What was claimed
The Spending Review means total departmental budgets will grow by 2.3% a year in real terms.
Our verdict
This headline figure doesn’t tell the whole story. 2.3% is the average annual real terms growth between 2023/24 and 2028/29, and includes both day-to-day and capital spending. The average annual increase between the current financial year and 2028/29 is 1.5%.
On Wednesday the Chancellor of the Exchequer Rachel Reeves delivered the Labour government’s first Spending Review, outlining the government’s spending plans for the next few years.
We’ve taken a look below at some of the key claims from her statement.
Join 72,547 people who trust us to check the facts
Get weekly updates on politics, immigration, health and more.
At the start of her statement Ms Reeves announced that “total departmental budgets will grow by 2.3% a year in real terms”. This headline figure doesn’t tell the full story, however.
Firstly, 2.3% is the average annual real terms growth in total departmental budgets between 2023/24 and 2028/29. That means it includes spending changes that have already been implemented, for both the current (2025/26) and previous (2024/25) financial years.
The average annual increase between this year and 2028/29 is 1.5%.
Therefore, as the Institute for Fiscal Studies (IFS) has said, “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.”
Secondly, it’s worth noting that the 2.3% figure includes both day-to-day (Resource DEL) and investment (Capital DEL) spending.
Capital spending (which funds things like infrastructure projects) is increasing by 3.6% a year on average in real terms between 2023/24 and 2029/30, and by 1.8% between 2025/26 and 2029/30.
Day-to-day departmental budgets meanwhile are seeing a smaller average annual real-terms increase—of 1.7% between 2023/24 and 2028/29 and 1.2% between 2025/26 and 2028/29.
Ms Reeves touted substantial spending increases in some areas (for example, the 3% increase in day-to-day NHS spending in England). But unsurprisingly her statement did not focus on areas where spending will decrease.
Changes to government spending are not uniform across all departments, and alongside increases in spending on things like the NHS, defence and the justice system, a number of government departments will see their budgets decrease in real terms.
Departments facing real-terms reductions in overall and day-to-day spending include the Foreign, Commonwealth and Development Office (this factors in reductions in aid spending announced earlier this year to offset increased defence spending), the Home Office (although the government says the Home Office’s budget grows in real terms if a planned reduction in asylum spending is excluded) and the Department for Environment, Food and Rural Affairs.
Ms Reeves made a claim we’ve heard a number of times since it first surfaced in July 2024—that the previous Conservative government left a “£22 billion black hole in the public finances”.
Ms Reeves first cited this figure on 29 July 2024, and we’ve written about it many times since. The figure comes from a Treasury audit that forecast a £22 billion overspend in departmental day-to-day spending in 2024/25—but the extent to which it was unexpected or inherited is disputed.
The Institute for Fiscal Studies said last year that some of the pressures the government claimed contributed to this so-called “black hole” could have been anticipated, but others did “indeed seem to be greater than could be discerned from the outside”.
An Office for Budget Responsibility (OBR) review of its March 2024 forecast found an estimated £9.5 billion of additional spending pressures were known to the Treasury at that point in time, but were not known to the OBR as it prepared its forecast. It’s true that this review didn’t confirm the £22 billion figure, but it also did not necessarily prove that it was incorrect, because Labour’s figure included pressures which were identified after the OBR prepared its forecast and so were beyond the scope of the OBR’s review.
We’ve written more about how the government reached the figure of £22 billion in our explainer on this topic.
We also saw claims from both Ms Reeves and Conservative shadow chancellor Mel Stride about the government’s fiscal rules—self-imposed targets which constrain spending and tax decisions.
Ms Reeves insisted in her statement that her fiscal rules were “non-negotiable” and “the foundation for stability and investment”, while in his response to the review Mr Stride accused the government of having “loosened” the rules so it could borrow more, claiming: “She said she would not fiddle her fiscal rules; then she did.”
We’ve been monitoring the Labour government’s adherence to its fiscal rules as part of our Government Tracker.
The current government’s main two fiscal rules are to ensure a current budget surplus by 2029/30—meaning day-to-day public sector spending is met by revenues from taxes and other sources and the government would only borrow to invest—and to have debt falling as a share of the economy by 2029/30 when compared to the previous financial year. The government is currently on track to meet these rules.
However it is true that the way in which the fiscal rules measure debt has changed under Labour—and while the detail of this is quite technical, it makes a big difference to the government’s spending plans.
