UK Spending Review Update – October 2025
Home Secretary Yvette Cooper remains the only cabinet minister yet to finalize a budget agreement with the Treasury as of the impending Spending Review scheduled for Wednesday. This critical financial review aims to establish departmental budgets for the upcoming years.
Recent negotiations have been ongoing between Cooper and Chancellor Rachel Reeves, with progress reported. Housing and Communities Secretary Angela Rayner secured a funding deal with the Treasury on Sunday evening. However, discussions remain challenging for Cooper, largely due to disagreements surrounding police funding.
On Sunday, Technology Secretary Peter Kyle emphasized that police must contribute to reforming public services, acknowledging that “every part of society is struggling.” He indicated that the Chancellor is under significant pressure from all sectors for additional financial resources. While the Spending Review is anticipated to allocate increased funding for education and scientific research, Kyle did not dismiss the possibility of budget constraints impacting the police.
Moreover, Home Office officials suggest that achieving the Labour Party’s pledged recruitment of 13,000 additional police and community support officers may not be feasible due to funding shortages. Kyle pointed out that the government has already allocated an additional £1 billion to police funding and conveyed expectations for police reform and adaptation.
When questioned about safeguarding the housing department from budget reductions amid plans to construct 1.5 million new homes by the end of Parliament, Kyle remained non-committal yet reaffirmed the government’s dedication to its manifesto promises.
These eleventh-hour discussions precede a week of substantial significance for governmental finance. Reports indicate that the NHS may receive a financial boost, with the Department of Health poised for increased funding. However, other government sectors are likely facing budgetary constraints as the Chancellor works to adhere to fiscal guidelines focused on minimizing borrowing for daily expenses while ensuring national debt decreases as a percentage of income by 2029/30.
Recent announcements from the government include a substantial £86 billion investment package for science and technology aimed at advancing drug treatments and developing longer-lasting batteries. Additionally, this Wednesday, the Chancellor will reveal a £15.6 billion plan to enhance transport infrastructure in Greater Manchester, the Midlands, and the North East.
Reeves has confirmed that the government plans to amend its earlier decision to restrict Winter Fuel Payments to those receiving means-tested benefits. While further details on recipients are expected during the Spending Review, comprehensive information will only be available during the upcoming Budget.
The Institute for Fiscal Studies has noted that current economic growth rates are "relatively modest," suggesting that significant trade-offs will be unavoidable in future financial planning.