In a landmark address to Parliament, Chancellor Rachel Reeves laid out a comprehensive and ambitious spending review that signals a new era of investment, stability, and national renewal under the Labour government. Her speech was not just a fiscal roadmap—it was a declaration of intent to rebuild Britain’s economy, infrastructure, and public services.
Reeves began by highlighting the dire state of public finances inherited from the previous government, citing a “£22 billion black hole.” She emphasised that her first priority as Chancellor was to restore stability:
The Chancellor reaffirmed Labour’s commitment to the NHS:
- £29 billion per year increase in NHS day-to-day spending.
- Recruitment of 1,700 new GPs and 3.5 million extra appointments.
- £10 billion for NHS digital transformation.
- Mental health support in all schools by the end of Parliament.
Responding to the Chancellor’s announcements on the Comprehensive Spending Review, Matthew Taylor, chief executive of the NHS Confederation, said:
“Health leaders recognise that the NHS is being prioritised for investment over other parts of the public sector."
"The funding boost is welcome given the precarious state of public finances and will help the NHS to cope with rising demand from an ageing population, often with multiple or more complex physical and mental health conditions.
“But difficult decisions will still need to be made as this additional £29 billion won’t be enough to cover the increasing cost of new treatments, with staff pay likely to account for a large proportion of it. So on its own, this won’t guarantee that waiting time targets are met.
“NHS leaders will therefore need continued backing from the government to redesign services and balance budgets. That means getting political backing when some services are redesigned or cut, including moving hospital services into the community and closer to people’s homes as part of the government’s three shifts.
“Given the difficult state of public finances health leaders will understand that there is only so much vital capital funding to go round. But we cannot ignore that today’s flat settlement continues to leave a major shortfall in capital funding and also fails to lift the ban on private investment that is required to boost NHS capital funding. This needs to be addressed in the upcoming national infrastructure strategy and ten-year plan. Only then will the NHS be able to work with the private sector to build new healthcare facilities, including much mooted neighbourhood health hubs, while also supporting economic growth and local regeneration.”
Nuffield Trust Senior Policy Analyst Sally Gainsbury said:
“The spending announced for the NHS exemplifies the dilemma faced by a government boxed in by anaemic growth and little appetite for further tax rises.
“Spending pressures including inflation and increased planned treatment capacity mean that the funding announced at the Autumn Budget has been more than wiped out. DHSC starts the period covered by this Spending Review £1.3bn in the red.
“Compared to the settlements for other departments - from policing to education - the NHS deal looks generous. But seen in the context of all the promises made by the government to the British people - to drive down waiting lists, shift care closer to home, rapidly improve tech - and the commitments to meet staff pay demands and rising costs of new drugs, today’s settlement soon melts away. With capital funding staying flat in real terms for the rest of the spending review period, it will be difficult for the NHS to invest in the technology and facility upgrades it needs to meet the government's ambitious productivity targets.
“A hope for the government’s 10 Year Health Plan is that reform and productivity gains will mean that the NHS can cope with its spending growing slower than it has for much of its history. But the government must be clear what its priorities are for health and where there will be compromise. Other sectors will also need to play a part in reducing healthcare need. For example, it remains to be seen whether the government's changes to the benefit system will support or hinder improvements in population health. It is also unclear how much of the investment announced today in affordable housing will come in the form of much needed social housing.
“We now know what money Baroness Casey will have to work with as she carries out her review on social care over the next few years, and it’s unlikely to lead to the transformation we were promised. Local government may find enough money to keep up with existing demands from today’s settlement, but that will only come by racking up council tax again, and little will be left for a programme of reform. Plans for a Fair Pay Agreement for care workers are welcome, but with tightly constrained finances, councils could only fund this by cutting into other budgets.”
Image credit: iStock
