Today Chancellor Rachel Reeves has delivered her first, multi-year Comprehensive Spending Review (CSR). In it she promised “national renewal”: an encouraging headline for The Future Governance Forum (FGF), which has this at the heart of our overall mission. But does the detail stand up that optimistic ambition?
Below, FGF’s team of experts analyse what the means for:
- The government’s economic agenda
- Local and regional government
- Infrastructure
- Mission-driven government
- Transformative technology
- Asylum.
What the CSR means for the government’s economic agenda
This Spending Review comes firmly in behind the government’s key economic goal and mission – to boost economic growth. So the big and best news was around the major boost to infrastructure investment, including housing, transport and energy (especially nuclear), that is key to delivering this in the medium to longer term. The Chancellor’s ability to do this was in turn a consequence of the very significant but underreported change in the fiscal rules she made back in the autumn that loosened constraints on capital expenditure even as it kept things tight on day-to-day spending. But even on current spending, the focus on education and health, key underpinnings of growth, shows where the government is placing its bets.
The focus on the long term is welcome and is one key part of the missions agenda – even though it comes with political risk. Equally welcome is the fact that much of it was directed to the regions of the country to try and address one of the Achilles heels of UK growth, that it is too London dependent. The devolution aspects of the announcements also suggest that this agenda is live and kicking, something FGF has long argued for all.
Dan Corry, Chief Economist
What the CSR means for local and regional government
The Chancellor’s statement underlines and reinforces government policy on English devolution. Housing and transport are clear beneficiaries of the much trailed capital investment, greater financial freedom was confirmed for 5 additional mayoralties, including the Greater London Authority alongside a 4-year settlement for Transport for London, and a new 10-year Local Growth Fund was announced (but we’ll have to wait a little longer for more details).
Much less headline – and you have to really look for it, the government has been good to its word – in handing local government its first multi-year settlement in almost a decade. That gives councils much needed certainty when they are under increasingly intense financial pressure. This is a vital step in the right direction as it is a much needed updated assessment of need (last refreshed in 2013) which was also mentioned.
However – while not unexpected – the very real crisis in how we fund local government remains fundamentally unresolved. The 3.1% increase in ‘core spending power’ assumes a 5% increase in council tax every year – so same old, same old. The Chancellor’s first fiscal rule is that day to day spending should not be funded by borrowing. Against that measure, we’re some way off when it comes to council funding with £1.3bn loaned to 30 councils this year alone to get their budgets over the line.
Hamida Ali, Head of Learning and Practice
What the CSR means for infrastructure
Rachel Reeves’ mantra is “stability, investment and reform”. If much of Labour’s first year in office has been about stability, then today the emphasis was investment, particularly in infrastructure.
The Chancellor consciously owned her “choice” – her favourite word today – to adjust the fiscal rules and borrow more to invest. Shadow Chancellor Mel Stride’s traditional attacks on “Labour borrowing” fell fairly flat, suggesting Reeves is right to assume she has more political space here than the accepted wisdom of recent years.
The figures are substantial: £120bn total investment, including £39bn in affordable housing, £20bn in nuclear energy, £15bn in regional transport settlements, and £5bn in hospitals and schools. These are much-needed, and the government’s decision to front-load spending – bringing £3.3bn forward from future years into 2026-27 – shows commitment to accelerating delivery, and political awareness that voters need to feel the benefits ahead of the next election.
Yet the total infrastructure gap is £300bn over the next decade. Public investment alone cannot fill that. Today’s spending review rightly expands the capacity of the state to leverage more private investment, but one tool is still conspicuously absent: public-private partnerships. We’re calling for a new model – Infrastructure Investment Partnerships – and will look to the 10-Year Infrastructure Strategy later this month to see if the government is truly prepared to pull every lever it can to ‘renew the nation’.
Adam Terry, Deputy Director
What the CSR means for mission-driven government
The Spending Review was always going to be the first major test on whether the government is serious about missions as a new approach to governing across siloes and towards long-term priorities (see Mission Critical 01, and Dan’s recent piece for Labour List, and on our substack.)
