could be forced to raise taxes or look for more savings in the autumn.<\/p>\n

There could be other tax increases ahead, with the Treasury\u2019s calculations being based on assumptions that local authorities will put up council tax by the maximum 4.99% a year for three years to fund services, including adult social care.<\/p>\n

Writing in the Guardian, Keir Starmer said departmental budgets, which will grow by 2.3% a year in real terms, showed the government had \u201centered a new stage\u201d in its efforts to transform the country<\/a>.<\/p>\n

\u201cIt is an investment in Britain\u2019s renewal, so working people have more money in their pocket, more pride in their community and more hope for their children\u2019s future,\u201d he wrote.<\/p>\n

The NHS and defence were the big winners<\/a> of the spending review, with 90% of the increase in the day-to-day budget over the next three years going to health and 80% of the boost in capital spending going to defence, according to the Resolution Foundation.<\/p>\n

However, it means other Whitehall departments, including the Home Office, Ministry of Housing Communities<\/a> and Local Government, and the departments of culture, transport and environment, all face real terms cuts to their everyday budgets, as does the Foreign Office, mainly as a result of aid cuts.<\/p>\n

Ministers have been chastened by polls which suggest that Labour\u2019s decision to increase spending overall at the autumn budget has not yet filtered through to voters, after a bumpy first year in power, contentious decisions over welfare cuts and a rise in national insurance for employers.<\/p>\n

<\/svg><\/span>The chancellor reminded voters that Nigel Farage had Liz Truss\u2019s disastrous mini-budget as \u2018the best Conservative budget since the 1980s\u2019.<\/span> Photograph: Adam Vaughan\/EPA<\/figcaption><\/figure>\n

A growing clamour for change has been reflected in a surge in support for Reform UK<\/a>. In her statement to MPs, Reeves reminded them that Nigel Farage, the party\u2019s leader, had described Liz Truss\u2019s disastrous mini budget as \u201cthe best Conservative budget since the 1980s\u201d.<\/p>\n

She said Reform was \u201citching to do the same thing all over again\u201d and had already racked up \u00a380bn in unfunded spending commitments<\/a> since the last election. \u201cThey are simply not serious,\u201d she said.<\/p>\n

In response to a threat from the right, the chancellor made a high-stakes promise to cut spending on asylum hotels by the end of the parliament<\/a>, which she said would save \u00a31bn. There was also \u00a3280m more a year for the new Border Security Command.<\/p>\n

But the Home Office will receive a budget cut that will extend beyond the asylum savings, causing alarm from police officers and the London mayor, Sadiq Khan.<\/p>\n

The government set out its version of Elon Musk\u2019s \u201cDoge\u201d efficiency pledges, suggesting they would make cuts of \u00a314bn to through operational improvements, digital transformation, cutting consultants and implementing AI.<\/p>\n

Despite free school meals being expanded to at least 500,000 more pupils, lifting 100,000 out of poverty, school budgets will be squeezed. Teachers will get a 4% pay rise next year via additional funding of \u00a3615m but schools will have to fund about a quarter of it themselves.<\/p>\n

The spending review marked the culmination of months of discussions between Reeves and her cabinet colleagues. Negotiations with the home secretary, Yvette Cooper, went down to the wire.<\/p>\n

In recent days, ministers announced \u00a315bn for transport outside London<\/a>, \u00a314.2bn to build a new nuclear power station<\/a> and an increase that will almost double government spending on affordable housing<\/a> to nearly \u00a340bn over the next 10 years.<\/p>\n

After months of speculation over the government\u2019s commitment to net zero, Reeves confirmed ministers would not cut Labour\u2019s landmark \u00a313.2bn fund to fix draughty homes<\/a>.<\/p>\n

Reeves drew a comparison with the 2.9% cut in the austerity years under the Conservative-Liberal Democrat coalition \u2013 a retort to her critics who have accused her of a return to austerity.<\/p>\n

\u201cAusterity was a destructive choice for the fabric of our society, and it was a destructive choice for our economy, too, choking off investment and demand,\u201d she said. \u201cCreating a lost decade for growth, wages and living standards \u2013 that is their legacy. My choices are different. My choices are Labour choices.\u201d<\/p>\n

Paul Johnson, director of the Institute for Fiscal Studies, hailed the \u201cgenuinely big sums\u201d the chancellor had set aside for infrastructure projects, but warned that some departments\u2019 day-to-day spending plans look tight.<\/p>\n

\u201cThe funding increases for health and defence are substantial. The corollary, of course, is a less generous settlement elsewhere,\u201d he said.<\/p>\n

<\/svg><\/span>\u2018Spend-now, tax-later review\u2019: Shadow chancellor Mel Stride picked holes in Labour\u2019s spending review.<\/span> Photograph: House of Commons\/AFP\/Getty Images<\/figcaption><\/figure>\n

Reeves changed her fiscal rules in last autumn\u2019s budget to pave the way for a \u00a3113bn uplift in investment spending, and Wednesday\u2019s statement set out details of where this funding will be allocated \u2013 much of it aimed outside London and the south-east.<\/p>\n

Beneficiaries include green energy, social housing and transport. The Treasury hopes such projects will create jobs (including in deprived areas), help to make the UK\u2019s sluggish economy more productive, and kickstart growth.<\/p>\n

As well as changing Treasury rules to support investment in England\u2019s regions, the spending review provides \u00a352bn for Scotland, \u00a320bn for Northern Ireland and \u00a323bn for Wales.<\/p>\n

\u201cWe are renewing Britain. But I know that too many people in too many parts of our country are yet to feel it,\u201d Reeves said. \u201cMy task as chancellor and the purpose of this spending review is to change that. To ensure that renewal is felt in people\u2019s everyday lives, in their jobs, and on their high streets.\u201d<\/p>\n

As the chancellor insisted she would stick to her fiscal rules \u2013 including meeting day-to-day spending through tax receipts \u2013 experts warned that any economic shock could push her plans off course.<\/p>\n

Andrew Goodwin, chief economist at consultancy Oxford Economics, said: \u201cConsidering the government\u2019s recent U-turn on winter fuel payments could be a precursor to higher government spending in other areas, it looks increasingly likely that substantial tax increases will be needed.\u201d<\/p>\n

Ruth Curtice, director of the Resolution Foundation, said: \u201cAfter a summer of spending, the budget this autumn will be far more challenging. The economic outlook is looking weaker \u2013 not stronger \u2013 since the spring, and that will require more tax rises or welfare cuts for the chancellor to meet her fiscal rules.\u201d<\/p>\n

The shadow chancellor, Mel Stride, called it a \u201cspend-now, tax-later review\u201d, adding that Reeves \u201cknows she will need to come back here in the autumn with yet more taxes and a cruel summer of speculation awaits\u201d.<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"

Rachel Reeves has gambled billions of pounds of infrastructure spending on \u201crenewing Britain\u201d before the next election but faces a challenge to convince voters Labour can deliver change amid deep cuts to everyday spending. 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