Chancellor Rachel Reeves recently addressed the House of Commons with her Spending Review, unveiling a sweeping set of measures that significantly reshape the UK’s approach to housing, public services, and national investment. Among the most notable announcements was a substantial increase in funding for affordable housing, signalling a firm shift in government priorities under the Labour leadership.
Reeves declared that the government would allocate £39 billion over the next ten years to support the creation of new social housing. This funding will be distributed among local authorities, housing associations, and private developers to help build more homes for people in need. Averaging £3.9 billion per year, the new programme nearly doubles the £2.5 billion annual allocation under the 2021-2026 scheme.
The Chancellor made it clear that this new Affordable Homes Programme is a key component of Labour’s long-term plan to address housing shortages. Reeves emphasised that towns and cities including Blackpool, Preston, Sheffield, and Swindon are already preparing proposals to take advantage of the upcoming funding opportunities.
In a controversial move, Reeves also announced that social housing landlords will be permitted to raise rents at a rate 1% above the Consumer Price Index (CPI) each year for the next decade. This measure doubles the five-year rent increase period she introduced last year, offering a longer horizon of financial predictability for landlords and investors.
Additionally, the government plans to reintroduce rent convergence, a mechanism that was scrapped in 2015. Rent convergence allows lower-cost rents to rise faster, bringing them in line with other properties in the social housing sector. The consultation on this policy is expected to provoke discussion among stakeholders.
The Spending Review extended beyond housing, with major investments across a range of public services. The National Health Service (NHS) will receive an additional £29 billion per year for its day-to-day operations. This represents a 3% annual increase in spending, continuing until the next general election.
Technological development also featured prominently in the Chancellor’s speech. Reeves allocated £2 billion to artificial intelligence (AI), as part of a broader goal to raise the total research and development budget to £22 billion. The investment aims to keep the UK at the forefront of innovation and scientific progress.
Public safety and justice received a boost, with a further £2 billion earmarked to recruit 13,000 additional police officers, Police Community Support Officers (PCSOs), and special constables. In parallel, the government will invest £7 billion to add 14,000 new prison places, addressing both crime prevention and capacity needs.
In response to public pressure, the government has also decided to partially reverse recent cuts to winter fuel payments. At a cost of £1.2 billion, more than three-quarters of pensioners will now be eligible to receive the payments again, offering crucial support during the colder months.
Defence spending is set to increase substantially, with an extra £11 billion allocated to the sector. The government plans to raise military expenditure from 2.3% of GDP to 2.6% by April 2027, with a broader commitment to reaching 3% in future, although no exact timeline has been provided. Some of this funding will come from reductions in overseas aid.
On immigration and asylum, Reeves announced that housing asylum seekers in hotels will end by 2029. To support this shift, the government has set aside an additional £280 million for enhanced border controls and improved immigration enforcement.
Education is another focal point of the Spending Review. The core schools budget will receive an additional £4.5 billion annually. Notably, half of this funding will be directed toward repairing “crumbling classrooms,” ensuring safe and conducive learning environments. Free school meals will also be expanded to 500,000 more children whose families are on Universal Credit.
The government is also investing heavily in the energy sector, specifically nuclear power. A total of £14.2 billion will go toward the construction of the Sizewell C nuclear power station, as well as smaller modular reactors. This move reflects the government’s commitment to diversifying and securing the UK’s energy supply.
Transport improvements are being prioritised as well, with £15.6 billion earmarked for upgrading infrastructure in Greater Manchester, the Midlands, Tyne-and-Wear, and the Oxford-Cambridge corridor. Additionally, bus fares outside of London will remain capped at £3 until at least spring 2027, helping to keep travel affordable for commuters.
In a final significant allocation, Reeves announced £86 billion in funding for scientific research. This will focus on advancements in medical treatments and the development of environmentally friendly, long-lasting batteries. These initiatives aim to solidify the UK’s position as a global leader in science and sustainability.
In concluding her address, the Chancellor stated that her primary goal since taking office has been to improve the lives of working people across the UK. She highlighted that, as a result of her fiscal planning, departmental budgets will grow by 2.3% in real terms. This, she claims, enables the government to allocate £190 billion more for the day-to-day operations of public services compared to previous government plans. The Spending Review sets the stage for a significant shift in how the country tackles housing, public services, and economic development in the years ahead.
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