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If you sat through the entire spending review speech delivered by Rachel Reeves in the House of Commons, you might have been lulled into a sense that the UK was awash with a wealth of riches as the chancellor sprinkled billions across the land.

There were billions for social housing, nuclear power stations, rail lines and research and development to power the economy.

There was money for schools, the police, the NHS, and defence spending, as the chancellor sketched out her roadmap for Britain for years to come, with an acknowledgement that the government – and particularly this chancellor – had endured a difficult first year.

“We are renewing Britain. But I know that too many people in too many parts of our country are yet to feel it…the purpose of this spending review is to change that,” she said.

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There was £113bn of borrowing to fund capital investment and an extra £190bn over the course of the parliament for public services, fuelled by those contentious tax rises in the budget last autumn. This was a Labour chancellor turning her back on austerity.

“In place of decline, I choose investment. In place of retreat, I choose national renewal,” she said.

The chancellor deserves credit for the capital investment, which she hopes will unlock jobs and power economic growth. But when something sounds too good to be true, it normally is.

For me, former shadow chancellor John McDonnell hit the nail on the head on Wednesday night as he remarked rather wryly to me that “the greater the applause on the day, the greater the disappointment by the weekend”.

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Sky’s economics editor Ed Conway looks at the key takeaways from the spending review.

Could tax hikes be needed?

Because, in talking up the prospect of national renewal, the chancellor glossed over what the “hard choices” mean for all of us.

There are questions now swirling about where the cuts might fall in day-to-day budgets for those departments which are unprotected, with local government, the Home Office, the Foreign Office, and the Department for Environment all facing real-terms cuts.

My colleague Ed Conway, analysing the government figures, found cuts in the schools budget for the last two years of this parliament – the chancellor’s top line figure showed an overall rise of 0.6% over the five-year period of this Labour government.

There are questions too over whether council tax bills might be increased in order to top up local government and police budgets.

Ms Reeves told me in an interview after her speech that they won’t, but she has predicated increases in police funding and local government funding coming locally, rather than from central government, so I will be watching how that will play out.

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The chancellor tells Sky News council tax will not have to rise as a result of measures in her spending review.

Even with the increase in health spending – the NHS is getting a 3% boost in its annual budget – there are questions from health experts whether it will be enough for the government to hit a routine operations target of treating 92% of patients within 18 weeks.

My point is that this might not be – to again quote Mr McDonnell – “mathematical austerity”, but after over a decade where public dissatisfaction in public services has grown, the squeeze of day-to-day spending could make it hard for the chancellor to persuade working people this is a government delivering the change for them.

There is pressure to reverse some of the welfare cuts, and pressure to lift the two-child benefit cap, while the pressure to reverse the winter fuel allowance has already resulted in Reeves this week making a £1.25bn unfunded spending commitment (she will set out how she is paying for it at the next budget).

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Treasury minister refuses to rule out tax rises later this year.

Will voters feel the ‘renewal’?

Reeves told me on Wednesday there was no need for tax rises in the autumn because the spending envelope had already been set, and the money now divvied out. It’s a very live question as to whether that can hold if the economy weakens.

She did not rule out further tax rises when I asked her last week, while Treasury minister Emma Reynolds told my colleague Ali Fortescue on Wednesday night: “I’m not ruling it in, I’m not ruling it out.”

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The gamble is that, by investing in infrastructure and getting spades in the ground, and tilting limited public money into the NHS, the government can arrive at the next election with enough ‘proof points’ to persuade voters to stick with them for another five years.

On Wednesday, the chancellor laid the foundations she hopes will turn the government’s fortunes around. The risk is that voters won’t feel the same by the time they are asked to choose.

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What is the car finance scandal – and what could today’s ruling mean for motorists?

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What is the car finance scandal - and what could today's ruling mean for motorists?

The UK’s Supreme Court is set to deliver a landmark ruling today that could have billion-pound consequences for banks and impact millions of motorists.

The essential question that the country’s top court has been asked to answer is this: should customers be fully informed about the commission dealers earn on their purchase?

However, the Supreme Court is only considering one of two cases running in parallel regarding the mis-selling of car finance.

Here is everything you need to know about both cases, and how the ruling this afternoon may (or may not) affect any future compensation scheme.

