On 11th June, Chancellor Rachel Reeves delivered her 2025 Spending Review, setting the direction for the UK’s public spending over the next several years. While it may not have the drama of a Budget, the decisions will still influence your income, local services and the wider economy.
What Actually is the Spending Review?
2. Expanding Free School Meals Nationwide
3. Potential Council Tax Rise as Local Services Improve
4. Fare Caps and Public Transport Investments
5. Winter Fuel Payments Returning for More Pensioners
6. Increases to Energy Bills with Potential Savings Later
7. Investment into More Affordable Homes
What Actually is the Spending Review?
The Spending Review is when the UK Government sets out how much money it plans to spend across different government departments over a set number of years. It is not the same as a Budget, which focuses on tax changes and new policies, but it is just as important because it determines funding for public services.
1. Public Sector Jobs and Pay
If you work in the public sector, this review could impact your pay or job security. While sectors such as the NHS, Defence and Science will benefit from increased funding, not every department is so fortunate.
- The NHS in England will receive a 3% annual real-terms boost in its day-to-day budget
- Defence spending will rise to 2.6% of GDP by 2027
The Home Office, Foreign Office, Environment and Transport departments will all see annual reductions. Although labelled as efficiency, these cuts may result in job losses or slower pay growth.
- For example: The Department for Transport will reduce day-to-day spending by 5% each year through to 2028/29
However, there is a silver lining. Projects like the Sizewell C nuclear power plant should create roughly 10,000 direct jobs and many more in related industries. These roles could offer new opportunities in engineering and construction.
2. Expanding Free School Meals Nationwide
From September 2026, all children in England whose parents receive Universal Credit will qualify for free school meals. At present, only households earning under £7,400 qualify.
The aim is to reduce food insecurity and support children’s health and learning. This move also brings England in line with Wales, Scotland and Northern Ireland, where similar schemes already exist.
The expansion will cost £410 million annually by 2028/29.
3. Potential Council Tax Rise as Local Services Improve
Around 350 communities could benefit from local “renewal” projects, including upgrades to parks, youth centres, libraries and swimming pools. While this sounds promising, it may lead to increased tax to fund the improvements.
The review documents suggest Council Tax bills are likely to rise to help fund these services, although exact increases will depend on local authority decisions. This extra revenue will help fund local services; including social care, infrastructure repairs and waste collection.
4. Fare Caps and Public Transport Investments
For regular bus users, there is good news. The original £2 cap on most bus fares in England, which rose to £3 in 2024, will remain in place until at least March 2027, meaning continued savings for commuters.
In addition, the government is investing in transport links. Northern Powerhouse Rail, which will connect Liverpool and Manchester is moving ahead. Tram networks in Greater Manchester, Leeds and Birmingham will also see improvements.
The Newcastle to Sunderland metro line be getting an extension and nearly £1 billion will go to improving train services in the South West.
5. Winter Fuel Payments Returning for More Pensioners
For winter 2024/25, only pensioners on Pension Credit received extra cost-of-living support on top of the standard Winter Fuel Payments. For winter 2025/26, the government is extending these payments to all pensioners in England and Wales with a taxable income under £35,000.
These payments, worth £200 or £300, will help cover energy costs during colder months. The Treasury estimates the change will cost £1.25 billion.
6. Increases to Energy Bills with Potential Savings Later
The government has committed £17.8 billion to build Sizewell C, a new nuclear power plant. Financing for this investment will come from borrowing; and households will see a small rise, around £1 per month, in their energy bills to cover the interest.
Ministers argue that once operational in the 2030s, Sizewell C will cut long-term energy bills by reducing dependence on imported fuel.
Alongside this, investment in home insulation should reduce energy consumption and carbon emissions, delivering long-term financial and environmental benefits.
7. Investment into More Affordable Homes
The government is investing a total of £39 billion into affordable and social housing over the next ten years. An extra £10 billion will go to Homes England to fast-track homebuilding.
The target?
To build 1.5 million new homes by 2030. This plan aims to tackle the UK’s housing shortage and improve access for lower-income families.
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