The spending review: Five things you need to know

Even for those of us who follow these kinds of things on a regular basis, the spending review is, frankly, a bit of a headache.
This is one of the biggest moments in Britain's economic calendar - bigger, in some respects, than the annual budget.
After all, these reviews, which set departmental spending totals for years to come, only happen every few years, while budgets come around every 12 months (or sometimes more often).
Yet trying to get your head around the spending review - in particular this year's spending review - is a far more fraught exercise than with the budget.
In large part that's because the Office for Budget Responsibility (OBR), the quasi-independent body that scrutinises the government's figures, is not playing a part this time around.
There will be no OBR report to cast light, or doubt, on some of the claims from the government. Added to this, the data on government spending are famously abstruse.
So perhaps the best place to start when approaching the review is to take a deep breath and a step back. With that in mind, here are five things you really need to know about the 2025 spending review.
1. It's not about all spending
That might seem like a strange thing to say. Why would a spending review not concern itself with all government spending? But it turns out this review doesn't even cover the majority of government spending in the coming years.
To see what I mean you need to remember that you can split total government spending (£1.4trn in this fiscal year) into two main categories.
First there's what you might call non-discretionary spending. Spending on welfare, on pensions, on debt interest.
This is spending the government can't really change very easily on a year-to-year basis. It's somewhat uncontrolled, but since civil servants wince at that idea, they have given it a name that suggests precisely the opposite: "annually managed expenditure" or AME.
Then there's the spending the government has a little more control over: spending in its departments, from the Ministry of Defence to the NHS to the Home Office.
This is known as "departmental spending". This is what the spending review is about - determining what departments spend.
The key thing to note here is that these days departmental spending (actually, to confuse things yet further, the Treasury calls it Departmental Expenditure Limits or DEL) is quite a bit smaller than AME (the less controlled bit with benefits, pensions and debt interest costs).
In short, this spending review is actually only about a fraction - about 41p in every pound - of government spending.
You can break it down further, by the way. Because departmental spending can be split into day-to-day spending (Resource DEL) and investment (capital DEL). But let's stop with the acronyms and move on to the second thing you really need to know.
2. It's a "zero-based" review. Apparently
The broad amount the government is planning to spend on its departments was set in stone some time ago. The real task at hand in this review is not to decide the overall departmental spend but something else: how that money is divided up between departments.
Consider: in this fiscal year (2025/26) the government is due to spend just over £500bn of your money on day-to-day expenditure.
Of that, by far the biggest chunk is going to the NHS (£202bn), followed by education (£94bn), defence (£39bn) and a host of other departments. That much we know.
In the next fiscal year, we have a headline figure for how much day-to-day spending to expect across government. What we don't have is that breakdown.
How much of the total will be health, education, defence and so on? That, in a sense, is the single biggest question the review will set out to answer.
Now, in previous spending reviews the real debate wasn't over those grand departmental totals, but over something else: how much would they increase by in the following years?
This time around we are told by Rachel Reeves et al that it's a slightly different philosophy. This time it's a "zero-based review".
For anyone from the world of accountancy, this will immediately sound tremendously exciting. A zero-based review starts from the position that the department will have to justify not just an annual increase (or decrease), but every single pound it spends.
It is not that far off what Elon Musk was attempting to implement with the DOGE movement in US government - a line-by-line check of spending.
That's tremendously ambitious. And typically zero-based reviews tend to throw out some dramatic changes.
All of which is to say, in theory, unless you believed government was run with incredibly ruthless efficiency, if this really were a zero-based review, you'd expect those departmental spending numbers to yo-yo dramatically in this review. They certainly shouldn't just be moving by small margins.
Is that really what Whitehall will provide us with in this review? Almost certainly not.
3. It's the first multi-year review in ages
What we will get, however, is a longer-range set of spending plans than government has been able to provide in a long time.
I said at the start that these reviews are typically multi-year affairs, setting budgets many years in advance.
However, the last multi-year review happened in the midst of COVID and you have to look back to 2015 for the previous multi year review.
That certainty about future budgets matters for any government department attempting to map out its plans and, hopefully, improve public sector productivity in the coming years.
So the fact that this review will set spending totals not just for next fiscal year but for the next three years is no small deal.
Indeed, for investment spending (which is actually the thing the government will probably spend more time talking about), we get numbers for four successive years. And the chances are that is what the government will most want to talk about.