The missions are certainly present in the Spending Review, if only from a comms perspective (bundled together into two chapters: health opportunity and safer streets in a public services bucket; growth and clean energy in another).
But there are few indications that the Spending Review is the product of a process that was any more collaborative than the usual departmental head to head, as the Chief Secretary to the Treasury indicated it would be at the IfG in January.
It’s possible to tease out some cross cutting themes: investment in training and apprenticeships for instance will not only contribute to the opportunity mission; investment in the skills agenda will be critical to net zero and housebuilding alike.
But the most promising indication of a missions approach in practice is in the focus on prevention and devolution for the reform of public services. A relatively small financial investment (£100m) is made into a new community help partnership which will work collaboratively with local government and civil society to deliver a step change in support for adults with complex needs. Along with the Test, Learn and Grow programme from the Cabinet Office, these new approaches demonstrate a mission-driven approach to building public sector capabilities through collaboration in action.
Finally, the Chancellor showed some understanding of the need to connect the long arc of missions to a story about changes people can feel today and tomorrow (such as a cap on the cost of school uniforms and on bus fares.) But for the promise of a mission driven approach to be realised across government, missions need to take hold at the centre: at both HMT and at No.10.
Grace Wyld, Head of Policy and Research
What the CSR means for transformative technology
The Spending Review marks a shift in the UK’s approach to innovation, delivering on several priorities long advocated by the Future Governance Forum. In Rebuilding the Nation: Spurring Innovation, we called for a more strategic role for the state in developing sovereign capabilities in AI, providing long term R&D certainty, and reforming access to finance for scaling firms. Many of those recommendations have now been taken forward.
The Chancellor has announced £2 billion in funding for a new Artificial Intelligence Action Plan, overseen by the Secretary of State for Science and Technology, to drive job creation and investment in the UK. “Homegrown AI has the potential to solve diverse and daunting challenges, as well as the opportunity for good jobs and investment in Britain,” Rachel Reeves told the Commons.
Backing innovation also means backing those with the ideas but not yet the capital. The British Business Bank will receive a two-thirds increase in its investment capacity, taking its total to £25.6 billion. “To champion those small businesses I am increasing the financial firepower of the British Business Bank” Reeves added.
Alongside this, record investment in skills and training will ensure young people are equipped for the jobs AI will create, recognising that a modern economy can’t grow on old foundations. The Chancellor’s message is clear: innovation, skills and start-ups will be at the heart of Britain’s economic renewal. The task now for this Labour Government, is delivery.
Shuab Gamote, Researcher
What the CSR means for asylum
For the Home Office, this is a tight settlement that will require successfully ending the use of asylum hotels to avoid real-term cuts to their budget over the Parliament. Despite the election promise to end asylum hotels, their use has increased and the Government is right to address an area where system failures are driving up costs.
To deliver, the Chancellor rightly recognised that upfront investment across the whole asylum system is needed – with £200m in transformation funding (plus £450m investment in the courts) for end-to-end reform, from processing to appeals.
What could make the biggest difference is the new capital investment for temporary accommodation to drive down the use of costly B&Bs and hotels for homeless households. Such an approach could offer a way forward as the Government seeks a solution to the current reliance on wasteful, inadequate and unpopular asylum hotels.
The significant boost to the Border Security Command budget shows the Government doubling down on enforcement in a bid to ‘smash the gangs’. The impact of this new unit is still to be seen (the legislation to give it teeth is still going through Parliament) but with record numbers of people crossing the Channel, many are asking whether enforcement alone can deliver. In our recent report, we recommend the Government addresses both the supply of smuggling routes and the demand for them by coupling enforcement with asylum processing from France through Asylum Management Centres. Such a comprehensive approach would, however, require new commitment from the Government and the funding to match.
Emily Graham, Policy Associate and co-author, Asylum Management Centres: A new approach to tackle small boat crossings
Beth Gardiner-Smith, Senior Policy Associate and co-author, Asylum Management Centres: A new approach to tackle small boat crossings
