UK finance minister set on ‘renewing Britain’ as she unveils spending plans
On Wednesday, Treasury chief Rachel Reeves outlined spending plans for the coming years that included big funding boosts for health, defence and housing.
She said, “We are renewing Britain. But I know that too many people in too many parts of our country are yet to feel it. This government’s task, my task as Chancellor, and the purpose of this spending review, is to change that.”
The centerpiece of Reeves’ announcement was a substantial funding increase of £190 billion ($260 billion) for the day-to-day operations of public services across the UK. This move is intended to reverse years of underfunding under the Conservative government’s austerity measures, which began in 2010 following the global financial crisis.
Among the biggest recipients of this funding boost is the National Health Service (NHS), which continues to grapple with the long-term impacts of the COVID-19 pandemic. Reeves also reaffirmed Labour’s commitment to defense spending, with plans to raise it to 2.6% of national output by 2027, aligning with pledges made by Prime Minister Keir Starmer. While this figure remains below targets sought by NATO and U.S. leaders, it marks a significant increase in military investment.
Reeves also addressed Britain’s pressing housing crisis by announcing a massive £39 billion investment in social housing over the next decade. This forms part of a broader £113 billion infrastructure investment package, which includes transportation and energy projects primarily outside of London. The housing plan aims to build 1.5 million new homes by the next general election, scheduled to occur by mid-2029.
Despite the extensive investment plans, not all departments benefited. The Home Office, Culture Department, and Foreign Office saw budget reductions, with the Home Office’s cuts tied to expectations of reduced migrant arrivals and the phasing out of hotel accommodations for asylum seekers by 2029.
Reeves emphasized that her budget adheres to strict fiscal rules: day-to-day spending will not be funded by borrowing, and government debt as a percentage of GDP will be reduced by the end of this parliamentary term. This cautious fiscal stance reflects Labour’s pledge not to raise income or sales taxes, a promise that has left Reeves with limited fiscal flexibility.
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