UK Politics

The UK economy has shrunk by more than expected in a major blow to Rachel Reeves, just one day after she unveiled her spending review. The chancellor, who set out record investment in the Commons on Wednesday, acknowledged that the latest GDP figures, released on Thursday, were “clearly disappointing” but insisted her plan for the economy would help deliver growth.The Office for National Statistics (ONS) said gross domestic product (GDP) fell by 0.3 per cent in April, compared with growth of 0.2 per cent the previous month and marking the biggest contraction since October 2023. It was also worse than the 0.1 per cent contraction expected by most economists.Chancellor of the Exchequer Rachel Reeves delivering her Government’s spending review to MPs in the Commons (House of Commons/UK Parliament/PA) More

Even the UK’s leading economist was flummoxed.Minutes after Rachel Reeves had delivered her first spending review, Paul Johnson, the head of the influential Institute for Fiscal Studies, said he was not sure he had ever listened to a speech by a chancellor where it was “so hard to work out what is happening”. Her statement to the Commons had been “full of numbers, few of them useful”, he added. But one thing is sure – big problems are still to come down the line. The under-pressure chancellor had no choice but to come out fighting on Wednesday as she unveiled plans for government spending until the next election. She is facing criticism from all sides for a series of policy choices she has made since entering office, as well as poor economic growth. Just days before she unveiled her spending review, Labour’s first in a generation, she was forced to announce a massive U-turn on one of her earliest decisions in the Treasury – stripping the winter fuel allowance from millions of pensioners. Rachel Reeves is under growing pressure from her colleagues over her fiscal choices More

Rachel Reeves cheered beleaguered Labour backbenchers with record investment in her spending plans as she unveiled major boosts for the NHS, social housing and defence.In her long-awaited spending review, the chancellor also promised to save £1bn by closing all asylum hotels as she took aim at Nigel Farage and Reform.But experts warned that she will have to break her manifesto pledge not to raise taxes or increase borrowing much further to pay for her promises.Reeves set out her spending plans for the rest of this parliament More

The UK and the EU have agreed a post-Brexit deal to implement a “fluid” border between Gibraltar and Spain – which will not require checks on people crossing. The move marks a breakthrough in talks that have been ongoing since Britain left the European Union in 2020.Under the agreement, checks will not be required on those crossing the border between Spain and the British colony. More controversially, however, there will be “Eurostar-style” dual border control checks at Gibraltar airport, which will be carried out by both Gibraltar and Spanish officials.Operating in a similar way to the UK and French system for checking documents used at London’s St Pancras station, Britons arriving on the Rock will have to show their passports when they land.There will be dual border control checks for arrivals by air at Gibraltar airport More

Reeves delivers spending review key aimsTax rises are now “very likely” following a raft of spending announcements by Rachel Reeves, a former government economist has warned.In a speech to the Commons on Wednesday, the chancellor laid out the government’s updated spending plans across all government departments for the next four years.She said her proposal was focused on “Britain’s renewal”, as she announced big funding boosts to defence, nuclear energy projects, the NHS and transport in England’s city regions.Shadow chancellor Mel Stride branded the spending review as a “fantasy”, while financial experts have warned that it could prompt future tax raises.“Obviously things can and will change between now and October – but at present it looks very likely indeed that the spending totals today will mean that taxes need to go up in October so that the Chancellor can meet the fiscal rules,” former government and now Kings College London economist, Jonathan Portes, told The Independent.In last year’s Autumn Budget, taxes were raised including a hike in National Insurance payments paid by employers and capital gains tax. But speaking in the Commons on Wednesday, Ms Reeves said she would never “have to repeat a budget like that again”. Starmer set to be biggest cutter of overseas aid everThe Independent’s Political Correspondent Archie Mitchell reports:Sir Keir Starmer is on course to become the biggest cutter of overseas aid on record.The prime minister slashed the international development budget to fund his plans to hike defence spending.And now campaigners are warning it could land him with the damning legacy.Adrian Lovett, executive director of the ONE Campaign, said: “Not only is Keir Starmer the first Labour Prime Minister on record not to increase aid spending, but he is on course to deliver the most severe cut to aid investment in other countries in decades – going further than Thatcher, Major, Johnson or Sunak ever did.“These aren’t just numbers on a spreadsheet. This will lead to preventable deaths, diseases spreading faster and children going without vaccines. Some of the world’s most vulnerable people will pay the price for this decision, and it makes Britain less safe and strong, too.”( More

