Spending review: Government poised to boost NHS and defence sector
The government’s spending review is likely to focus on the UK’s health and defence sectors, a report from the Institute for Fiscal Studies (IFS) suggests.
The spending review, which will be published on 11 June, will allocate departmental funding and budgets for the next three to four years.
It has been the subject of speculation in the past weeks, as departments vie for the funding needed to accomplish their missions.
NHS gets a big share
According to the IFS, the NHS will get £202bn this year – 39 per cent of total day-to-day departmental spending.
As “the largest public service department,” how much money is set aside for the NHS “has a major impact on the amount left over for spending on other public services,” the IFS says.
These resources will be mobilised towards the government’s aims of cutting down on hospital waiting times and improving health services.
“The sheer size of the NHS means that this is – in budgetary terms at least – the most consequential Spending Review choice to be made.”
The Department for Health and Social Care (DHSC) leads all other departments in terms of day-to-day spending.
Defence to follow
The government announced in February that defence spending would rise to 2.5% of GDP by 2027–28 – in a move that would raise defence by £6.4bn compared to if it had stayed at 2023 levels.
So far, this is being supported through the government withdrawing international development spending.
The PM has suggested the government would consider raising this to a 3 per cent of GDP in the next parliament.
The IFS suggests the Ministry of Defence would see a one per cent increase in expenditure per year for the next two years.
The largest share of the government’s capital spending goes toward defence – £24bn in 2025–26.
According to the IFS, “in a scenario where defence is increased to 3 per cent of GDP, and DHSC gets 3.4 per cent” – the maximum spending scenarios projected by the IFS – “all other departments would face cuts of around 1.8 per cent per year.”
Cuts, here and there
The IFS expects real-terms cuts in government spending after this year.
For departments to operate at the same level despite finding themselves with relatively less generous funding packages, public sector productivity will need to be boosted.
To this end, other think tanks, like Policy Exchange, have previously suggested cutting down civil service mandarins by 80,000, while creating incentives to increase competitiveness and efficiency.
However, on the whole, departments’ day-to-day budgets could grow by 1.2 per cent each year in real terms in the following years.