The Spending Review 2025: Key Takeaways for Public Services
What does the published Spending Review 2025 say about the UK government's investments in security, health and the economy over the next 5 years, and what does this mean for spending on public services?
On Wednesday, the Chancellor presented the Spending Review 2025 to parliament, announcing that departmental budgets will grow by 2.3% across the Spending Review period, as well as the NHS seeing a £29bn real terms increase in annual day-to-day spending, defence spending rising to 2.6% GDP from 2027, and £7bn for 14,000 new prison places to support the justice system. We've created a handy infographic that summarises the key takeaways and investments in public services from this Spending Review. You can find the summary in plain text below the graphic.
Key Takeaways
- Protected Departments (Health, Defence and Education) account for majority of spending increases - nearly three quarters of the total 1.5% real-terms increase in day-to-day spending from 25/26 to 29/30.
- Majority of four-year capital spending increases going to defence, energy and transport, with NHS Capital spending flat
- Local Government protected from cuts, with 2.6% real-term increase in core day-to-day spending from 25/26 to 29/30
Key Investments in Public Services
Health and Social Care
- 2.7% Real terms increase in DHSC day-to-day spending from 25/26 to 28/29 - higher than the 10-years pre-COVID but below the historic average and the rate needed for the NHS Workforce Plan
- £10bn NHS technology & digital transformation investment
- Over £4bn increase in funding for adult social care & additional funding for training more GPs
- Target productivity improvements for the NHS of 2% per year
Education
- Core schools budget to increase by £2bn (1.1% real growth per pupil per year)
- £0.41bn per year by 2028-29 to expand Free School Meals
- £2.4bn each year for School Rebuilding Programme
- £0.37bn across 4 years for school-based nurseries
Transport
- £15.6bn in total by 2029-30 for selected cities via Transport for City Regions settlements
- £2.3bn in the Local Transport Grant in Phase 2
- £3.5bn for TransPennine Route & £2.5bn for East West Rail
Housing
- £39bn for a new 10-year Affordable Homes Programme
- £4.8bn in Financial Transactions (26/27 to 29/30) to spur private investment and boost house building
- £0.95bn capital investment in Local Authority Housing Fund
Defence
- Spending to rise to 2.6% of GDP by 2027
- £15bn nuclear warheads, £1bn laser weapons, £4bn autonomous systems, £6bn munitions, and £7bn infrastructure from capital
Home Office
- Increase in national security funding - £0.1bn per by 2028-29
- £0.28bn top-up per year for strengthening border security & fighting people-smuggling gangs
- £0.2bn to reform asylum, aiming to save £1bn per year by 28/29
Justice
- Real terms increase of 2% per year in day-to-day funding for justice from 25/26-29/30, but reduction of 2.1% in capital spend
- £7bn total for 14,000 new prison places (2024-2030)
- £0.7bn for probation service & £0.45bn for courts per year by 28/29
Learn More
The PSC's mission is to make public services brilliant. If you have any questions about the Spending Review 2025 or want to discuss how we can support your organisation in response to this review, contact us at hello@thepsc.co.uk
The full Spending Review 2025 document can be found on the Gov.UK website.
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