Good morning. The government plans to be spending almost £1.4tn in 2026-27, rising to almost £1.5tr in 2028-29. Those annual limits are already agreed. Today, when Rachel Reeves, the chancellor, stands up at 12.30pm to present the spending review, she will explain how she has decided to divvy up that money between government departments over the next three years.
This is not a budget, and she will not be announcing changes to tax policy. But it will feel like a budget because, like a budget, it will involve decisions that affect the public services people rely upon. And it is bound to intensify speculation about whether taxes will have to go up in the next budget, in the autumn.
Public spending is hideously complicated, and Reeves needs a clear, simple narrative that will land with the public at large. We know what it is because the Treasury sent out a press release last night with words from the statement where Reeves will sum up what she is trying to achieve. She will say:
This government is renewing Britain. But I know too many people in too many parts of the country are yet to feel it.
This government’s task – my task – and the purpose of this Spending Review – is to change that. To ensure that renewal is felt in people’s everyday lives, their jobs, their communities.
So that people can see a doctor when when they need one. Know that they are secure at work. And feel safe on their local high street …
I have made my choices. In place of chaos, I choose stability. In place of decline, I choose investment. In place of retreat, I choose national renewal.
These are my choices. These are this government’s choices. These are the British people’s choices.
The government differentiates between current, day-to-day spending (“resource” spending, in Treasury jargon) and capital spending. In so far as Reeves has “good news” to announce, much of it is in the capital spending area, because she changed her fiscal rules last year to allow more borrowing for infrastructure projects. That is why she is saying “In place of decline, I choose investment”, not “I choose spending”. Some government departments will face real-terms spending cuts.
But there is an obvious political problem with this, well summarised by John McDonnell, shadow chancellor when Jeremy Corbyn was Labour leader, in this comment to the Financial Times.
Capital spend takes years to produce political results, while cuts in revenue spending on services like council services are felt adversely quickly.
It is easy to promise national renewal, but it is a lot harder to make people believe it is happening. Today’s decisions will have a big effect on what voters do end up concluding about this, but it will take a while to know for sure what that effect will be.
Here is Aamna Modhin’s assessment of what to expect in the spending review in her First Edition briefing.
And here is our overnight preview story, by Kiran Stacey, focusing on the proposal to spend £39bn on affordable housing.
Here is the agenda for the day.
9am: Keir Starmer chairs cabinet, where Rachel Reeves, the chancellor, will be briefing colleagues on what is in the spending review.
Noon: Starmer faces Kemi Badenoch at PMQs.
12.30pm: Reeves makes a statement to MPs about the spring statement.
4pm: The Institute for Government thinktank holds a briefing on the spring statement.
4.15pm: The National Police Chiefs’ Council gives its response to the spending review.
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If you want to flag something up urgently, it is best to use social media. You can reach me on Bluesky at @andrewsparrowgdn.bsky.social. The Guardian has given up posting from its official accounts on X, but individual Guardian journalists are there, I still have my account, and if you message me there at @AndrewSparrow, I will see it and respond if necessary.
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Key events
Lib Dems call for £2 bus fare cap in England to be restored
One of the more popular decisions taken by the last Conservative government was capping bus fares in England at £2. The policy was introduced at the start of 2023, but the government did not commit to funding it permanently and it was only due to last until the end of 2024.
When Labour came to office, it said that a new £3 cap would apply – but just until the end of 2025.
Last night LBC reported that this will be extended at least until March 2027.
The Liberal Democrats say the cap should be restored to £2. Paul Kohler, the Lib Dem transport spokesperson, said:
Household budgets are still really feeling the squeeze, so many will be really disappointed to see that the government is moving to make the bus fare hike permanent.
This will hit those who rely on public transport to get around to their local high street or to work and school in the pocket. People have been telling them they got this wrong, but Labour clearly isn’t listening.
Meanwhile, vital local bus services are in a death spiral, with rural communities particularly badly hit as routes are slashed. The government should be heeding Liberal Democrat calls to scrap the bus tax and bring the cap back to its previous level.
In Wales politcians from almost all parties have been complaining for years about the UK government’s decision to categorise HS2 as a project for England and Wales, even though the line does not go through Wales at all. Treating it as a project that nevertheless benefit Wales means Wales does not get equivalent money for its own infrastructure, under the Barnett formula.
According to a report by ITV Cymru, Wales will get £445m for rail in the spending review. ITV quotes a Welsh Labour source as saying:
This investment is more than Wales would have had so far had HS2 been Barnettised. It will make a massive difference economically and politically.
Reeves and Cooper says Border Security Command to get funding boost worth up to £280m a year by 2029
Yvette Cooper, the home secretary, was the last minister to settle in the spending review negotiatons and there have been reports that her talks with Rachel Reeves, the chancellor, got acrimonious. The police have claimed the financial settlement they have been offered is not high enough.
But Cooper and Reeves have put on a united front in the Sun, where they have both put their names to a joint article saying there will be a significant increase in spending on border security. They say:
We need to go much further and faster to get one step ahead of the tactics used by small boat gangs.
