When is the Spending Review – and what could be announced?

Chancellor Rachel Reeves will unveil the Spending Review, which lays out the long-term budgets for each government department, on Wednesday 11 June.

The Treasury has had to make tricky decisions as they assess the trade-offs between increasing spending in certain places and finding cuts in others.

The review will come less than three months after Reeves’s Spring Statement, and is the second phase of “Spending Review 2025”. The first part took place in the Autumn Budget, which confirmed departmental budgets for 2024-25 and set budgets for 2025-26.

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Susannah Streeter, head of money and markets at Hargreaves Lansdown, says the chancellor’s “fiscal juggling act” is becoming more difficult, with “multiple balls of pledges to be kept up in the air – from defence, to pay demands and relief for families and pensioners”.

The Spending Review “could prove to be one of the most significant domestic policy events of this parliament”, according to the thinktank the Institute for Fiscal Studies (IFS).

With this in mind, we look at what the Spending Review could contain, and when it will take place.

What is the Spending Review?

A Spending Review is the process the government uses to set departments’ budgets for future years. This covers services like the NHS, schools and transport, as well as how much money the government will invest to drive economic growth across the country, such as in big infrastructure projects or energy security.

The Chancellor of the Exchequer and the chief secretary to the Treasury lead the Spending Review.

Reeves already set department budgets for 2025-26 in the Autumn Budget, so the Spending Review will confirm spending allocations for the following three to four years.

The review covers two categories of spending: day-to-day, which includes things like salaries, supplies and administration costs; and investment, which includes funding for infrastructure as well as new buildings like schools and hospitals.

The Spending Review will set out day-to-day expenditure for three years and investment spending for four years.

The upcoming Spending Review “will be the first multi-year Spending Review since 2021, and the first to happen outside of a pandemic since 2015”, according to the IFS.

When will the Spending Review take place?

The Spending Review will be delivered by Reeves in the House of Commons on Wednesday, 11 June.

The Treasury confirmed to MoneyWeek that it will take place around 12:30pm, following Prime Minister‘s Questions. The Spending Review documents will be published once Reeves finishes speaking, and she will then take questions from the house, which could last an hour or two.

What has already been announced ahead of the Spending Review?

The government has already made some announcements ahead of next week’s Spending Review.

For example, spending on defence will rise from 2.3% of gross domestic product (GDP) to 2.5% by 2027 – that's around an extra £5 billion a year – and there’s an aim to increase it further to 3% by the next parliament.

Then there’s the commitment to give public sector workers in England a pay hike of 3-5% in 2025/26, rather than 2.8% as the chancellor had originally planned for – which could cost an extra £2-3 billion.

The Treasury has also announced a new eligibility criteria for the Winter Fuel Payment in a significant climbdown from the means-testing rules it announced in 2024 . On 9 April, the government said the “vast majority” of pensioners – over nine million people – will be able to get the payment this winter, at an estimated cost of £1.25 billion a year.

The provision of free school meals will be greatly expanded too, with the government pledging to provide them for all children in households on Universal Credit, instead of just those in households earning less than £7,400. More than 500,000 children will benefit from this, according to the government, and £1 billion has been earmarked for the scheme.

Infrastructure investment is another key area of the spending review. In her Spring Statement, the chancellor committed £13 billion to capital infrastructure over the next five years and said that the precise details of this will be seen at the Spending Review.

Now the review is upon us, we have some more details on what infrastructure the government will be investing in.

Reeves is set to unveil a £15.6 billion package to fund extensions to trams, trains and buses in Greater Manchester, the Midlands and Tyne-and-Wear.

The government has also pledged billions for investment in nuclear. The focal point of this is a £14.2 billion investment to build a new nuclear power station near Sizewell in Suffolk.

Sizewell is already home to two power stations, Sizewell A and B. Now, following years of delay, the third site, Sizewell C, has been given the green light.

Meanwhile, £2.5 billion will be put towards nuclear fusion. The government also said a preferred bidder had been chosen to build the UK’s first small modular nuclear reactor.

Budgets for all government departments have been set already as Reeves made a breakthrough with Yvette Cooper on Monday afternoon following disagreements on the policing budget.

It followed difficult negotiations with Angela Rayner, the housing secretary, and Ed Miliband, the energy secretary, last week as they challenged the Treasury, but final agreements were made by Monday.

What could be announced in the Spending Review?

During a speech in Manchester on 4 June, Reeves said not every government department will "get everything they want" in the Spending Review, and that a squeeze on funding was a "product of economic reality".

So, some departments may be disappointed by their funding allocation, and need to make cuts.

The NHS is an area we expect to be a major focus. The government campaigned on the promise to increase its funding in 2024 and Reeves is expected to outline this in the Spending Review.

Day-to-day health spending is anticipated to increase by 2.8% in real terms (£30 billion) over the next three years from April 2026, according to officials, The Times reports.

Meanwhile, billions are expected to be spent on capital spending and infrastructure projects, according to the Financial Times.

However, other departments will not be as lucky.

Treasury officials battled with housing minister Angela Rayner last week over the amount of money being directed towards local government, but eventually struck a deal.

There was also significant back and forth between Reeves and home secretary Yvette Cooper who jostled over the policing budget. Cooper had been pushing the Treasury for more cash, arguing the party wouldn't be able to meet its manifesto promise of safer streets without it.

The two departments reached an agreement on Monday afternoon, according to Politico, but Cooper seems to have settled for less than she bargained for.

London is also set to lose out on some investment after mayor Sadiq Khan was unable to convince the Treasury to provide funding for an extension to the Bakerloo underground line and a project to expand other parts of London’s transport network, according to the Financial Times.

What won’t be announced at the Spending Review?

The purpose of the Spending Review is to look at the spending of government departments and give them long-term expectations for their individual budgets.

The review is not a “fiscal event” like the Autumn Budget or the Spring Statement.

That means that we should not expect any new taxes or other revenue-raising measures to be announced. The chancellor has long held the view that she only wants to hold one major fiscal event a year, so if there are any changes to the government’s revenue-raising measures they are likely to be announced at the Autumn Budget.

While no specific taxes will be announced on Wednesday, the Spending Review will set the stage for future fiscal events as the government tries to meet its spending targets.

Hollands at Evelyn Partners says: “We may well see some expectation setting, as we saw this time last year, about ‘difficult decisions’ ahead, with the government potentially leaning into the twin factors of global trade uncertainties and rearmament as behind this.”

Will Reeves adjust her fiscal rules?

Whenever economic policy is discussed, the ‘fiscal rules’ always loom large.

These are a set of three self-imposed rules that govern how much Reeves is able to borrow and spend. The trouble is that they constrain what the chancellor can achieve, making them the target of a great deal of criticism.

However, there has been speculation that these rules could be adjusted in order to give the chancellor a bit more wiggle room. Recently the IMF suggested some “refinements” to the rules.

Streeter at Hargreaves Lansdown says if Reeves accepts the IMF’s recommendation and changes her fiscal rules, “the government might not be forced to make such frequent spending changes in reaction to changes to the economic outlook”.

Lindsay James, investment strategist at the wealth manager Quilter, says a rethink of the fiscal rules framework is likely to be a better approach than raising taxes in the Autumn Budget just so Reeves can “stick to her self-imposed fiscal rules”.

She adds: “While no one wants to see a repeat of the total disconnect with reality that led to the disastrous Truss Mini Budget, there is still scope for a different policy framework that minimises economic disincentives and distortions and prevents already underfunded departments from being asked to magic up further savings.”

It is worth noting that there have been no indications from Reeves that she will adjust her fiscal rules, which she has previously said are “iron-clad”.