Chancellor Rachel Reeves has unveiled the Labour government’s 2025 Spending Review, a sweeping fiscal roadmap detailing how over £600 billion in public funds will be distributed across key sectors over the next four years.
Announced on 11 June, the review sets out new priorities for health, defence, housing, transport, and border control, positioning Labour’s first budget as a bold attempt at national renewal.
The speech, delivered just days after Keir Starmer’s Strategic Defence Review, comes at a critical moment for the UK economy. Reeves framed her budget as an investment in long-term stability, underpinned by fiscal caution, growth-focused interventions, and a commitment to rebuilding public trust.
NHS to Receive £30 Billion Boost
One of the most significant announcements was Reeves’ pledge to increase NHS funding by 3% a year in real terms over the next three years amounting to an additional £30 billion by 2028–29. Of this, up to £10 billion will be allocated for digital transformation and technology, with major expansions in GP training and a rollout of mental health support to every school.
Reeves stressed that “there is no strong economy without a strong NHS.” In that spirit, the government will also fund 700,000 additional urgent NHS dentist appointments per year to help clear the backlog that has persisted since the pandemic.
Defence Spending Rises, With Controversial Nuclear Programme
On defence, Reeves confirmed that the UK will increase military spending from 2.3% to 2.6% of GDP by 2027, amounting to an £11 billion uplift and a further £600 million for the UK’s intelligence and security services. She stated that a core priority will be to ensure this investment supports British jobs and domestic industries.
However, one of the more polarising moves is the £15 billion earmarked for a sovereign nuclear warhead programme, expected to support 9,000 jobs. This initiative falls within a wider Strategic Defence Review led by Prime Minister Keir Starmer and is designed to shift the UK towards “warfighting readiness” — a vision he has called a “battle-ready, armour-clad nation.”
Border Crackdown Sparks Human Rights Concerns
The review also allocates £280 million per year to enhance border security. Funding will go toward expanding drone surveillance, deploying specialist border police, and increasing intelligence-sharing with international agencies. The stated goal is to dismantle people-smuggling gangs facilitating dangerous small boat crossings across the Channel.
However, human rights groups have warned that such measures may prove inflammatory — especially given that 2024 is already the deadliest year on record for Channel crossings, with 61 fatalities by October. Critics argue that while the government frames its response as targeting “criminal gangs,” it may inadvertently force vulnerable migrants onto even riskier routes. The strategy also raises ethical and legal questions, particularly around the UK’s obligations under the 1951 Refugee Convention.
Infrastructure and Transport Investment Across the UK
In keeping with Reeves’ argument that a strong economy requires strong and reliable transport links, the review confirmed £15.6 billion in funding for city-region transport projects in England by 2031–32. An additional £2.3 billion will be invested in transport improvements outside the nine core city regions between 2026 and 2030 — a move aimed at making everyday journeys faster and more efficient.
To support overlooked regions, the government will also launch a Growth Mission Fund to fast-track long-neglected local projects. These include Southport Pier, Kirkcaldy’s seafront and High Street, and a new sports quarter in Peterborough. In the coming weeks, the government will also publish its Infrastructure and Industrial Strategies, designed to provide businesses and investors with the clarity and certainty they need to unlock future growth.
£39 Billion Affordable Homes Plan Announced
Housing featured prominently in the review, with Reeves announcing £39 billion over ten years for a new Affordable Homes Programme, the largest investment in social and affordable housing in a generation. The Labour government called this a “significant settlement” and the first time in modern history that such a programme has been backed by ten years of guaranteed funding.
Still, challenges remain. While the funding is historic, rising development costs, planning delays, and the lack of structural reform could stall delivery. William Reeve, CEO of Goodlord, welcomed the announcement but cautioned that the crisis is rooted in “a historic failure to ensure our housing stock keeps up with population growth.” Without bold planning reform and timely execution, he warned, “the supply gap may continue to grow — regardless of funding.”
What Comes Next
The 2025 Spending Review marks a defining moment for the Labour government. From rebuilding the NHS to renewing Britain’s industrial capacity and investing in forgotten towns, Reeves has laid out a vision that combines fiscal restraint with targeted ambition. The coming months and how swiftly promises to translate into delivery will determine whether this review is remembered as a turning point or another missed opportunity.
