The Government has said that total departmental budgets will grow by 2.3 per cent in its spending review on Wednesday – however many will see real terms cuts to their funding.
Although there’s set to be a large increase in NHS spending whilst other areas such as defence will also see a boost, other arms of the Government will not be so lucky.
Among the biggest losers are the likes of the Foreign, Commonwealth and Development Office and Home Office, which are seeing cuts to their resource spending.
We take a look at where Rachel Reeves’ cuts will hit and which departments will be affected.
Tables showing how departments’ spending on resource will change between 2025/26 to 2028/29 can be seen below.
The figures cover the annual percentage change in the money that will be allocated to each department for their day-to-day costs.
This covers spending on things that recur, like salaries, goods and services.
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Of the major departments, one of the biggest winners will be the Department for Health and Social Care.
This will receive £215.6bn in current prices this year, before growing steadily to £246.7bn by 2028/29, which represents 2.7 per cent growth on average, annually.
The Ministry of Defence will also see high average annual growth, from £62.2bn in 2025/26, to £73.5bn by 2028/29 – an increase of 3.8 per cent.
But the Foreign, Commonwealth and Development Office (FCDO) will see its spending drop from £12.1bn this year to £9.9bn – on average seeing real growth reduce by 8.3 per cent.
Other areas that will see a contraction in spending include the Treasury, HMRC and the Home Office.
Yael Selfin, chief economist at KPMG UK, said: “While health gets the lion’s share of the additional spending compared to other departments, this spending review would imply the slowest pace of increases since the plans set in 2015.
“With overall day-to-day spending rising at a slower pace of 1.2 per cent per year until 2028/29, the Home Office and transport among others are now facing real terms cuts to overall spending.”
Below shows the average annual real growth on spending for each department between 2025/26 and 2028/29.
Spending on equipment and building will also fall for some departments
Some departments will also see the money they are allocated to spend on capital projects – which covers infrastructure and other fixed costs – go down over the next few years in real terms.
While the likes of defence will see spending go up, from £23.2bn this year to £33.2bn in 2029/30 – an increase of 7.3 per cent – others will again see cuts.
HMRC will see a large deduction in spending equating to a drop of 24.3 per cent on average annually between 2025/26 and 2029/30.
Another area which will lose out is the Department for Environment, Food and Rural Affairs.
This department will see its annual limits drop 1.8 per cent on average over the same period.
The Treasury, Cabinet Office and the DWP will also see a contraction in spending.
Below shows the average annual real growth in capital spending for each department between 2025/26 and 2029/30.
Speaking specifically about HMRC’s plans, Nimesh Shah, CEO of accountancy firm Blick Rothenberg, said that his reading was that the Department would be relying on its “digital transformation agenda to reduce HMRC spending – this is a huge bet, if my suspicion is right, because recent history says that HMRC has a poor track record with these digital projects.”
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