I watched Rachel Reeves’ spending review today and thought it’d be useful to give a bit of an overview. Before I get into that, I’m going to have a quick rant and then never mention it again.
– GROW UP!
That’s a statement from me to all politicians in the UK. It is honestly embarrassing to watch our MPs jeer and joke and insult each other in the Houses of Parliament. These are a bunch of, primarily, millionaires who are charged with running our country for the benefit of all citizens, but they cannot go longer than 3 minutes without making a joke, insulting each other or jeering over someone’s announcement. If you acted like this in a Board of Directors meeting, you’d be fired. Please don’t run our country like a gaggle of school children, thank you.
Moving on, the Chancellor of the Exchequer made a number of spending announcements today, however she neglected to announce how the funding for these new expenditures is to be raised, apart from the reduction in aid spending which will be used to fund the increase in defence spending. This leaves me with some doubts as to how the Autumn Statement is going to impact our personal finances, a notion that was echoed by the Shadow Chancellor for the opposition.
Let’s look at some of the spending announcements.
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Increased Spending on Renewable Energy
Today, Rachel Reeves announced various places that Labour will be spending more money on our energy system. As was announced yesterday, Reeves confirmed a planned £14.2bn spend on the Sizewell C nuclear power station. This is expected to create around 10,000 direct jobs and thousands more in firms supplying the plant. It is predicted to generate enough clean energy to power six million homes across the UK, but critics of the decision are discussing the fact that the Hinkley Point C nuclear plant has been being built for almost a decade already, isn’t expected to be complete for at least another five years and has cost billions more than originally planned. Sizewell C is to be a copy of Hinkley Point C, so may end up costing us a lot more than planned and is unlikely to produce any energy before the year 2040.
Rachel Reeves also announced a £2.5bn pot to be earmarked for investment in a Small Modular Reactor program, investment going to the British company Rolls Royce for the production of the SMRs, as well as another £2.5bn investment pot to be put into nuclear fusion research.
The Winter Fuel Payment has been returned to pensioners from winter 2025, but in a new format. Rather than £300 per pensioner household with no age or financial limits, it will instead be £100 per person, if that person earns more than £35,000 a year then they will have to repay the £100 back to HMRC the following year, and anyone over the age of 80 will get £200 instead of £100. So it’s worse than it was before, but it’ll benefit far more pensioners.
These were the key announcements, although it is worth nothing that the Chancellor stated £30bn to be invested in our energy systems, so either those £2.5 pots are actually annual amounts to be spent each year over the next three years or there is another £10bo of spending to be distributed into our energy system that she did not announce in parliament today.
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Other increases in spending announced in the Spring Spending Review
I gave the energy announcements separately because that is where my focus is, but various other spending announcements were made today, they include the following:
- £750m set aside for a new supercomputer at Edinburgh University
- £2bn to be allocated over the next three years for the government’s “opportunities action plan” for AI
- Department for Science, Innovation and Technology to have a day-to-day budget increase of 7.4% per year on average over the next three years
- £15.6bn to be spent between 2027 and 2031 for transport projects outside of London
- £3 cap on single bus fares to be kept in place until March 2027
- A price cap will be put on school uniforms
- £370m for school-based nurseries
- More funding for sports and music programs for children
- Free school meals to be given to an additional 500,000 children
- £4.5bn extra to be spent on day-to-day running of schools over the three years
- £2.3bn set aside for fixing crumbling schools and another £2.4bn to restore completely closed/collapsed schools across the country
- An extra £615m to be spent on partially funding a 4% pay rise for teachers in England
- £39bn to be allocated for social housing in England between 2026 and 2036, that’s a rough increase of 67% from current spending plans
- Spending power of police to increase by an average of 2.3% per year by 2029
- Annual funding for border security to increase by £280m per year by 2029
- Pledge to end the use of hotels for housing asylum seekers before the next election
- £7bn for building 14,000 new prison spots in England and Wales by 2031
- 3% day-to-day budget increase for NHS in England in real terms over the three years, to reach £226bn by 2029
- Pledge to increase health service productivity by 2% over the next three years, delivering a £17bn benefit
- Increasing the “fire power” in British Business Bank for small business funding by giving a 67% increase in investment, up to £25.6bn
- £1.2bn per year extra to be invested into providing training and apprenticeships for young people by 2029
There are a lot more announcements, and nuances to these announcements listed above, which I’m sure will come out in time, but these are the key things I noted during todays hour-long announcement. What was missing was where all this money is coming from? I understand that this is the first time in about 15 years that a government has done a zero-based spending review, which means they started each department’s budget at £0 and built up line by line, reviewing every penny of expenditure, rather than just adding a percentage to the previous budget, so inherently there should be some cost savings there. However, I expect we’ll see some more tax issues hitting either our personal finances or targeting businesses in the Autumn Budget later this year.
Only time will tell, there is not sense in speculating right now. However, if you want to keep up-to-date with what’s happening in the country that’ll affect your bills, subscribe to The Regulator Guy’s weekly newsletter.
Thanks everyone,
Richard Winstone
The Regulator Guy.
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