Spending Review 2025: Background briefing

The Chancellor will report the outcome of the 2025 Spending Review on 11 June 2025. This will set planned day-to-day spending totals for all government departments for the years from 2026/27 to 2028/29, and investment spending plans for a further year (from 2026/27 to 2029/30).

What is a Spending Review?

The government sets out its spending plans every few years at Spending Reviews. These cover all the spending that can reasonably be planned in advance, making up about 40% of all public spending (the remaining spending is largely driven by demand that can’t be planned, such as benefits).

The most recent multi-year review took place in 2021. Budgets for the 2025/26 financial year were set at “phase 1” of the current review and were announced alongside the 2024 Autumn Budget.

Government departments have been in negotiations with HM Treasury over their spending plans for the subsequent years since the current review (sometimes referred to as “phase 2”) was launched in December 2024. The government has said that this review will be “zero-based”, meaning the government will set budgets from zero and assess all spending for value for money rather than beginning from existing budgets and deciding increases or decreases. This may mean changing policies as well as spending plans.

The government had intended to publish its new industrial strategy alongside the Spending Review, as well as its infrastructure strategy. The content of this briefing reflects that intention. However, according to reporting from the Financial Times on 8 June 2025, the infrastructure strategy will now be published in the week following the Spending Review, with the industrial strategy following it in the final week of June. 

Long-term public spending context

Day-to-day spending and investment spending (the two totals usually set at Spending Reviews) have generally increased in real terms in recent years. However, as a proportion of the economy, spending totals are below where they were in 2010/11 (see section 2.1).

The government-wide totals for the whole of the Spending Review period (the “envelope”) were set at the 2024 Autumn Budget. These show spending increasing across the review period, but these increases are heavily front-loaded to the first year.

Departments vary in how their spending has changed in recent years (see section 2.2). Some (such as the Department for Health and Social Care) have had steady increases, while others (such as the Housing and Communities budget) have had an overall decrease compared to 2006/07.

Factors influencing the 2025 Spending Review

Several factors, both from within government and from outside, will affect the plans set at this Spending Review. These include:

• The state of the public finances
• Savings that have already been announced, such as “efficiency” savings and cuts to administrative budgets
• Existing spending commitments, such as the government’s plan to increase defence spending to 2.5% of gross domestic product (GDP) by 2027
• Public sector productivity, and how effectively departments can use their spending plans
• Uncertainty, particularly in international trade
• Long-term pressures on public spending, such as those caused by an ageing population

What happens next

There is no formal parliamentary procedure accompanying a Spending Review, and Parliament will not vote on the spending plans directly. However, the plans will affect the contents of the Estimates that are laid before Parliament twice a year for its approval.

Departments will use the funding settlements agreed at this review to form their own internal spending plans.

The next fiscal event will be the 2025 Autumn Budget. The plans announced at the current Spending Review will be used by the Office for Budget Responsibility at that point, as part of its assessment of whether the government is on track to meet its fiscal targets.

Data in this briefing

Most of the data used in this briefing is available in the downloadable Excel file linked above, or from the sources linked throughout the briefing. This includes data on changes in spending for most government departments since 2006/07. Please get in touch with us at papers@parliament.uk if you would like to access the data in a different format.