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Politics latest: Chancellor delivers big money to NHS as she unveils spending review

Rachel Reeves has outlined her long-awaited spending review, setting budgets for government departments up to the next election. Watch and follow live coverage throughout the day in the Politics Hub.

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Rachel Reeves has delivered her spending review, setting out each government department's budget for the coming years.

Here are her headline announcements:

  • NHS: The health service gets 拢29bn for day-to-day spending - a 3% rise for each year until the next election;
  • Defence: Spending will rise from 2.3% of GDP to 2.6% by 2027 - that's a 拢11bn uplift, with 拢600m for security and intelligence agencies;
  • Border security: The use of hotels to house asylum seekers will end by 2029, and there will be 拢280m more per year for the Border Security Command, which will help combat illegal immigration;
  • Energy: Some 拢14.2bn is being poured into the Sizewell C nuclear power station, part of a 拢30bn investment in nuclear energy;
  • Science and tech: Research and development funding will hit 拢22bn - a record high - by the end of the parliament, with AI plans getting 拢2bn;
  • Housing: Social and affordable housing will get 拢39bn - the biggest cash investment for 50 years;
  • Transport: 拢15bn for new rail, tram, and bus networks in the North and the West Midlands, a new rail line between Liverpool and Manchester, and a four-year settlement for TfL, plus the 拢3 bus fare cap extended to 2027;
  • Nations: Scotland gets 拢52bn, Northern Ireland 拢20bn, and Wales 拢23bn, including notably for coal tips;
  • Prisons: 14,000 new prison places will be funded with a 拢7bn injection;
  • Police: 13,000 more police officers will be paid for with 拢2bn;
  • Education: Free school meals extended to 500,000 children, while the extra 拢4.5bn per year will also go on fixing classrooms and rebuilding schools.
Government borrowing costs spike after spending review

By James Sillars, business and economics reporter

The government's spending review is not a budget. There is no independent scrutiny by the Office for Budget Responsibility.

As such, there's limited knowledge for financial market investors to take from such an event.

But it was clear before Rachel Reeves got to her feet in the Commons that rises in spending would intensify the risk of a repeat of her spring statement intervention, at the autumn budget to come, to maintain the 拢10bn of so-called fiscal headroom she has given herself.

So perhaps, in the absence of spending cut or tax rise announcements, it will not come as a surprise that the spending review - which will deliver a 2.3% real terms lift to government departments annually up to 2028/9 - was followed by a small spike in government borrowing costs.

Yields - the effective interest rate - on UK benchmark 10-year bonds, known as gilts, rose by 7 basis points to 4.57%.

The pound also held on to a gain of 0.3% versus the dollar and was hovering just below three-year highs above $1.35 as the US currency weakened after domestic inflation data.

It showed a weaker-than-expected increase in the headline rate during May, despite Donald Trump's trade war risking a surge in the pace of consumer price growth.

If the FTSE 100 were to hang on to its current level at the close, it would amount to a record high by the skin of its teeth.

The index is trading at 8,871.96 - that's less than a point above its March record level of 8,871.31.

Housing industry reacts to the chancellor's spending review

We've received lots of reaction to the chancellor's spending review from businesses, unions, and charities.

We'll start with some responses the housing industry - one of the government's biggest areas of focus.

Dandara, a housebuilder, welcomed the chancellor's announcement of "long-term commitments to infrastructure and housing", saying it offers "a critical opportunity to reform the systems that underpin delivery".

Chris Harris, Dandara's CEO, said: "The 拢39bn investment in affordable and social housing is especially encouraging, signalling serious intent to tackle supply challenges across all tenures."

But he warned that council planning teams are "one of the big obstacles to progress" and that local authorities need more funding. 

More money needed for local councils to refit homes

SimplyPhi, another housebuilder that works with councils to build affordable homes, said the chancellor's spending review is "historic".

But the company said that "more support and funding must be made available to local authorities to acquire and retrofit existing housing stock, and make this available both for temporary and long-term accommodation for those in need."

Spending review 'missed the mark'

Meanwhile, the Construction Plant-hire Association (CPA), which represents more than 1,900 firms, said the review "missed the mark".

This was because it didn't the national insurance rise for employers introduced earlier this year, which it said has been "threatening the very firms needed to deliver" new homes.

We've also had reaction from the financial services sector.

Legal and General has welcomed Reeves' housing announcements for providing "welcome stability for housing providers", allowing them to invest with greater confidence.

But it said it is "crucial" that the government, businesses and the third sector "continue to collaborate on a unified long-term strategy, treating housing as essential infrastructure and channelling investment into productive assets."

Charities react to the chancellor's spending review

We've had lots of charities respond to the chancellor's spending review.

Save the Children has said the investment in social housing is a "gear shift" for the government and that along with expanding free school meals, "the chancellor has demonstrated she is committed to reducing child poverty".

It has called for the two-child benefits cap to be scrapped.

But the charity added that "slashing the aid budget ultimately threatens our safety at home".

Save the Children said: "There is no 鈥榥ew era鈥� of security without greater investment in international co-operation. The government must change course."

Christian Aid has been much more critical of Rachel Reeves.