Rachel Reeves has pledged that the government will no longer house migrants in asylum hotels by 2029. Outlining her spending review plans to MPs on Wednesday, Ms Reeves said that ministers would end “the costly use of hotels to house asylum seekers in this parliament”. She said she was working with Home Secretary Yvette Cooper to end the costly scheme, which sees “billions of pounds of taxpayers’ money spent on housing asylum seekers in hotels, leaving people in limbo and shunting the cost of failure onto local communities”. Ms Reeves told MPs that plans to cut the asylum backlog, hear more asylum appeal cases, and return people to their home countries would save £1bn per year. Under spending plans published by the Treasury on Wednesday, officials estimated that they would still be spending £2.9bn on asylum costs in 2027-28 and £2.5bn in 2028-29. This year asylum costs are expected to be £3.9bn. In Labour’s manifesto, the party pledged to end the use of asylum hotels and it has been looking at medium-sized sites, such as student accommodation blocks and former care homes, as alternative sources of accommodation. The public spending watchdog recently predicted that the cost of asylum accommodation would triple to £15.3bn over 10 years. Original estimates on the cost totalled £4.5bn for 2019-2029, but the National Audit Office (NAO) revised this up to £15.3bn. The NAO said that around 110,000 people seeking asylum were housed by the Home Office in December 2024 – with some 38,000 of these living in hotels. The most senior civil servant in the Home Office said earlier this year that the department was aiming to get asylum hotel use down “to zero” by the end of this parliament. However, Sir Matthew Rycroft, who has now left the top job, predicted that “ups and downs” might affect that promise. Chancellor of the Exchequer Rachel Reeves delivers her government’s spending review to MPs in the House of Commons More

