From “tough choices” to “Labour choices”. The spending review delivered by Rachel Reeves in the House of Commons this afternoon marks a tangible tone shift.
Apportioning £2.24 trillion of public cash across Whitehall departments, Reeves announced significant funding increases for the NHS, defence and schools, as well as tens of billions for major infrastructure projects.
The chancellor’s statement was organised around a narrative of “renewal”, informed by a series of Labour “choices” on public services in particular. This frame was set out explicitly in a revealing readout of cabinet via Downing Street this morning. Collected in No 10, ministers heard Keir Starmer herald a “new chapter” for his government as it looks to “invest in working people’s priorities.”
The prime minister reflected on last year’s “tough but necessary decisions”, announced at the autumn budget and the preceding months, insisting they helped “fix the foundations of the economy”.
As a result, Starmer relayed, “the government can set out plans to significantly increase investment in public services and growth.”
In her contribution to cabinet, Reeves was unapologetic about her sometimes controversial fiscal choices. She said that “the decisions at the autumn budget to raise taxes and change the fiscal rules unlocked significantly higher investment in public services and growth.”
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And so the chancellor took to the despatch box today, following a typically combative but ultimately inconsequential session of PMQs, to outline her latest round of “Labour choices”. Political pressure has piled onto Reeves over the course of this parliament; but there was a lively quality to her address. The chancellor cast herself as hopeful and upbeat about Britain’s long-term economic prospects. She appeared assured. The Parliamentary Labour Party (PLP) — a crucial constituency which Reeves seriously needed to please — seemed with her.
Total Whitehall departmental budgets will grow by 2.3 per cent over the next three years, the chancellor announced. “Compare that to the Conservative choice for austerity”, she urged. “In contrast to our increase of 2.3 per cent, they cut spending by 2.9 per year in 2010.”
Reeves reaffirmed the importance of her guiding doctrine, so-called “Securonomics”, and set out a useful definition. She told MPs: “[It is the] basic insight that in an age of insecurity, government must step up to provide security for working people and resilience for our national economy. Put simply, where things are made, and who makes them, matters.”
“Security”, then, was another driving theme of the spending review.
On energy security, Reeves hailed “the biggest rollout of nuclear power for half a century… a £30bn commitment to our nuclear-powered future.”
On security of the realm, Reeves confirmed the government will increase defence spending to 2.6 per cent of GDP by 2027. “A new era in the threats we face demands a new era for defence and security”, she insisted.
On border security, Reeves said Labour will end the use of asylum hotels in the current parliament. “That is my choice, Mr Speaker, that is Labour’s choice, and that is the choice of the British people.”
Elsewhere, Reeves announced police spending power will increase by an average of 2.3 per cent; the £3 bus fare cap will be extended until at least March 2027; £4.5 billion more a year for the core schools budget; and £39 billion of investment in new affordable and social housing.
For her final announcement, Reeves said the NHS will be handed an extra £29 billion per year. “That is what the British people voted for and that is what we will deliver”, the chancellor said.
“More appointments. More doctors. More scanners. The National Health Service: created, by a Labour government. Protected, by a Labour government. And renewed, by this Labour government.”
With her choices, Reeves exploited the political power of the chancellorship to draw dividing lines with her opposition. She looked across the despatch boxes, where Kemi Badenoch was perched, but mostly to her right and the Reform benches.
Reeves mocked Nigel Farage as trying to present himself as a “friend” of working people — juxtaposing his rhetoric with his support for the 2022 mini-budget. The chancellor quipped: “Some of us are old enough to remember when he described that disastrous Liz Truss budget as, and I quote, ‘the best Conservative budget’ since the 1980s.”
“[Reform] are simply not serious”, Reeves asserted.
To help frame her budget and her “Labour choices”, the chancellor treated the House to a history lesson. The recent past was seized upon and recruited to support Reeves’ political position. She rubbished austerity, the economic policy of the Conservative-led coalition government, as a “destructive choice” for British society. It created, the chancellor contended, a “lost decade for growth, wages and living standards”.
She pivoted to her principal message: “My choices are different. My choices are Labour choices.”
The spending review will set the fiscal frame for the next three years up to the next general election. But Reeves also sought to re-conceptualise the political narrative, with an unmistakable attempt to spark arguments on traditional Labour terms. Tanks were recalled from Tory lawns and deployed onto Labour’s ideological home turf.
Reeves was therefore happy to play to her immediate audience of Labour MPs. An aside on education funding received a particularly hearty roar: “I joined the Labour Party over 30 years ago — because I knew the Tories didn’t care about schools like mine.”
Of course, despite the chancellor’s assured performance this afternoon, there are still challenges to be faced and arguments to win: first of all, the claim that Labour has fixed the foundations of the economy, thereby justifying a more expansionist policy in the outlined areas, will be contested fiercely in the coming weeks.
Opponents will argue that Reeves is rewriting the recent past in order to justify the pursuit of long-held, ideological ambitions. They will say that the review is in fact a preview of tax rises to come in the autumn budget. (On that latter point, at least, they could well be right).
There was also less focus this afternoon on the so-called “losers” of the spending review. The Home Office will face a 1.7 per cent annual real cut over the three-year period; the Foreign Office faces a 6.9 per cent real cut; and the Ministry of Housing, Communities and Local Government was hit with a 1.4 per cent real cut.
Reeves’ “new chapter” framing, moreover, comes from a position of political weakness. The tone shift is an attempt to draw a line under the first 11 months of this Labour government. That is explicable. At the outset of her speech, Reeves recognised public discontent with the government and, implicitly, with her. “We are renewing Britain”, she said. “But I know that too many people in too many parts of our country are yet to feel it.”
This was the opening gambit of a new phase of Labour governance. The spin suggests it is the logical continuation of the strategy inaugurated last July. But Labour MPs will hope Reeves’ new departure signals a more sure-footed administration: an end to the policy fiascos and political foundering.
Labour has projected to voters that things, after 11 months of uncertain government and “tough choices”, are going to get better. That is the ultimate power of any administration: the ability to make promises and the capacity to deliver on them. And so Reeves and Labour must.
The price of failure was positioned to Reeves’ right this afternoon: Reform and Farage are constant reminders of the political consequences of disillusion.
A gambit, especially one played in the early-mid-game of an administration, always contains an element of peril. Labour cannot afford to exacerbate the unease it has overseen by falling short of expectations.
Josh Self is Editor of Politics.co.uk, follow him on Bluesky here.
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