Prior to the election, Ms Reeves reportedly committed to using the same measure of public debt as the Conservatives had been using since 2022, public sector net debt excluding the Bank of England’s balance sheet (PSND ex BoE). But in the Autumn Budget, she said this would be changed to a different measure, public sector net financial liabilities (PSNFL), which includes a wider range of financial liabilities and assets.
As we’ve written before, some commentators have suggested this change was made to provide additional headroom for capital expenditure, while others have backed the new measure as better capturing the value of the public sector’s long-term financial assets.
When we asked the Institute for Fiscal Studies in March about claims the government had “fiddled” its rules by changing this debt measure, it told us: “You can make a case for targeting PSNFL on principled grounds, even though this may have been a somewhat opportunist choice.”
Ms Reeves made a number of announcements that appear to directly impact the delivery of several pre-existing Labour pledges, many of which we’re already monitoring in our Government Tracker. We’ll be updating the tracker to reflect these announcements in due course, and reviewing how we rate progress on pledges as necessary.
The chancellor announced an average increase in “police spending power” of 2.3% a year in real terms over the course of the review period, which she said was the equivalent of an additional £2 billion. However, as police budgets comprise a mix of central government grants and local council tax receipts, some of this extra spending is expected to be funded by increases in council tax precepts. And the average increase of 2.3% applies when the figures are compared to 2023/24, rather than the current year.
Ms Reeves said this funding would help the government achieve its commitment of “putting 13,000 additional police officers, PCSOs and special constables into neighbourhood policing roles in England and Wales”, which we’re monitoring here.
The Spending Review also includes funding of “almost £370 million across the next four years to support the government’s commitment to deliver school-based nurseries across England”. Ms Reeves said this would help the government deliver its pledge to have “a record number of children being school-ready”.
The chancellor also committed to ending the use of hotels to house asylum seekers by the end of this parliament, with an additional £200 million announced to “accelerate the transformation of the asylum system”.
When we looked last month at progress on the government’s pledge to “end asylum hotels” we said it appeared off track, as figures published in May showed the number of asylum seekers housed in hotels was higher at the end of March 2025 than it was when Labour came into government.
The government announced the launch of its Border Security Command in July 2024, which was established with the aim of reducing the number of small boats reaching the UK and tackling the gangs behind them (though it’s worth noting small boat arrivals have been higher in the first few months of 2025 compared to the equivalent period last year). The Spending Review includes an additional £280 million of funding for this body.
The Chancellor also said: “We must have a strong NHS. Not as the Reform party have called for, an insurance-based system.”
We’ve heard similar claims from Labour a lot in recent months—for example, in a social media post in March it claimed Reform UK would “scrap the NHS and replace free healthcare with private health insurance”. Labour has also previously quoted specific prices that it suggested people could have to pay for healthcare under a Reform UK government.
It is true that Reform UK’s leader Nigel Farage has repeatedly suggested that he is open to re-examining the NHS’ funding model, including recently. For example, in an LBC interview in January Mr Farage said he was “open to anything” when asked about the possibility of turning to an insurance model such as the one used in France (for more about this system, see our fact check on this topic).
However Reform UK has said it is committed to keeping the NHS free at the point of delivery, and indeed Mr Farage made the same point in his LBC interview—immediately prior to saying he was “open to anything”, Mr Farage said “Yes” when asked if he was “completely committed to free at the point of delivery”.
Reform UK’s 2024 election manifesto made the same commitment, saying: “Services will always be free at the point of use.” And Reform UK also said in April that it will “never” charge people to use the NHS.
In her statement, Ms Reeves took the opportunity to congratulate health secretary Wes Streeting for delivering “three and a half million extra” hospital appointments in England.
The government has previously celebrated this as a “massive increase”, particularly in light of its manifesto pledge to deliver an extra two million appointments a year.
Ms Reeves’ claim was broadly accurate—data published last month shows there were 3.6 million additional appointments between July 2024 and February 2025 compared to the previous year.
But importantly that increase is actually smaller than the 4.2 million rise that happened in the equivalent period the year before, under the Conservative government—as data obtained by Full Fact under the Freedom of Information Act and published last month revealed.
Full Fact fights for good, reliable information in the media, online, and in politics.
Bad information ruins lives. It promotes hate, damages people’s health, and hurts democracy. You deserve better.
