The chancellor will unveil the spending review at lunchtime – with plans to invest billions of pounds across the UK.
However, Rachel Reeves will admit that “too many people” are yet to feel the benefits of the government’s work so far.
In the House of Commons, she will confirm the budgets for each government department over the next three years – with boosts expected for schools, defence and the NHS.
Ms Reeves will vow to spend vast sums of money across the country to “ensure that renewal is felt in people’s everyday lives, their jobs, their communities”.
She is also pledging to set out “reforms that will guarantee towns and cities outside London and the South East can benefit from new investment”.
Image: Chancellor Rachel Reeves will set out the government’s spending plans for the next three years. Pic: Reuters
Ms Reeves is expected to say: “This government is renewing Britain. But I know too many people in too many parts of the country are yet to feel it.
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“This government’s task – my task – and the purpose of this spending review – is to change that … So that people can see a doctor when they need one. Know that they are secure at work. And feel safe on their local high street.
“The priorities in this spending review are the priorities of working people. To invest in our country’s security, health and economy so working people all over our country are better off.”
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3:56
What to expect from the spending review
Watch live coverage of the spending review on Sky News from 12pm
Ms Reeves will formally confirm “the biggest-ever local transport infrastructure investment in England’s city regions” – worth £15.6bn – as well as £86bn to “boost science and technology”, including by building the Sizewell C nuclear power station.
She will also announce the extension of the £3 cap on bus fares, Sky News understands. The cap – which Labour lifted from £2 – was due to expire at the end of this year.
Meanwhile, £39bn for a new Affordable Homes Programme over the next 10 years is set to be unveiled, with the government seeking to ramp up housebuilding to hit its manifesto pledge of 1.5 million new homes by the end of this parliament.
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10:28
‘You are everyone’s worst enemy’
The chancellor will argue: “The choices in this spending review are possible only because of the stability I have introduced and the choices I took in the autumn.”
One of those choices included cutting the winter fuel allowance for almost all pensioners – a decision the government has now U-turned on at a cost of £1.25bn. However, she is not expected to explain where that money will come from until the budget this autumn.
Ms Reeves will tell MPs: “I have made my choices. In place of chaos, I choose stability. In place of decline, I choose investment. In place of retreat, I choose national renewal.
“These are my choices. These are this government’s choices. These are the British people’s choices.”
But shadow chancellor Sir Mel Stride said this will be “the ‘spend today, tax tomorrow’ spending review” – arguing that the government is “spending money it doesn’t have, with no credible plan to pay for it”.
He said in a statement: “Rachel Reeves talks about ‘hard choices’ – but her real choice has been to take the easy road. Spend more, borrow more, and cross her fingers. This spending review won’t be a plan for the future – it will be a dangerous gamble with Britain’s economic stability.”
He went on: “Today, we’ll hear slogans, spin and self-congratulation – but not the truth. Don’t be fooled. Behind the spin lies a dangerous economic gamble that risks the country’s financial future.”
Ryanair and easyJet have cancelled hundreds of flights as a French air traffic controllers strike looms.
Ryanair, Europe’s largest airline by passenger numbers, said it had axed 170 services amid a plea by French authorities for airlines to reduce flights at Paris airports by 40% on Friday.
EasyJet said it was cancelling 274 flights during the action, which is due to begin later as part of a row over staffing numbers and ageing equipment.
The owner of British Airways, IAG, said it was planning to use larger aircraft to minimise disruption for its own passengers.
The industrial action is set to affect all flights using French airspace, leading to wider cancellations and delays across Europe and the wider world.
Ryanair said its cancellations, covering both days, would hit services to and from France, and also flights over the country to destinations such as the UK, Greece, Spain and Ireland.
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Group chief executive Michael O’Leary has campaigned for a European Union-led shake-up of air traffic control services in a bid to prevent such disruptive strikes, which have proved common in recent years.
He described the latest action as “recreational”.
Image: Michael O’Leary. Pic: Reuters
“Once again, European families are held to ransom by French air traffic controllers going on strike,” he said.
“It is not acceptable that overflights over French airspace en route to their destination are being cancelled/delayed as a result of yet another French ATC strike.
“It makes no sense and is abundantly unfair on EU passengers and families going on holidays.”
Ryanair is demanding the EU ensure that air traffic services are fully staffed for the first wave of daily departures, as well as to protect overflights during national strikes.
“These two splendid reforms would eliminate 90% of all ATC delays and cancellations, and protect EU passengers from these repeated and avoidable ATC disruptions due to yet another French ATC strike,” Mr O’Leary added.
The CBI has begun a search for a successor to Rupert Soames, its chairman, as it continues its recovery from the crisis which brought it to the brink of collapse in 2023.
Sky News has learnt that the business lobbying group’s nominations committee has engaged headhunters to assist with a hunt for its next corporate figurehead.
Mr Soames, the grandson of Sir Winston Churchill, was recruited by the CBI in late 2023 with the organisation lurching towards insolvency after an exodus of members.
The group’s handling of a sexual misconduct scandal saw it forced to secure emergency funding from a group of banks, even as it was frozen out of meetings with government ministers.
One prominent CBI member described Mr Soames on Thursday as the group’s “saviour”.
“Without his ability to bring members back, the organisation wouldn’t exist today,” they claimed.
Mr Soames and Rain Newton-Smith, the CBI chief executive, have partly restored its influence in Whitehall, although many doubt that it will ever be able to credibly reclaim its former status as ‘the voice of British business’.
Its next chair, who is also likely to be drawn from a leading listed company boardroom, will take over from Mr Soames early next year.
Egon Zehnder International is handling the search for the CBI.
“The CBI chair’s term typically runs for two years and Rupert Soames will end his term in early 2026,” a CBI spokesperson said.
“In line with good governance, we have begun the search for a successor to ensure continuity and a smooth transition.”
Following his remarks, the value of the pound dropped and government borrowing costs rose, via the interest rate on both 10 and 30-year bonds.
Although market fluctuations are common, there was a reaction following Sir Keir’s comments in the Commons – signalling concern among investors of potential changes within the Treasury.
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1:07
PM refuses to rule out tax rises
Sterling dropped to a week-long low, hitting $1.35 for the first time since 24 June. The level, however, is still significantly higher than the vast majority of the past year, having come off the near four-year peak reached yesterday.
While a drop against the euro, took the pound to €1.15, a rate not seen since mid-April in the aftermath of President Donald Trump’s tariff announcements.
Meanwhile, the interest rate investors charge to lend money to the government, called the gilt yield, rose on both long-term (30-year) and ten-year bonds.
The UK’s benchmark 10-year gilt yield – so-called for the gilt edges that historically lined the paper they were printed on – rose to 4.67%, a high last recorded on 9 June.
And 30-year gilt yields hit 5.45%, a level not seen since 29 May.
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Ms Reeves has committed to self-imposed rules to reduce debt and balance the budget. Speculation around her future led investors to question the government’s commitment to balancing the books – and how they would do that.
The questions over her future came after the government scrapped the core money-saving component of its welfare bill, which had been intended to reduce spending in order to meet fiscal rules.