Rachel Reeves confirms largest public funding plan in years as Labour targets major improvements to transport housing and NHS in Britain

As the cost of living continues to bite and public services creak under pressure, many Brits are wondering what the government is going to do to make things better.

Today, Chancellor Rachel Reeves laid out an ambitious new spending plan aimed at overhauling everything from healthcare to housing.

But behind the big numbers and bold promises, there are growing concerns about who will end up footing the bill.

What’s Behind the New Spending Push?

Reeves and her Cabinet have signed off on a sweeping spending review, promising to pour hundreds of billions into public services over the next five years.

The move was made possible after Labour relaxed strict borrowing rules in last year’s Budget, freeing up an estimated £300 billion more than what the Tories had planned.

While the Chancellor insists this is a long-term investment in the country’s future, critics warn that the cash splash comes with no clear plan for how to pay it back.

With the economy slowing and global uncertainties—including trade tensions from Donald Trump’s resurgence—analysts worry tax hikes may be unavoidable.

A New Chapter for Labour’s Leadership

Labour leader Sir Keir Starmer framed the announcement as the end of the government’s “first phase,” shifting now into active delivery on promises made to voters.

Reeves echoed that tone, saying the review was all about economic renewal, job creation, and investing in key British industries.

She highlighted defence, health, education, and energy security as top funding priorities and acknowledged that many households still don’t feel the benefit of Labour’s policies—despite the party approaching one year in power.

Key Spending Highlights at a Glance

Here’s a snapshot of what’s included in Reeves’ major financial commitments:

• NHS: Budget increases by around 3% in real terms—roughly £30 billion total.
• Defence: Spending to rise to 2.5% of GDP by 2027.
• Public Transport: £15.6 billion for English cities.
• Nuclear Power: £16.7 billion in total, including £14.2 billion for Sizewell C.
• Social Housing: £39 billion over a decade.
• Bus Fare Cap: £3 fare limit extended until March 2027.
• Welsh Rail Upgrades: £445 million committed.
• Project Funding Reforms: Updates to the Treasury’s “green book” rules.

Can Labour Keep Its Promises Without Raising Taxes?

Although Reeves has not confirmed any new tax hikes just yet, she hasn’t ruled them out either.

With pressure mounting from multiple sectors—especially defence and healthcare—it’s likely the Autumn Budget will carry some heavy financial trade-offs.

Last year’s Budget already marked the biggest tax rise on record, and economic headwinds haven’t let up.

The unemployment rate has climbed to 4.6%, and new figures show payrolls dropped by over 100,000 in May alone.

Critics blame the slump partly on Reeves’ previous tax hit to employer National Insurance.

NHS: Still on Life Support?

Healthcare is one of the big winners in the review.

The Chancellor has pledged around £30 billion in new funding, which translates to a 2.8% real-terms boost.

The goal? Drastically reduce NHS waiting lists. Labour has promised that by the next election, 92% of patients will be seen within 18 weeks of referral.

But the Institute for Fiscal Studies has already warned that such generous funding for the NHS could mean cuts elsewhere—or further tax hikes.

The NHS received a big cash bump in Reeves’ first Budget, yet the situation hasn’t drastically improved.

Even Health Secretary Wes Streeting admitted that the NHS is still struggling, saying it’s “not just on its knees, it’s on its face.”

Education: A Welcome Boost, But Still Stretched

Schools are also set to benefit, with the government promising record per-pupil spending.

But while this sounds impressive, experts warn that rising costs might still outpace these increases.

A report from the IFS noted that state school budgets remain “very tight,” and universities aren’t on track for financial stability anytime soon.

Labour’s controversial VAT policy on private schools is expected to fund 6,500 new teachers.

There’s also talk of tuition fees going up slightly.

Education unions, however, are calling for more radical steps—like a 2% wealth tax—to ensure schools don’t continue operating on a financial knife-edge.

Defence: Bracing for Global Uncertainty

Defence spending is climbing, largely in response to escalating threats from Russia.

Labour has committed to reaching 2.5% of GDP by 2027, with hopes of hitting 3% in the next Parliament.

But NATO wants members to go even further, with a 3.5% target looming.

This could mean an additional £30 billion annually—a massive financial challenge given current debt levels.

Yet Labour says it’s essential, especially with NATO allies, including the US, urging stronger defence commitments from European nations.

Housing: A Huge Investment in Social Homes

One of the more dramatic announcements was a £39 billion pledge for social and affordable housing, aimed at delivering 1.5 million new homes before the next election.

The investment doubles annual housing funding and has been welcomed by major homelessness charities like Crisis and Shelter.

Planning reforms to speed up housing development have also passed Parliament.

Plus, a centuries-old law criminalising rough sleeping—the 1824 Vagrancy Act—is finally being repealed, a move hailed as historic by advocacy groups.

Policing and Security: Left Behind?

Not every department fared well. Policing, in particular, has been squeezed.

Though the Home Office did secure a £680 million bump for border security, frontline police forces are still warning of major shortfalls.

Estimates suggest they face a £1.3 billion funding gap over the next two years.

West Midlands Police, for example, has asked for hundreds of officer positions to be restored.

Meanwhile, the government is investing more in border patrols and anti-smuggling operations, including drone surveillance and intelligence sharing with France.

Critics Aren’t Holding Back

The Tories have wasted no time slamming Reeves’ approach.

Shadow Chancellor Mel Stride called the plan reckless, accusing Labour of “spending money it doesn’t have.”

He warned that the result would be more borrowing, more debt, and, inevitably, more taxes—putting Britain’s financial stability at risk.

Stride dubbed Reeves the “Spend Today, Tax Tomorrow Chancellor,” echoing a concern shared by some economists: that without a clear revenue plan, Labour’s generous spending could turn into a long-term liability.

What’s Next?

While the government paints this review as a new beginning, the real test lies ahead.

Will the ambitious investments translate into real change for families across the UK?

And how will Labour manage the growing pressure to balance the books?

Expect more answers—or more questions—when the Autumn Budget rolls around.