Rachel Reeves finally published her long-awaited Spending Review to parliament today, and although there weren’t too many specifics of relevance to our sectors, there were a few nuggets buried in the small print.
By and large, the big ticket items Reeves revealed were things we already knew. More energy investment took top billing, because “energy security is national security,” Reeves noted. That meant nods for yesterday’s Sizewell C nuclear plant announcement and £2.5bn for a small modular reaction programme, with Rolls-Royce as the preferred partner, and a £2.5bn investment in nuclear fusion as part of the £30bn “biggest rollout of nuclear power for 50 years.” Non-nuclear got a look in too, with the promise of support for the Acorn carbon capture and storage project in Scotland and the Viking project in Humberside.
We already knew about the planned rise in defence spending too, by 2.6% of GDP by April 2027. That will provide an extra £11bn increase, plus £600m for security and intelligence agencies. We’d probably all rather not be looking down the barrel of an increasingly aggressive Russian gun right now, but the significant extra funds are sure to provide a boost to newer AI, data and cyberwarfare methods as well as more traditional heavy manufacturing in the North, and Scotland in particular.
There was also a promise of changes to green book rules to allow more investment in regions, and a claim that plans for Northern Powerhouse Rail would be forthcoming in the “coming weeks.”
There was £86bn for science and technology R&D, including up to £500m for regional authorities to target investment locally, and £2bn for the AI Action Plan.
Given how much of the review announcement we already knew, it’s perhaps understandable that not everyone was impressed, including Institute of Fiscal Studies director Paul Johnson:
Katie Gallagher, MD of Manchester Digital and chair of the UK Tech Cluster Group, was broadly more supportive, however.
She said: “Greater Manchester will receive awards of least £30m, as well as a £4.8m partnership between Manchester and Cambridge for business investment.
“We also recognise the significance of the funding to reform public services and the opportunities this could create for SMEs in terms of procurement, if done correctly, as well as the £1.2bn announced for skills and training for young people, which will be vital to the development of our tech, digital and science industries.
“We’ve campaigned and worked closely with MPs and officials to push for greater regional investment. As ecosystem organisations, we see first-hand where support is needed and where it can have the most impact. Giving local leaders the means to invest in R&D, skills and digital infrastructure will only deliver results if they are working hand-in-hand with the right partners, including cluster organisations like ours, who understand the businesses, the gaps and the opportunities on the ground.
“This isn’t just about growing the tech sector. It’s about creating the conditions for people across our cities and regions to benefit from high-value, future-facing jobs. If we get this right, the returns will go far beyond GDP.”
Liverpool Mayor Steve Rotheram also saw the positives: ““This Spending Review sets the right tone – and the right priorities – for the road ahead. At a time when tough choices have had to be made, the Chancellor has clearly recognised the value of investing in the parts of the country with the greatest potential and the strongest record of delivery.
“That’s a real vote of confidence in places like the Liverpool City Region, and in the role that mayors can play as the delivery arm of government.
“I welcome the focus on long-term investment, regional fairness and the practical steps being taken to back local areas with the tools and funding we need to succeed. From transport and housing to skills and innovation, this gives us the opportunity to build on our momentum and deliver real, lasting change.”
Rotheram seemed particularly pleased with the plans to reform the Treasury’s Green Book rules: “This is a landmark moment. For too long, the rules governing public investment have tilted the playing field against areas like ours. I’ve spent years pressing for reform of the Green Book, and I’m really pleased to see the Treasury now recognising the need for a fairer, more practical approach.
“These changes go far beyond technical tweaks; they represent a fundamental shift in how funding decisions get made. By cutting unnecessary complexity, scrapping arbitrary thresholds, and putting local priorities at the heart of the process, we have a real opportunity to deliver the kind of inclusive growth that benefits every part of the country.
“The real test now is implementation. That’s why I’m offering the Liverpool City Region as a national pilot for this new approach to show how it can work in practice and deliver better outcomes for people in places that have too often been left behind.”
Chair of The Great North, and North East Mayor, Kim McGuinness, agreed: “Spending and investment has been rigged in this country for too long against the people of the North. This Northern Chancellor is backing mayors across The Great North by changing the rules and fixing this for future generations.”
McGuinness had spotted an impressive £10bn of transport investment for the region in the document:”The North has secured over £10 billion investment into our transport network, a new 10-year local growth fund to unlock our potential and transform our infrastructure, and an industrial strategy for the North’s growth opportunities in advanced manufacturing and defence, clean energy and life sciences,” she said.
“Like the Chancellor herself said – we are ambitious. The potential of the North is unrivalled, we can drive growth of £118 billion. As Northern mayors, we are looking forward to working with both the Deputy Prime Minister and the Chancellor to bust the North-South divide and achieve the potential of The Great North.”