4. It's not "austerity"
One of the big questions that periodically returns to haunt the government is that we are heading for a return to the austerity policies prosecuted by George Osborne after 2010.
So it's worth addressing this one quickly. The spending totals implied by this spending review are nothing like those implemented by the coalition government between 2010 and 2015.
You get a sense of this when you look at total public spending, not in cash or even inflation-adjusted terms (which is what the Treasury typically likes to show us), but at those figures as a percentage of GDP.
Day-to-day spending dropped from 21.5% of GDP in 2009/10 to 15% of GDP in 2016/17. This was one of the sharpest falls in government spending on record.
By contrast, the spending envelope for this review will see day-to-day spending increasing rather than decreasing in the coming years.
The real question comes back to how that extra spending is divided between departments.
Much money has already been promised for the NHS and for defence. That would seem, all else equal, to imply less money for everyone else.
But overshadowing everything else is the fact that there's simply not an awful lot of money floating around.
5. It's not a big splurge either
While the totals are indeed due to increase in the coming years, they are not due to increase by all that much.
Indeed, compared with most multi-year spending reviews in the past, this one is surprisingly small.
In each year covered by the 2000 and 2002 comprehensive spending reviews under Gordon Brown, for instance, capital investment grew by 16.3% and 10.6% respectively.
This time around, it's due to increase by just 1.3%. Now, granted, that slightly understates it. Include 2025/26 (not part of this review but still a year of spending determined by this Labour government) and the annual average increase is 3.4%.
Even so, the overall picture is not one of plenty, but one of moderation.
While Rachel Reeves will wax lyrical about the government's growth plans, the numbers in the spending review will tell a somewhat different story. If you can get your head around them, that is.

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After the October 7 attacks on Israel, protests stepped up, and ahead of votes in the UK Parliament there was co-ordinated action by campaign groups but she says that became "sustained" once the general election was called. Article continues below Before this, there has been online or email abuse, but this was the first in-person incident she had experienced, which felt more acute as it was in her constituency. "The vast majority of abuse or threats you have to are not necessarily from real people or they don't seem to be real people because they're online," she said. "The day it happened we had scheduled our campaigning sessions in advance and this was the last one of the day, and it had been published on the Labour Party website where we were going to be for Labour members to join. "I was with a group of about five or six members and more were joining. We met up at the meeting point and they were there, both of them, at the meeting point. 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I tried to engage in a conversation, I tried to explain to them that they were wrong, that I hadn't abstained on the ceasefire vote because I wasn't even in the country at that time. "I tried to articulate all of the action I had taken to support conflict free resolutions in the Middle East, the work I'd done to support Palestinian women who had allegedly been raped by IDF soldiers, the work I've been doing support Jewish women who'd been raped on October 7. I pointed them to debates that I've spoken in Parliament, and I was like talking about what I had been doing in terms of diplomatic work. "It was clear that they didn't agree with me, and it was clear that it wasn't going to be resolved. So I said, look, 'we'll stop it there'. ‌ "We walked away from where we were due to be campaigning, and then they started following us down the street. "The interaction was getting more inflammatory, more aggressive, more frustrated, I suppose from their point of view, because they weren't getting what they wanted out of me necessarily. So they started following us down the street. It was awful, it was scary. They were shouting, 'Do you support genocide' and 'You're responsible for murder'. All of this was being screamed down the street as we were walking down the street. They were continuing to hand out leaflets to people as they were passing and screaming this to us. "We tried to get away from them, so we took a different route," she said. ‌ Ayeshah Behit leaving Cardiff Magistrates Court after being convicted of harassing Labour MP Alex Davies-Jones (Image: PA ) As they began knocking on doors in a different area, the pair - Ayeshah Behit and Hiba Ahmed - found them. "Every door we were knocking, they were then knocking and speaking to the people about why I was a genocidal baby killer. 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They didn't put our full conversation on but amplified it, made it look like I was lying and that hurt me more than anything because people can say I'm many things, you can disagree with me, but I am not a liar. That really, really got to me because then that was when the huge amount of abuse started, because they incited a pile on for people to contact me, and it was relentless." ‌ As a candidate, she felt she couldn't withdraw from social media. "I didn't sleep. It was constant. I could turn the notifications off, but they were still there. I was doing a general election campaign and social media at that moment is key in terms of engaging with local voters and it was it was a bombardment which became terrifying because the escalation of abuse was awful." She has a young family, who has she spoken about publicly, but she said what didn't come out during the court case was that the pair broke bail conditions by emailing her. "One of