Day-to-day spending on the NHS will increase by £29bn a year, Rachel Reeves has announced as she accepted voters are yet to feel an improvement under Labour.
Delivering her spending review, the chancellor also declared an end to the use of asylum hotels this parliament by investing in cutting the backlog and returning more people with no right to be here – which she said would save the taxpayer £1bn a year.
Politics live: Reaction to spending review
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Ms Reeves acknowledged that almost a year on from Labour’s landslide election victory, “too many people” are yet to feel their promise of national renewal.
She said the purpose of her spending review is “to change that”, with total departmental budgets to grow by 2.3% a year in real terms until 2028-29.
This includes £190bn more on the day-to-day running of public services, and £113bn more on capital investments, she said.
Key settlements include:
• NHS: The health service gets £29bn for day-to-day spending – a 3% rise for each year until the next election;
• Housing: £39 billion over the next 10 years to build affordable and social housing;
• Defence: Spending will rise from 2.3% of GDP to 2.6% by 2027, made up of an £11bn uplift on defence and £600m for security and intelligence agencies;
• Science and tech: Research and development funding will hit £22bn with AI plans getting £2bn;
• Transport: £15bn for new rail, tram, and bus networks in the North and the West Midlands, a new rail line between Liverpool and Manchester, and a four-year settlement for TfL, plus the £3 bus fare cap extended to 2027;
• Nations: Scotland gets £52bn, Northern Ireland £20bn, and Wales £23bn, including for coal tips;
• Education: Free school meals extended to 500,000 children, while the extra £4.5bn per year will also go on fixing classrooms and rebuilding schools;
• Nuclear: A £30 billion commitment to nuclear power, including £14.2 billion to build Sizewell C plant in Suffolk and £2.5 billion in small modular reactors;
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Ms Reeves drew a distinction between her plans and the Tories’ austerity agenda in 2010, saying they cut spending by 2.9%.
She said austerity was a “destructive choice for the fabric of our society” and “different choices” would be made under Labour.
However while overall departmental spending will increase day to day, some departments face a squeeze.
This includes the Home Office, whose spend will reduce by 1.4% over the next three years, including daily spend and capital investments.
Daily spend covers the daily running costs of public services, while capital investments is spending by the state on the creation of fixed, long-term assets, such as roads and railways.
Combined, the foreign office and DEFRA also face reductions, as does the departments of culture media and sport and the cabinet ofifice.
Paul Johnson, the director of the Institute for Fiscal Studies, said 3% a year increases in NHS spending “does mean virtually nothing on average for current spending elsewhere”.
Read more: The key announcements
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Ms Reeves said the cash boost for the NHS would fund more appointments, more doctors and more scanners.
She used this to draw dividing lines with Reform UK, saying they have called for, an ‘”insurance-based system”.
“The National Health Service: Created, by a Labour government, protected by a Labour government and renewed, by this Labour government,” she added.
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