UK Spending Plan Prioritizes Defense and Healthcare

Government Allocates Billions Amidst Economic Constraints

Rachel Reeves, the U.K.’s Chancellor of the Exchequer, unveiled a comprehensive Spending Review on Wednesday, detailing how billions of pounds will be distributed across government departments and infrastructure projects. The plan reflects a commitment to bolstering national security and healthcare while navigating a challenging economic landscape.

Defense Spending Rises

Responding to pressure from international allies, Reeves announced an increase in defense spending to 2.6% of Gross Domestic Product by April 2027. This represents a significant boost to the military, funding initiatives such as the construction of 12 new nuclear-powered attack submarines and advancements in drone, missile, and munitions manufacturing. The government also intends to strengthen its cyber warfare capabilities.

Record Investment in the National Health Service

The National Health Service (NHS) is set to receive what Reeves described as “a record cash investment,” with real-terms day-to-day spending increasing by 3% annually over the review period. This translates to an additional £29 billion per year for the NHS’s operational costs. This comes as the UK faces increasing pressure on its healthcare system; in February 2024, a report by the King’s Fund found that over 7.6 million people were waiting for NHS treatment. Source: The King’s Fund

Support for Housing and Education

A £39 billion investment will be directed towards social and affordable housing, addressing a critical need for accessible housing options. Furthermore, free school meals will be expanded to over 500,000 additional children whose parents receive Universal Credit, a welfare payment for low-income households. Previously, eligibility criteria were more restrictive outside of London.

Justice and Policing Enhanced

The government plans to invest £7 billion in creating 14,000 new prison places and allocate up to £700 million annually to reform the probation system. Police funding will also increase by an average of 2.3% per year, supporting the addition of 13,000 police officers, community support officers, and special constables across England and Wales.

Infrastructure and Energy Investments

Transport networks outside of London will benefit from a £15.6 billion funding boost, focusing on the North and Midlands regions. Transport for London will also receive a four-year settlement to ensure stability for future planning. Additionally, over £14 billion will be invested in building the new Sizewell C nuclear power station, alongside £2.5 billion for smaller modular reactors, aiming to create 10,000 jobs and enhance energy security.

“We are renewing Britain,”

—Rachel Reeves, Chancellor of the Exchequer

The Spending Review does not include any changes to taxation or borrowing levels. Reeves is committed to adhering to previously established fiscal rules, aiming to fund day-to-day spending through tax receipts and reduce debt as a percentage of GDP by 2029/30. The opposition Conservative Party criticized the plan, labeling it a “spend now, tax later” approach.