Spending Review Preview Chancellor Rachel Reeves MP will be unveiling the Government’s Spending Review next Wednesday 11 June. The Autumn Budget this past October set out department budgets for 2025-26 and the review next week will confirm the allocations for the next three to four years. The review, which will be broken down by department, will contain details surrounding both day-to-day spending for the next three years as well as longer term investment for the next four years. The Spending Review will allocate more than £600bn each year. The Chancellor will have a decision to make as to which departments to squeeze with big decisions to make on health and public investment projects. What has already been announced? The Government has already said that the increase in spending on day-to-day running costs and investment will be relatively modest. It has already announced the following: The overseas aid budget will be cut from 0.5% to 0.3% from 2027 Defence spending will rise from 2.3% to 2.5% by 2027 with the aim to increase it to 3% by 2034 A total investment of £15.6bn into local transport across the North, Midlands and South West The Government will reverse the decision to limit Winter Fuel Payments to those in receipt of means tested benefits Investment in transport The Government also announced a total of £15.6bn investment into a variety of local transport projects across the North, Midlands and South West including: £1.5bn for South Yorkshire to renew the tram network as well as bus services £1.6bn for Liverpool city region with faster train connections and a new bus fleet £1.8bn for the North East to extend the Newcastle-Sunderland metro £800m for the West of England to improve rail infrastructure £1bn for Tees Valley for rail investment £2bn for the East Midlands to improve road, rail and bus connections This announcement marks Reeves’ first open move away from the stringent rules in the Treasury’s Green Book which is used by officials to calculate the value for money of major projects. What to expect for the automotive industry The industry is expecting further transport investments to be announced. The integrated national transport strategy is due for publication later this year and will set a high-level direction for how transport should be designed, built and operated in England over the next 10 years. As part of their six priorities for the review, the Campaign for Better Transport identified prioritising investment in local transport over large-scale road schemes. It argued that this delivered good value for money over ‘expensive, low return and carbon intensive’ road projects. The Spending Review is expected to build on the ‘Pathways to Work: Reforming Benefits and Support to Get Britain Working’ white paper. The government aims to reduce long-term economic inactivity. This includes additional investment in employment, health and skills support scaling up to £1 billion annually by 2029-30.