Rachel Reeves Takes Axe To Whitehall Departments To Pay For Health And Defence Cash Splurge

Eight Whitehall departments will see their budgets slashed so that more cash can be spent on the NHS and defence.

The Home Office and Department for Transport are among those facing real-terms reductions in their day-to-day budgets as a result of chancellor Rachel Reeves’s spending review.

She announced that an extra £300 billion will be spent by the government over the next three years.

The NHS will enjoy a 3% rise in its budget after inflation, which works out at an extra £29 billion a year.

Meanwhile, defence spending will rise from 2.3% to 2.6% of gross domestic product (GDP) by 2027.

An extra £39 billion will be spent on building affordable homes over the next 10 years, while £14 billion is being spent on a new nuclear power plant at Sizewell C.

Reeves told MPs that departmental budgets will increase by 2.3% in real terms under plans.

She said she was “reflecting the choices of the British people” as she accused the Tories and Reform of having no plans for the economy.

But Treasury documents later revealed that a number of Whitehall departments will see their day-to-day budgets fall once inflation into account.

The Home Office faces a 1.7% fall, with the transport budget being reduced by 5% and the Department of the Environment, Food and Rural Affairs being cut by 2.7%.

Paul Johnson, director of the Institute for Fiscal Studies, said: “The crux is that most departments will have larger real-terms budgets at the end of the parliament than the beginning, but in many cases much of that extra cash will have arrived by April. 

“Eight departments will actually see cuts to their budget between this year and the end of the parliament.” 

Police chiefs warned that the Home Office funding settlement will make it “incredibly difficult” for them to hit the government’s target of recruiting an extra 13,000 frontline officers.

Liberal Democrat Treasury spokesperson Daisy Cooper accused Reeves of “smoke and mirrors”.

She said: “This spending review was a missed opportunity to repair the damage done by the Conservatives and finally deliver on the promise of change.

“Behind the smoke and mirrors is a potential blackhole for social care as local government budgets remain at breaking point. Putting more money into the NHS without fixing social care is like pouring water into a leaky bucket.”

Sadiq Khan, the Labour mayor of London, also attacked the chancellor, claiming the capital had missed out on much-needed funds.

He said: “I remain concerned that this spending review could result in insufficient funding for the Met and fewer police officers.

“It’s also disappointing that there is no commitment today from the Treasury to invest in the new infrastructure London needs. Projects such as extending the Docklands Light Railway not only deliver economic growth across the country, but also tens of thousands of new affordable homes and jobs for Londoners.

“Unless the government invests in infrastructure like this in our capital, we will not be able to build the numbers of new affordable homes Londoners need.”

Shadow chancellor Mel Stride said the spending review was “not worth the paper that it is written on” and will inevitably lead to taxes going up in the autumn Budget to pay for it.

He said: “This is the spend now, tax later review, because [the chancellor] knows she will need to come back here in the autumn with yet more taxes and a cruel summer of speculation awaits.

“How can we possibly take this chancellor seriously after the chaos of the last 12 months?”