the emails that was sent to me did make reference to the fact that I have a child and that really scared me because the words were used were 'I know you have a son ' and the way it was conveyed and it was really scary," she said. Hiba Ahmed, 26, (centre), leaving Cardiff Magistrates Court after being convicted of harassing Labour MP Alex Davies-Jones (Image: PA ) ‌ "It's really hard because I have chosen to be open and honest about my personal life because I think my personal experiences of being a mother going through IVF, having pre-cervical cancer, going through all the difficulties I have done, some of my colleagues have chosen not to open themselves up and not appear more human because of the risk that the more you open yourself up, the more then you become a target to potential attacks," she said. For the year before her case reached court, she said it was "hanging over me". "You know it's coming. and you psyche yourself up for it. You prepare yourself to go through that process. "I think about it all the time and now, I think about how will my interactions in public with constituents or whoever, what will that be like now? And I do feel like sadly, politics has become a lot more inflamed in recent years. ‌ "That's why it's also really important to humanise this, because people think we're just these people on screen or doing things rather than actually real human beings and that's why it's important to humanise this but then that does make me feel conscious of activity when out and about." All MPs have enhanced security offered to them after the killing of Sir David Amess. "I would say it is a different level of threat being a female MP because my male colleagues aren't necessarily subject to the misogynistic abuse that we are, which is more sustained. Research shows we are more prone to abuse compared to male colleagues and I would stress BME MPs are even more open to abuse." The risk factors into her day-to-day decisions. "Every time you plan to do something in person then you have to think about the safety implications. I'm not just responsible for myself. I'm responsible for my team. I'm responsible to whoever else may be coming to an event. I'm responsible for my family if they with me at an event, so you have to be aware and I think that's only responsible to do that of what security implications might mean about advertising your attendance something in advance, or opening something up to everyone to attend, or going to something that could be deemed to be controversial. ‌ "There's two sides of this. I've had a lot of praise and thanks from colleagues for pursuing the case because they have said thank you for being brave, because it's important that people realise that this is unacceptable and this did cross that threshold of holding your Member of Parliament to account and harassment and that's what the judge found in the case. "But then there's also the other side of this that I don't want what has happened to me and the normalisation of abusive of elected politicians to put anyone off from doing this job either. I have that responsibility to the next group of MPs coming forward, male or female, because this is still the best job in the world and I don't want that to influence anybody's decision into 'Gosh, this is awful. Why would anyone do that?' However, she does believe her experience of being a victim and having giving evidence in court will shape her experiences. "Now I've got that lived experience of having gone through it all, waiting for the trial to get to court, having been through the witness liaison officer scheme, speaking to police, the different agencies, being treated as a witness in court, giving evidence while your perpetrators in the dock and how that is all played out. ‌ "I have that experience now, which has helped me in terms of looking at, 'well, how can I make this experience better for victims and survivors?'. UK Government victims' minister Alex Davies-Jones has spoken about her own experiences of appearing in court (Image: Alex Davies-Jones ) "Ultimately, I don't want to diminish my case in any way, harassment happens to to individuals every day and it is awful and it is terrible, but also there are a number of victims and survivors all waiting years for their trial." ‌ She said she wants victims to be at the heart of the system. "One of the things I'm responsible for is the victims code, we are looking at how we give more power to the victims commissioner, so that they're able to hold agencies to account in our Bills coming forward and all of this is now feeding that work and giving me that perspective I didn't have before." Ms Davies-Jones said it has shaped her wanting to make sure victims can "take part in the justice system and do so safely and make them feel like they're able to represent the best version of themselves, so that we have an opportunity for justice to be heard in a courtroom" "Is there more we can do to make sure that victims actually stay engaged in the in the criminal justice system? Because we know court backlogs are so long, and we know that it can be quite difficult and traumatising to actually revisit that crime or your perpetrator in court," she said. ‌ There was a protest outside the court on that day, and protestors came to fill the public gallery. The courtroom had to be moved three times to accommodate all interested parties. "I just wanted to tell the truth, and I wanted to explain how all of this had happened. What's happening in Gaza is horrific. It's intolerable. It's awful and likewise, what happened on October 7 and the hostages still being held is awful and for people to think that I am in support of genocide or of murdering children is is it just terrible. I wanted to put that over that of course, that isn't the case. "We can have a difference of opinion about how you approach things and politics and policies but there is a line and when that line is crossed, then the action should be taken." Article continues below