Winners and losers from the spending review

Image - Sarah Agnew

This article was originally published on Jun 12, 2025.

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‍Rachel Reeves approached the dispatch box yesterday to set out the government’s fiscal priorities. Ultimately deciding – who gets what money and what the direction of this government will be.

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So which departments were winners, and who lost out?

Winners: NHS, Defence, Asylum and Border Control, Energy and Nuclear, Science and Tech, and Housing.

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As everyone expected, the 2 big winners were the NHS and Defence.

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The NHS will gain an extra 2.8% real term rise in day-to-day expenditure, equal to £29bn a year. Yesterday’s Spending Review coincides directly with the publishing of the new NHS 10 year plan. There are 3 key themes to the boost in spending, increased utilisation of tech, shifting the burden off hospitals towards a more community centric approach and prioritising prevention. The NHS tech budget will increase by 50% and there will be £10bn to bring the “analogue health system into the digital age”.

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The MoD will see an increased flow of cash, as Reeves committed to raising spending to 2.6% of GDP by April 2027 (an £11bn increase including £600mn extra for intelligence and security agencies). As previously announced, Ministers would like to increase defence spending to 3% of GDP by the next parliament, however there is currently no clear route to this.

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Reeves re-iterated that border security remained an important issue, and backed this up with £280mn more per year by the end of the spending review for the new Border Security Command. The Chancellor also announced that by 2029 the government would end the use of hotels to house asylum seekers. The latest figures show that 32,000 individuals are currently housed in asylum hotels.

Ed Miliband and energy were another winner, especially since many had suspected they would lose out. The spending review signalled an undeniable alignment on energy between himself and Starmer and a commitment to GB Energy. What is being termed as the biggest nuclear building programme for half a century was announced, including £14.2bn being invested into the Sizewell C nuclear plant (enough to cover the next 4 years of construction), alongside £2.5bn for a new small modular reactor programme.

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Science and tech was a notable winner, their budget will go up an annual average of 7.4%. Reeves has pledged a record £22bn per year for research and development funding. Plus the government will invest £2bn in homegrown AI, alongside other commitments to their AI Action Plan. There will also be a two-thirds uplift to British Business Bank funding (how this will be spent will be announced later this month). In a tight fiscal environment, where other departments are facing cuts, this is an enormous win for the department and industry.

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Housing was the final winner of the spending review, with a £39bn investment in affordable housing over 10 years, and an extra £10bn to help “crowd in” private sector investment in housebuilding.

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It’s also important to highlight that the chancellor confirmed that free school meals would be extended to over half a million more children. Noting that the policy alone will lift 100,000 children out of poverty.

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Losers: London, FCDO, Transport, Environment and Rural Affairs, and Business and trade.

London loses out, with Mayor Sadiq Khan commenting that “the way to level up other regions will never be to level down London”. This comes after a number of London infrastructure projects did not get the backing of the Treasury.

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The Foreign Office will lose 6.9% a year, predominantly in aid spending. This is in order to pay for the significant uplift in defence spending.

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Transport will lose 5% over the next 3 years, although Reeves confirmed £15bn for new rail, tram and bus networks for the West Midlands and North, as well as a new rail line between Manchester and Liverpool.

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The Environment and Rural Affairs department will lose 2.7%.

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Business and Trade will lose 1.8%.

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Round-Up

The message Reeves is trying to send is that the government has steadied the ship and it’s now time for action and renewal.

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But the cost of borrowing still looms large over the government, and people want to see a tangible impact of decisions.

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This means that the chancellor has to balance the necessary long term (decade plus) investments with short to medium term investments so that people will see an ROI before the end of this parliament. If successful, it would mean that Labour could walk into the next election in 2029 with something to back up their tax rises. Only time will tell.