Spending review 2025 | Reeves delivers package aimed at reversing decline

A commitment to Northern Powerhouse Rail and a promise to overhaul Green Book spending rules “to ensure no region has treasury guidance wielded against them”, were among the chancellor’s pledges.

Scroll down for a round-up of the spending review announcements

The spending review proper followed several big-ticket announcements in the preceding days that have grabbed national headlines.

They include more than £15bn for Northern transport infrastructure, a commitment to deliver a new railway line between Liverpool and Manchester, and an extra £3.9bn a year over the next decade for affordable housing.

Despite everything that went before, Reeves still had plenty of new things to say from the despatch box during a spending review that majored on energy, housing, infrastructure, and the NHS.

The chancellor pitched the spending review as a choice of “stability over chaos, investment over decline”.

She took regular jibes at the Conservatives, who she said had presided over 14 years of “mismanagement”.

Nigel Farage and his Reform UK party also came in for criticism, with Reeves saying the party is “simply not serious”, citing “£18bn of unfunded commitments” the party has made.

Reeves said her spending review, which includes £113bn for capital investment following changes to fiscal rules, was aimed at “renewing Britain”, adding that recent interest rate cuts and wage growth were signs that Labour is taking the economy in the right direction.

Speaking after Reeves, shadow chancellor Mel Stride said the statement was “not worth the paper it was written on” and predicted further tax increases and a “cruel summer of speculation” ahead.

Here is a round-up of what Labour said it will do between now and the end of this parliament.

Green book overhaul

Rachel Reeves has responded to calls from the North, including Liverpool City region Metro Mayor Steve Rotheram, to change the Green Book approach to assessing value for money for large projects.

Many outside of the capital see the Green Book as being biased towards London and the South West. While a recent review – the results of which were published today – found no “conclusive evidence” of this it conceded that “the methodology could be improved”.

This could lead to schemes in the regions being looked on more favourably in the future if the discount rate is reviewed “to ensure the fair assessment of transformational projects that provide long-term benefits”, the report states.

Rotheram described the move as a “vote of confidence” for the regions.

Reeves credited lobbying by Steve Rotheram as a reason for plans to overhaul the Green Book methodology. Credit: LCRCA

Boost for NPR

Having already announced several major transport investment, including a new line from Liverpool to Manchester via Warrington and Manchester Airport, Reeves pledged to unveil the government’s vision for Northern Powerhouse Rail over “the coming weeks”.

NPR is a plan to improve rail connectivity east to west, joining up some of the North’s largest cities with the aim of boosting economic growth.

Affordable homes

Billed as the biggest investment in discounted homes in a generation, Reeves has pledged £39bn over the next 10 years to deliver affordable homes.

As well a doubling of grant funding, the government also intends to allow social landlords to raise rents one percentage point above inflation, according to media reports.

The boost in grant funding follows Labour’s overhaul of the planning system, which is also aimed at increasing housing delivery.

Plans for NPR are due ‘in the coming weeks’. Credit: via Transport for the North

Infrastructure investment

Reeves confirmed last week’s injection of £15bn into transport infrastructure, calling it the “biggest ever investment of its kind”, and citing beneficiary projects such as new buses in Rochdale, train stations in Merseyside and Middlesbrough, and metro extensions in Tyne and Wear and Stockport. 

She said: “It is no good investing in new skills, new jobs, and new homes, if they are not properly connected”. 

Reeves added that investment in infrastructure would go alongside “strict guardrails for sensible spending” to unlock the development of thousands of homes. 

Last year, the chancellor announced funding for the TransPennine Route upgrade, across York, Leeds, and Manchester, which she committed a further £3.5bn toward in her speech. 

She added that by this summer, at least a quarter of the route would be fully electrified, in addition to local transport grants seeing a fourfold increase by the end of this Parliament in 2029. 

Energy

The chancellor said her party believes “energy security is national security” and criticised the Conservatives’ “neglect” of nuclear and renewable resources.  

Before announcing a £30bn commitment to “the biggest roll out of nuclear power for half a century”, £14bn of which would go to Sizewell C, she said nuclear was “the right choice for bills, the right choice for jobs, and the right choice for growth”. 

Reeves also committed £2.5bn for investment into small modular reactors in partnership with Derby-based Rolls-Royce, which has been appointed to develop the reactors, the first step towards a “full fleet of SMRs”. Private sector-led advanced modular reactor projects would also be given a fast-track route to be deployed UK-wide. 

The government confirmed that nuclear-approved land by Sellafield in Cumbria has been released to enable further private investment in the area, with an SMR tipped to move in. 

Reeves said the government would invest heavily in the publicly owned Great British Energy, though she did not give a concrete figure. 

Finally, the chancellor announced the government’s backing of carbon capture storage projects, including HyNet in Merseyside and North Wales, and Viking carbon capture storage in the Humberside region – the largest carbon-emitting region in the UK. 

The proposed Viking CCS pipeline would stretch from Immingham Industrial Estate to Theddlethorpe, where an existing pipeline takes emissions to be sequestered under the North Sea, while the £250m HyNet is already under construction by United Living in the North West. 

Best of the rest

• A total of £4.7bn to fix “crumbling” schools and rebuild 500 more

• Creation of a Growth Mission Fund to ensure locally important projects like the refurbishment of Southport Pier get delivered

• Trailblazer neighbourhoods – 25 locations across the country, including Little Layton and Little Carleton in Blackpool, Brinnington in Stockport, and Thorntree in Middlesbrough, will get £2m a year over the next 10 years.

• £10bn for Homes England to invest in regeneration projects as a “financial institution”

• A promise to end the use of hotels as temporary accommodation in this parliament as part of immigration reforms aimed at saving the taxpayer £1bn a year

• R&D funding to rise to £22bn a year by 2029, which is good news for life sciences in places like Liverpool and Manchester

• Skills – £1.2bn a year by the end of the parliament to get young people into training programmes and apprenticeships in trades including construction and plumbing

• An unspecified amount of funding for 350 communities to pay for local facilities like parks and youth centres to ensure the “renewal of Britain is felt everywhere”.