It says she "hasn't moved an inch to salvage the UK's now fragile credibility with Global South governments".

This is in reference to the Foreign Office having its budget squeezed, which will mean less for foreign aid. 

It also said that the review "brings no guarantee that the government will keep its promise on climate finance" and said it fears "more broken promises".

Meanwhile, mental health charity, Mind, is also critical.

It says today was a "missed opportunity" for the chancellor and points to a quarter of young people on mental health waiting lists being made to wait more than two years.

Mind said: "It鈥檚 time for an overhaul of Child and Adolescent Mental Health Services, so no young person has to wait for treatment. It鈥檚 time for the government to set out how it will roll out the network of early support hubs it has committed to. It鈥檚 time to make sure young people get the support they need in classrooms, in mental health services and in their communities."

The British Red Cross has welcomed the government's announcement that hotels will be phased out for asylum seekers, saying these are "completely unsuitable" for families "who have endured unimaginable trauma".

It said: "We welcome plans to invest more in the asylum system and to clear the backlog. To do this effectively, it's vital that decisions are made correctly the first time."

Ex-Reform chair to stand for parliament at next opportunity (if Reform are likely to win)

While the spending review was going on, our political correspondent Mhari Aurora heard of an interesting development at Reform UK.

She has found out former chair Zia Yusuf is planning to stand as an MP.

Mhari has been told Yusuf will stand for a parliamentary seat at the next general election, or in the next by-election the party thinks it can win.

Yusuf has become a familiar spokesperson and outrider for the party, often speaking to cameras instead of some of the party's more controversial MPs.

Asked about the development, Reform deputy leader Richard Tice told Sky News he "certainly hope[s]" Yusuf stands for a seat.

He said that while it's a matter for the man himself, Tice reckons Yusuf "would make a great member of parliament".

However, the deputy leader claimed Yusuf has a "big job" running the party's efficiency department.

Schools budget 'looks pretty tight'

The schools budget set out by the chancellor in her spending review seems "pretty tight", the director of the Institute for Fiscal Studies has said. 

Speaking to Sky News, Paul Johnson said "the growth is very, very slight and a chunk of that will be used up in the free school meals plans." 

He explains that this is going to cause more issues around teacher pay. 

Teachers have been arguing about pay in recent years, with several strikes taking place. 

Watch: Highlights from chancellor's spending review

Missed Rachel Reeves delivering the spending review and need a highlights reel?

We've got you covered - you can watch the most significant moments below:

Lib Dems demand more cash for social care

The Liberal Democrats have responded to the chancellor's spending review.

Daisy Cooper criticised Rachel Reeves for not announcing significantly more cash for councils to fix social care.

The party's Treasury spokesperson said: "Putting more money into the NHS without fixing social care is like pouring water into a leaky bucket."

Cooper called the review a "missed opportunity" and also repeated the party's call to create closer relationships with the EU. 

The Lib Dems have been campaigning for a bespoke UK-EU customs union. They say this would be the "best way to improve people's living standards and unlock billions of pounds".

Khan criticises spending review, saying more money needed for London

Sir Sadiq Khan has welcomed extra money for transport and housing announced in the spending review, but says he is "concerned" by the government's plans.

The mayor of London said he is worried the spending review could "result in insufficient funding for the Met and fewer police officers". 

He added: "It鈥檚 also disappointing that there is no commitment today from the Treasury to invest in the new infrastructure London needs."

The Labour politician warned if the government doesn't invest in infrastructure projects in London, then "we will not be able to build the numbers of new affordable homes Londoners need".

Don't 'level down London', chancellor warned

Building 1.5m new homes by 2029 is one of the Labour government's key targets, and Khan thinks projects such as extending the DLR will help unlock more development.

He said he would "continue to make the case" to the government for more funding for the capital.

"The way to level up other regions will never be to level down London", he concluded.

Watch: Ed Conway on the big picture of the spending review

Our data and economics editor Ed Conway has been crunching the numbers from the government's spending review. 

Health and social care is the sector receiving the most funding, followed by education and defence in day-to-day spending. 

Science, innovation, and technology will see the biggest increase in funding by 2028/29, followed by health.

While the Home Office has come out as a "loser", with its funding falling. 

Watch Ed's full analysis below鈥�

The Home Office is a big loser in chancellor's spending review

By Mollie Malone, news correspondent

In the justice world, the money feels a bit meh.

That's because nothing is that new - the chancellor has essentially dressed up the status quo and re-announced it. 

There's 拢7bn to build 14,000 new prison spaces, but that ambition was already there. In fact, it's continuity (and what's left to go) from the last government's target of building 20,000 new spaces.

The 拢700m for the probation service will be welcome, but it was already announced at the sentencing review a few weeks ago. 

It's baked in, if you like. And remember, we're about to see a load of pressures on the probation service as ministers look to make reforms to sentencing policy to send thousands fewer people to prison.

And of course, that brings me to the police, who will be needing to manage the streets as offenders are managed in the community, rather than behind bars. 

The Home Office is a big loser in all this, facing a cut to its spending of 1.4%. For a criminal justice system creaking at every corner, that will matter to the justice department - they need to all work together.