Day-to-day spending across all departments will increase by an average of 1.5% each year until 2029-2030, chancellor Rachel Reeves has announced.
Compared to the previous government's plans, this adds around £70bn per year to public spending over the next five years.
When including capital spending, departments' budgets grow by 1.7% in real terms over the period from 2024-25 to 2029-2030.
Delivering her budget speech, in which she also announced £40bn in tax rises, the chancellor said: “Because I have taken difficult decisions on tax today, I am able to provide an injection of immediate funding over the next two years to stabilise and support our public services.
Reeves said the increase delivers on Labour’s election promise that there would be “no return to austerity” if got into power.
For the next two years (2024-25 and 2025-26), departments will get average increases to their day-to-day spending power of 3.3% per year – 4.3% including capital spend – as the chancellor seeks to "stabilise public services".
The Red Book, which sets out details of spending pledges in the Budget, details specific spending for each department over the next two years and shows that the average increase hides several departments which see budget reductions. The Cabinet Office, for example, has a 7.4% average reduction in real terms in both years, and the Home Office, will experience a 3.2% real-terms decrease.
Other departments will get a big a growth in spending this year which then slows down. For example, NHS spending will rise by 4.7% in real terms this year and then 3.3% next year.
Reeves said she has prioritised day-to-day funding that delivers on Labour’s manifesto commitments in this first phase of the spending review, which resets departmental spending for 2024-25 and settles budgets for 2025-26.
She warned, however, that “the scale of the challenge that we are facing in our public services means that there will still be difficult choices in the next stage of the spending review”.
“So we will deliver a new approach to public service reform, using technology to improving public services and using a zero-based approach, so that tax payers money is spent as effectively as possible and so that we focus on delivering our key priorities,” she said.
The full details of budgets from 2026-27 onwards will be set out in next year's multi-year Spending Review. But the Office for Budget Responsibility said the growth envelope from 2026-27, set in this budget, means rises of around 1.3% per year in real terms across government.
Once protected departments – such as health and defence – are taken into account, however, the OBR said this will leave real spending in all other departments falling by 1.1 per cent a year in real terms in the final four years of our forecast.
It added that if the government meets its aspirations to raise defence spending to 2.5% of GDP and return overseas aid to 0.7% of GNI, this will mean unprotected departments see their budgets fall by 3.5% in real terms in the years beyond 2025-26.
Winners and losers: How is each department affected?
| Department |
Day-to-day increase (2023-24 to 2025-26) |
Capital increase (2023-24 to 2025-25) |
Total increase (2023-24 to 2025-26) |
|
Health and Social Care
|
3.4% |
10.9% |
3.8% |
| Education |
3.5%
|
2.2% |
3.4% |
| Home Office |
-3.2%
|
5.2% |
-2.7% |
| Justice |
4.3% |
14.9% |
5.6% |
| Law Officers’ Departments |
7.6% |
2.4% |
7.5|% |
| Defence |
1.7% |
3.4% |
2.3% |
| Single Intelligence Account |
2.8% |
1.7% |
2.4% |
| Foreign, Commonwealth and Development Office |
0.6% |
4.3% |
1.8% |
| Local Government |
10.2% |
- |
10.2% |
| MHCLG |
7.5% |
10.7% |
9.7% |
| Culture, Media and Sport |
-2.5% |
16.2% |
2.6% |
| Science, Innovation and Technology |
12.4% |
6.4% |
6.5% |
| Transport |
-0.7% |
-3.1% |
-2.5% |
| Energy Security and Net Zero |
8.8% |
25.2% |
22.0% |
| Environment, Food and Rural Affairs |
-1.9% |
126% |
2.7% |
| Business and Trade |
3.7% |
19.8% |
10.0% |
Work and Pensions |
6.4% (4.8% excluding fraud, error and debt) |
5.0% |
6.3% |
| HMRC |
4.1% |
7.1% |
4.5% |
| HM Treasury |
0.7% |
- |
1.3% |
| Cabinet Office |
-7.4% |
-1.1% |
-5.4% |
| Scottish Government |
2.3% |
2.3% |
2.3% |
| Welsh Government |
1.3% |
1.3% |
1.3% |
| Northern Ireland Executive |
1.% |
-0.3% |
1.3% |