File photo dated 26/3/2021 of the UK Supreme Court in Parliament Square, central London. A legal challenge over whether trans women can be regarded as female for the purposes of the 2010 Equality Act begins at the UK Supreme Court on Tuesday. The action is the latest in a series of challenges brought by the campaign group For Women Scotland (FWS) over the definition of "woman" in Scottish legislation mandating 50% female representation on public boards. Issue date: Monday November 25, 2024.
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What is the Supreme Court considering?

The Supreme Court case concerns complaints related to the non-disclosure of commission. This applies to 99% of car finance cases.

When you buy a car on finance, you are effectively loaned the money, which you pay off in monthly instalments. These loans carry interest, organised by the brokers (the people who sell you the finance plan).

These brokers earn money in the form of a commission (which is a percentage of the interest payments).

Last year, the Court of Appeal ruled in favour of three motorists who were not informed that the car dealerships they agreed finance deals with were also being paid 25% commission, which was then added to their bills.

The ruling said it was unlawful for the car dealers to receive a commission from lenders without obtaining the customer’s informed consent to the payment.

However, British lender Close Brothers and South Africa’s FirstRand appealed the decision, landing it in the Supreme Court.

Toy Car In Front Of Businessman Calculating Loan. Saving money for car concept, trade car for cash concept, finance concept.
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Pic: iStock

What does the second case involve?

The second case is being driven by the Financial Conduct Authority (FCA) and involves discretionary commission arrangements (DCAs).

Under these arrangements, brokers and dealers increased the amount of interest they earned without telling buyers and received more commission for it. This is said to have incentivised sellers to maximise interest rates.

The FCA banned this practice in 2021. However, a high number of consumers have complained they were overcharged before the ban came into force. The Financial Ombudsman Service (FOS) said in May that they were dealing with 20,000 complaints.

In January 2024, the FCA announced a review into whether motor finance customers had been overcharged because of past use of DCAs. It is using its powers to review historical motor finance commission arrangements across multiple firms – all of whom deny acting inappropriately.

The FCA also said it is looking into a “consumer redress scheme” that means firms would need to offer appropriate compensation to customers affected by the issue.

An estimated 40% of car finance deals are likely to be eligible for compensation over motor finance deals taken out between 2007 and 2021, when the DCAs were banned.

To find out how you can tell if you’ve been mis-sold car finance, read the following explainer from our reporter Megan Harwood-Baynes.

Read more from the Sky News Money blog

Pic: iStock
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Pic: iStock

How does the ruling affect potential compensation?

In short, the Supreme Court ruling could impact the scale and reach that a compensation scheme is likely to have.

The FCA said in March that it will consider the court’s decision and if it concludes motor finance customers have lost out from widespread failings by firms, it is “likely [to] consult on an industry-wide redress scheme”.

This would mean affected individuals wouldn’t need to complain, but they would be paid out an amount dictated by the FCA.

However, no matter what the court decides, the FCA could go ahead with a redress scheme.

The regulator said it will confirm if it is proposing a scheme within six weeks of the Supreme Court’s decision.

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What impact could this have on lenders?

Analysts at HSBC said last year the controversy could be estimated to cost up to £44bn.

Alongside Close Brothers, firms that could be affected include Barclays, Santander and the UK’s largest motor finance provider Lloyds Banking Group – which organises loans through its Black Horse finance arm.

Lloyds has already set aside £1.2bn to be used for potential compensation.

London, United Kingdom - January 1, 2017: Bank branch and ATM of Lloyds Bank with people around in London, England, United Kingdom

The potential impact on the lending market and the wider economy could be so great that Chancellor Rachel Reeves is considering intervening to overrule the Supreme Court, according to The Guardian.

Treasury officials have been looking at the potential of passing new legislation alongside the Department for Business and Trade that could slash the potential compensation bill.

The Treasury said in response to the claim that it does not “comment on speculation” but hopes to see a “balanced judgment”.

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Full details of Heathrow’s plans for a third runway revealed

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Full details of Heathrow's plans for a third runway revealed

Heathrow Airport has said it can build a third runway for £21bn within the next decade.

Europe’s busiest travel hub has submitted its plans to the government – with opponents raising concerns about carbon emissions, noise pollution and environmental impacts.

The west London airport wants permission to create a 3,500m (11,400ft) runway, but insists it is open to considering a shorter one instead.

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January: Third runway ‘badly needed’

In January, Chancellor Rachel Reeves announced that the government supports a “badly needed” expansion to connect the UK to the world and open up new growth opportunities.

But London mayor Sir Sadiq Khan is still against a new runway because of “the severe impact” it will have on the capital’s residents.

