British finance minister Rachel Reeves has today prioritised spending on health, defence and infrastructure projects to drive economic growth, in a bid to reboot the Labour government's offer of a brighter future to increasingly disillusioned voters.
Setting out day-to-day budgets for government departments from 2026 to 2029 and investment plans out to 2030, Reeves described the priorities of her so-called spending review as those of "working people" so that they are better off.
Keen to promote capital spending on housing, transport and cleaner energy projects, Reeves wanted to show the UK government was delivering on its plan for change. But with more money going to health and defence, day-to-day spending in other areas of government was expected to be squeezed.
"The priorities of this spending review are the priorities of working people - to invest in Britain's security, in Britain's health and to grow Britain's economy so that working people are better off," she told a noisy session of parliament.
"The choices in this spending review are possible only because of my commitment to economic stability," she said.
Reeves set the overall total for spending in an October budget, financing her plan with the biggest tax rise in a generation and looser fiscal rules that make it easier for her to borrow to cover long-term investment.
Her choices must start paying off quickly if Labour is to achieve its goals of boosting Britain's growth rate and improving the quality of overstretched public services.
She said the government's departmental budgets would grow by 2.3% a year in real terms, offering a further £190 billion for day-to-day spending on public services compared with the previous Conservative government's plans.
Among the projects announced today was a £39 billion 10-year programme to build lower-cost housing - almost doubling the annual amount spent on this compared with existing support. She also added to that by announcing an additional £10 billion to build more homes in England.
Since its sweeping election victory last July, Labour has seen its popularity slide, and Reeves herself has seen her ratings slump after the government introduced cuts to winter fuel payments for the elderly and to disability benefits.
In October, she also decided to place the main burden of tax rises on employers and boost workers' rights - something the opposition Conservatives said was to blame for the jobless rate hitting its highest in nearly four years.
The UK government has since made a partial U-turn on winter fuel payments, but the right-wing Reform UK party led by former Brexit campaigner Nigel Farage is now repeatedly ahead of Labour in opinion polls and outperformed it in English local elections last month.
"At the budget last October and again in the spring, I made the choices necessary to fix the foundations of our economy," Rachel Reeves said. "We are starting to see the results."