That is why we will boost investment to secure our borders, with up to £280m per year in the Border Security Command by 2028/29.
With this funding we will invest in new specialist investigators, new technology and cutting-edge surveillance equipment to disrupt and destroy this criminality.
The Sun says £580m is being spent over three years on border security, with some of the money funding drones to monitor small boats in the Channel.
Trump administration condemns decision by UK and others to sanction far-right Israeli ministers
The US government has condemned the decision by the UK and four other countries to sanction two far-right Israeli ministers.
In a post on X, Marco Rubio, the US secretary of state, said:
The United States condemns the sanctions imposed by the governments of United Kingdom, Canada, Norway, New Zealand, and Australia on two sitting members of the Israeli cabinet. These sanctions do not advance U.S.-led efforts to achieve a ceasefire, bring all hostages home, and end the war.
We reject any notion of equivalence: Hamas is a terrorist organization that committed unspeakable atrocities, continues to hold innocent civilians hostage, and prevents the people of Gaza from living in peace.
We remind our partners not to forget who the real enemy is. The United States urges the reversal of the sanctions and stands shoulder-to-shoulder with Israel.
This is a rare example of the Trump administration and the UK government disagreeing publicly over an issue. While the two governments are worlds apart politically, Keir Starmer has invested a lot of time in trying to develop a good relationship with Donald Trump and he has been reluctant to criticise almost anything the Trump regime has done, arguing that getting on with the White House is in the national interest.
Five charts that explain background to spending review decisions
When it comes to the public finances, graphs normally explain far better than words. Richard Partington has five charts explaining the context for the choices Rachel Reeves is making.
Good morning. The government plans to be spending almost £1.4tn in 2026-27, rising to almost £1.5tr in 2028-29. Those annual limits are already agreed. Today, when Rachel Reeves, the chancellor, stands up at 12.30pm to present the spending review, she will explain how she has decided to divvy up that money between government departments over the next three years.
This is not a budget, and she will not be announcing changes to tax policy. But it will feel like a budget because, like a budget, it will involve decisions that affect the public services people rely upon. And it is bound to intensify speculation about whether taxes will have to go up in the next budget, in the autumn.
Public spending is hideously complicated, and Reeves needs a clear, simple narrative that will land with the public at large. We know what it is because the Treasury sent out a press release last night with words from the statement where Reeves will sum up what she is trying to achieve. She will say:
This government is renewing Britain. But I know too many people in too many parts of the country are yet to feel it.
This government’s task – my task – and the purpose of this Spending Review – is to change that. To ensure that renewal is felt in people’s everyday lives, their jobs, their communities.
So that people can see a doctor when when they need one. Know that they are secure at work. And feel safe on their local high street …
I have made my choices. In place of chaos, I choose stability. In place of decline, I choose investment. In place of retreat, I choose national renewal.
These are my choices. These are this government’s choices. These are the British people’s choices.
The government differentiates between current, day-to-day spending (“resource” spending, in Treasury jargon) and capital spending. In so far as Reeves has “good news” to announce, much of it is in the capital spending area, because she changed her fiscal rules last year to allow more borrowing for infrastructure projects. That is why she is saying “In place of decline, I choose investment”, not “I choose spending”. Some government departments will face real-terms spending cuts.
But there is an obvious political problem with this, well summarised by John McDonnell, shadow chancellor when Jeremy Corbyn was Labour leader, in this comment to the Financial Times.
Capital spend takes years to produce political results, while cuts in revenue spending on services like council services are felt adversely quickly.
It is easy to promise national renewal, but it is a lot harder to make people believe it is happening. Today’s decisions will have a big effect on what voters do end up concluding about this, but it will take a while to know for sure what that effect will be.
Here is Aamna Modhin’s assessment of what to expect in the spending review in her First Edition briefing.
And here is our overnight preview story, by Kiran Stacey, focusing on the proposal to spend £39bn on affordable housing.
Here is the agenda for the day.
9am: Keir Starmer chairs cabinet, where Rachel Reeves, the chancellor, will be briefing colleagues on what is in the spending review.
Noon: Starmer faces Kemi Badenoch at PMQs.
12.30pm: Reeves makes a statement to MPs about the spring statement.
4pm: The Institute for Government thinktank holds a briefing on the spring statement.
4.15pm: The National Police Chiefs’ Council gives its response to the spending review.
If you want to contact me, please post a message below the line when comments are open (normally between 10am and 3pm at the moment), or message me on social media. I can’t read all the messages BTL, but if you put “Andrew” in a message aimed at me, I am more likely to see it because I search for posts containing that word.
If you want to flag something up urgently, it is best to use social media. You can reach me on Bluesky at @andrewsparrowgdn.bsky.social. The Guardian has given up posting from its official accounts on X, but individual Guardian journalists are there, I still have my account, and if you message me there at @AndrewSparrow, I will see it and respond if necessary.
I find it very helpful when readers point out mistakes, even minor typos. No error is too small to correct. And I find your questions very interesting too. I can’t promise to reply to them all, but I will try to reply to as many as I can, either BTL or sometimes in the blog.