Under Heathrow’s proposal, the runway would be constructed to the northwest of its existing location – allowing for an additional 276,000 flights per year.

The airport also wants to create new terminal capacity for 150 million annual passengers – up from 84 million – with plans involving a new terminal complex named T5XW and T5XN.

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Terminal 2 would be extended, while Terminal 3 and the old Terminal 1 would be demolished.

The runway would be privately funded, with the total plan costing about £49bn, but some airlines have expressed concern that the airport will hike its passenger charges to pay for the project.

EasyJet chief executive Kenton Jarvis said an expansion would “represent a unique opportunity for easyJet to operate from the airport at scale for the first time and bring with it lower fares for consumers”.

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Who’s behind these Heathrow leaflets?
A long history of Heathrow’s third runway plans

File photo dated 29/10/12 of a plane taking off from Heathrow Airport. Heathrow has increased the number of passengers it expects to travel through the airport this year to 82.8 million, which is 1.4 million more than it predicted in December 2023. Issue date: Tuesday April 23, 2024.

Thomas Woldbye, the airport’s chief executive, said in a statement that “it has never been more important or urgent to expand Heathrow”.

“We are effectively operating at capacity to the detriment of trade and connectivity,” he added.

“With a green light from government and the correct policy support underpinned by a fit-for-purpose, regulatory model, we are ready to mobilise and start investing this year in our supply chain across the country.

“We are uniquely placed to do this for the country. It is time to clear the way for take-off.”

The M25 motorway would need to be moved into a tunnel under the new runway under the airport’s proposal.

Airplanes remain parked on the tarmac at Heathrow International Airport.
Pic: Reuters
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Pic: Reuters

London mayor still opposed

Sir Sadiq says City Hall will “carefully scrutinise” the proposals, adding: “I’ll be keeping all options on the table in how we respond.”

Tony Bosworth, climate campaigner at Friends of the Earth, also said that if Sir Keir Starmer wants to be “seen as a climate leader”, then backing Heathrow expansion is “the wrong move”.

Earlier this year, Longford resident Christian Hughes told Sky News that his village and others nearby would be “decimated” if an expansion were to go ahead.

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January: Village to be levelled for new runway

It comes after hotel tycoon Surinder Arora published a rival Heathrow expansion plan, which involves a shorter runway to avoid the need to divert the M25 motorway.

The billionaire’s Arora Group said a 2,800m (9,200ft) runway would result in “reduced risk” and avoid “spiralling cost”.

Transport Secretary Heidi Alexander will consider all plans over the summer so that a review of the Airports National Policy Statement can begin later this year.

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It also comes after Sky News reported on a Heathrow Airport-funded group sending leaflets supporting a third runway to thousands of homes across west London.

The group, called Back Heathrow, sent leaflets to people living near the airport, claiming expansion could be the route to a “greener” airport and suggesting it would mean only the “cleanest and quietest aircraft” fly there.

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Who’s behind these Heathrow leaflets?

Opponents of the airport’s expansion said the information provided by the group is “incredibly misleading”.

Back Heathrow told Sky News it had “always been open” about the support it receives from the airport. The funding is not disclosed on Back Heathrow’s newsletter or website.

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Man, 76, arrested on suspicion of administering poison at summer camp after eight children taken to hospital

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Man, 76, arrested on suspicion of administering poison at summer camp after eight children taken to hospital

A 76-year-old man has been arrested on suspicion of administering poison at a summer camp which led to eight children being taken to hospital, police said.

Police received reports of children feeling unwell at a summer camp in Canal Lane, Stathern, Leicestershire, on Monday.

Paramedics assessed eight children, who were taken to hospital as a precaution and have all now been discharged.

The suspect was arrested at the camp and remains in custody on suspicion of administering poison with intent to injure/aggrieve/annoy.

Detective Inspector Neil Holden said: “We understand the concern this incident will have caused to parents, guardians and the surrounding community.

“We are in contact with the parents and guardians of all children concerned.

“Please be reassured that we have several dedicated resources deployed and are working with partner agencies including children’s services to ensure full safeguarding is provided to the children involved.

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“We also remain at the scene to carry out enquiries into the circumstances of what has happened and to continue to provide advice and support in the area.

“This is a complex and sensitive investigation and we will continue to provide updates to both parents and guardians and the public as and when we can.”

The force said it has referred itself to the Independent Office for Police Conduct (IOPC) over what it said was the “circumstances of the initial police response”.

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