The 2025 spending review
This Labour Government knows that delivery is its only route to political salvation, as it cannot out manoeuvre Reform on the right. The Spending Review shows that the NHS and Defence will remain the central political priorities of this Government up to the next election.
The consequence of these departments consuming the lion’s share of resource, is that life is made all the more difficult for most other Ministers, who must contend with cuts or flat budgets. They must continue to do more with less.
The Chancellor has shown she is willing to borrow to invest in capital projects (with Ed Miliband and energy a big winner today), but capital investment makes up a much smaller portion of departmental spending (c.17%), meaning that day-to-day budgets (and therefore services) will still be squeezed, and there will be no short-term fixes.
The Government still faces its core trilemma: whether to break its fiscal rules, cut spending, or raise taxes—today’s Spending Review ultimately postpones but doesn’t resolve this choice.
Big spending, even bigger trade-offs
Today’s Comprehensive Spending Review is the first delivered by a Labour Chancellor in 18 years and claims to deliver £113 billion in public investment over the course of the Parliament, though set against a tight day-to-day spending envelope for most individual Government departments.