Rachel Reeves Prepares To Unveil Billions Of Pounds Of Cuts In 'Devastating' Spending Review
Rachel Reeves is preparing to unveil billions of pounds worth of cuts across Whitehall in her make-or-break spending review.
Analysis by the House of Commons library suggests unprotected departments will see their budgets slashed by £5 billion in real terms as the chancellor tries to pay for increased spending on the NHS and defence.
The Home Office is expected to be one of the biggest losers, with its overall budget facing a real terms cut of nearly £500 million, despite warnings from police chiefs that it will harm their attempts to tackle crime.
Angela Rayner’s ministry of housing, communities and local government could also lose around £350 million, putting at risk Labour’s pre-election pledge to build 1.5 million new homes before the next election.
The budget for adult education and apprenticeships could also face real terms cuts worth over £685 million by 2028-29.
Both Rayner and home secretary Yvette Cooper were the last cabinet ministers to have their budgets agreed – with Reeves eventually taking the highly unusual step of imposing a settlement on the Home Office.
The chancellor will on Wednesday announce a huge increase in so-called “capital” spending on major infrastructure projects, including £15.6 billion on transport projects in the north and Midlands, and £15 billion on the new Sizewell C nuclear plant.
She will also say the government will spend £86 billion on the science and technology sector by the next election, to help fund research into drug treatments and longer-lasting batteries.
The NHS will see its budget increase the most, while Keir Starmer has already confirmed that spending on defence will rise from 2.3% to 2.5% of gross domestic product (GDP) by 2027, with the money coming from cutting foreign aid.
But Paul Johnson, director of the Institute of Fiscal Studies, said: “One number to look out for is 2.5%. If the Department for Health and Social Care gets an annual increase of that amount, then after accounting for the extra cash promised to defence, there will be nothing left to increase the budgets of other departments.
“2.5 for health means zero, on average, for everything else. It will probably get more than that. There is speculation that it will get an increase 2.8 per cent, or perhaps 3 per cent a year. That will mean cuts to be shared out elsewhere.”
He added: “If the government is promising cuts, do those cuts come with realistic plans for how to achieve them? If not then we are likely to be in for a rocky ride.”
The House of Commons analysis was based on the Office for Budget Responsibility’s projections from the Spring Statement in March, and carried out for the Lib Dems.
It found that unprotected departments, which exclude NHS England, the core schools budget and defence, could see real-terms cuts worth nearly £5 billion in total by 2028/29.
Lib Dem Treasury spokesperson Daisy Cooper said: “The potential scale of these cuts at the spending review is staggering.
“From social care to neighbourhood policing, this Labour government is at risk of failing to deliver the change that people were promised. The best way to avoid this devastating spending squeeze is to generate meaningful growth, but the chancellor is acting more as a handbrake rather than an accelerator.”