Rachel Reeves has delivered her first spending review as chancellor after months of bitter negotiations with her cabinet colleagues. She has unveiled what amount to cuts for some departments, fuelling accusations Labour is returning the country to the austerity agenda pursued by the Conservatives. But the chancellor has also splashed the cash in key areas as she bids to convince voters Labour is listening to their concerns and reverse the party’s decline in the polls. The Independent looks at what is in the spending review, and, crucially, what is not…Regional transport The chancellor highlighted £15.6 billion of transport spending in England’s city regions as part of a £113 billion investment spree. The £15.6 billion package for mayoral authorities included funding to extend the metros in Tyne and Wear, Greater Manchester and the West Midlands, along with a renewed tram network in South Yorkshire and a new mass transit system in West Yorkshire.Nuclear projectsThe spending review also contained £16.7 billion for nuclear power projects, including £14.2 billion for the new Sizewell C power plant in Suffolk.Ms Reeves also rolled out hundreds of millions of pounds worth of spending to secure Britain’s borders. She is offering up to £280 million per year to the Border Security Command Labour has set up to tackle people smuggling gangs. And she confirmed that the government will end the use of asylum hotels by 2029, saving the taxpayer £1 billion per year. Skills and industry funding Ms Reeves has also promised to plough £22 billion per year into research and development funding, highlighting the potential for AI developed in the UK to “solve the daunting challenges” facing the country. She she announced £2 billion specifically for the government’s AI action plan and £6 billion to encourage start-ups to grow in Britain. The review also promised £39 billion over the next decade to fund affordable housing in what has been billed as the biggest investment in a generation.Ms Reeves set out plans to almost double annual investment in affordable homes to £4 billion by 2029-30, compared to £2.3bn between 2021 and 2026. The money will go to local authorities, private developers and housing associations. The NHS was also one of the big winners in next week’s spending review, with a boost of up to £30 billion at the expense of other public services.The Department for Health and Social Care got one of the biggest settlements in the government’s spending review, while other areas faced cuts.Its budget will rise by 3 per cent each year for three years – a cash increase of £29 billion by 2028.The chancellor also extended the £3 cap on bus fares until 2027, arguing that without it a single journey between Leeds and Scarborough could cost as much as £12. The chancellor has promised a £4.5 billion uplift in the budget for schools each year, with £2.3 billion each year to fix “our crumbling classrooms”. Ms Reeves said her schooling experience in the 1980s and 1990s, including being taught in temporary classrooms, showed her the necessity of investing in schools. She wrote for The Independent on the same topic last week. Welsh railways Ms Reeves also rolled out £445 million to pay for upgrades to Welsh railways.Free school mealsThe chancellor also confirmed her announcement that all children with a parent claiming universal credit will be eligible for free school meals. The Treasury said it comes as part of a package to support households through the cost of living crisis. Other measures included caps on the cost of school uniforms and a £13.2 billion plan to insulate people’s homes. … Two-child benefit cap?Labour backbenchers will be feeling let down by Ms Reeves after her spending review. Expectations had been building that a climbdown by the government on the Tory-era two-child benefit cap was imminent. But, in a spending review containing few positive surprises, the chancellor ducked the opportunity to lift the cap – hated by Labour MPs. And nothing for London? Sir Sadiq Khan had kicked up a fuss about the lack of investment in London and the Treasury’s refusal to give mayors the power to levy tourist taxes. The London mayor aso fought for support for several transport projects as well as a substantial increase in funding for the Metropolitan Police – with his lobbying failing to win over Ms Reeves. Government officials highlighted that London will receive its biggest multi-year settlement in more than a decade, with £2.2 billion by 2030. But after the review, Mr Khan, said: “I remain concerned that this Spending Review could result in insufficient funding for the Met and fewer police officers. “It’s also disappointing that there is no commitment today from the Treasury to invest in the new infrastructure London needs. Projects such as extending the Docklands Light Railway not only deliver economic growth across the country, but also tens of thousands of new affordable homes and jobs for Londoners. “Unless the government invests in infrastructure like this in our capital, we will not be able to build the numbers of new affordable homes Londoners need.” More

With the dust barely settled on Rachel Reeves’ first major spending review since Labour’s return to power, debate is already raging over the scale, shape, and consequences of the chancellor’s plans.Unveiled to MPs at 12.30pm today, Reeves’ review promises sweeping investment in the NHS, affordable housing, transport and nuclear energy – all under the banner of what she calls “Britain’s renewal.” Among the pledges: £30bn for the NHS, £39bn for social and affordable housing, £14.2bn for nuclear, and billions more for AI and public transport in the North and Midlands.Supporters of the review argue it strikes a necessary balance between fiscal discipline and public investment. Reeves herself insists it will “make working people better off” without raising taxes or borrowing for day-to-day spending. Others, such as senior economists in Labour’s policy circle, have welcomed the focus on infrastructure and science as critical to long-term growth.But critics are already lining up. Police chiefs, including Sir Mark Rowley, the head of the Metropolitan Police, have warned of “far-reaching consequences” if budget squeezes lead to a drop in frontline policing. Home Secretary Yvette Cooper and Deputy Prime Minister Angela Rayner reportedly resisted signing off on spending cuts until the final hours, fearing damage to border control, housing and social care. Outside Whitehall, London Mayor Sadiq Khan has accused the government of reviving an “anti-London agenda” by neglecting the capital’s transport needs. And the Institute for Fiscal Studies has warned bluntly that “sharp trade-offs are unavoidable” — with many departments bracing for stealth austerity.So what do you think? Has Rachel Reeves delivered a spending review that invests wisely in Britain’s future? Or is Labour already falling short of the promises it made just weeks ago?We want to hear from you. Share your thoughts on Rachel Reeves’ spending review in the comments and vote in the poll below – we’ll feature the most compelling responses and discuss the results in the coming days.All you have to do is sign up and register your details – then you can take part in the debate. You can also sign up by clicking ‘log in’ on the top right-hand corner of the screen. More