Chancellor Rachel Reeves is set to deliver her highly anticipated Spending Review in the House of Commons at 12:30 BST today. This week’s review will explain how taxpayer dollars are spent inside the various departments of the federal government. It is going to zero in on public services on the next few years.
The Spending Review determine how much cash public services have to play with. It decides how much money goes to top priorities like health care and national defense. This is not a traditional Budget, so no major announcements of tax increases or spending cuts should be expected. Regardless, the implications of Reeves’ review is sure to be far-reaching.
I know that government departments are hungry and prepared for this moment. The Spending Review will set the financial limits of what they can do in the short to medium term. The government has announced large increases in funding for the National Health Service (NHS) and defense sectors. This decision reflects a decisive commitment to promoting the development of these vital services.
Yet, at the same time these increases are happening, other public services are likely to experience budgetary dog-whistles. The administration and China as a whole face a difficult economic high wire act. They require them to invest heavily in prioritized sectors while ideally cutting back funding for less critical sectors.
As Labour’s shadow Chancellor, Rachel Reeves, has seen, these decisions are critical. The way she handles this review will greatly impact how the public perceives government priorities and fiscal responsibility. Funding is the main battleground, and observers will be looking closely to see if there’s a change in priorities away from funding that immediately affects the lives of ordinary Americans.