Chancellor Rachel Reeves has delivered her first Spending Review in a speech to MPs, setting out budgets for government departments until the next election. The chancellor says she
Chancellor Rachel Reeves has delivered her first Spending Review in a speech to MPs, setting out budgets for government departments until the next election.
The chancellor says she was rejecting “austerity” and announced that total departmental spending will grow by 2.3% over inflation per year.
The long-awaited review boosts defence and affordable housing and pledges to end use of asylum hotels by 2029. Spending on the NHS will rise by 3% a year after inflation, providing a £29bn real-terms increase in annual day-to-day spending.
It also includes commitments on EVs, transport and road maintenance.
Announcements include £2.6bn capital investment to decarbonise transport from 2026-27 to 2029-30. This includes £1.4bn to support the continued uptake of electric vehicles, including vans and HGVs, and £400m to support the rollout of charging infrastructure along with £616m to build and maintain walking and cycling infrastructure.
Labour also committed to providing £24bn of capital funding between 2026-27 and 2029-30 for motorways and local road maintenance. As spotlighted by the RAC, this is equivalent to £8bn per fiscal year – just under the total amount the Tory party pledged to spend (£8.3bn) over 10 years in its election manifesto to resurface 5,000 miles of local roads.
The Treasury said the roads funding increase would allow National Highways and local authorities to invest in significantly improving the long-term condition of England’s road network, delivering faster, safer and more reliable journeys.
And, as announced last week, £15.6bn is being invested by 2031‑32 through the new Transport for City Regions (TCR) settlements to give metro mayors of some of England’s largest city regions long‑term transport settlements.
The BVRLA greeted the funding for transport decarbonisation.
Toby Poston, chief executive of the trade body for the rental and leasing sector, said: “This £1.4bn could make a big difference in driving stronger and wider demand for vans, trucks and used electric vehicles. We will continue to work with colleagues at OZEV to highlight how this money can achieve the best return on investment.”
And ChargeUK said it strongly welcomed the announcement.
Vicky Read, CEO of the trade body for the charging industry, said: “The decarbonisation of transport is only possible if government and the private sector work effectively together. ChargeUK members’ commitment to invest £6 billion through to 2030 has already delivered over 80,000 public charge points, with a new one deployed every 25 minutes on average.”
She added: “It is vital that Government focuses both on stimulating demand for vehicles and targeting public funds in the most efficient way to complement private capital in infrastructure.
“ChargeUK is looking forward to working with the Department for Transport to ensure the funding announced today is allocated where it can have the most impact, in addition to taking action in other ways to help our members deliver widespread, affordable charging. This can be achieved by equalising VAT on public charging to five per cent, addressing the rise in standing charges, and extending the Renewable Transport Fuel Obligation to include EV charging.”
But while EVA England also greeted the continued government EV spending commitment, it said that “what matters now is how this funding will be spent”.
Chief executive Vicky Edmonds elaborated: “We urgently need clarity to ensure drivers remain at the heart of this investment, via targeted incentives that render EVs more affordable and accessible, alongside a continued rollout of public charging infrastructure. Too many cost barriers remain such as the Expensive Car Supplement that disproportionately impacts EVs and actively dissuades some drivers from considering electric. VAT on public charging, meanwhile, alongside more planning and regulatory barriers continue to promote a ‘two tier’ system between EV drivers with and without access to reliable and cost-effective home charging.”
Antoine Picron, director – Europe public policy at ChargePoint, added: “While this funding has the potential to reshape regional mobility and stimulate innovation, its effectiveness will depend on how well government, industry and local authorities work together. The opportunity is there for the UK to close charging gaps, foster competition and make EVs a mainstream choice – but only if investment translates into real-world solutions and improved charging experience for all. To realise the full potential of these investments, collaboration between government and industry is key. Aligning on infrastructure priorities, supporting workforce skills and deploying proven technologies can help ensure that public spending results in scalable, long-term impact.”
And the National Franchise Dealers Association (NFDA) said the Government needs to clarify how the £1.4bn for decarbonisation will be spent, adding “we still remain of the view that the Government needs to be incentivising consumers to purchase a new vehicle by improving charging infrastructure as well as addressing EV tax hikes”.
Finally, John Cassidy, director of sales at Close Brothers Motor Finance, had this to say: “Improved charging availability is critical to supporting the uptake of EVs. But while quantity is required, frequent reports of faulty charging points prove that guaranteeing the quality of the charging points is equally important. It’s crucial that the rollout is not rushed through at the cost of functionality. High upfront costs and the removal of EV exemptions from vehicle excise duty and the expensive car supplement continue to act as barriers to EV adoption, so while investment is good news, the Government should consider reevaluating the removal of incentives to avoid shooting itself in the foot.”
Meanwhile, the RAC welcomed the commitment on local road maintenance.
RAC head of policy Simon Williams responded: “Giving councils the certainty of longer-term funding to fix their roads is something we’ve called for many years, so this is excellent news.
“Local authorities now have a golden opportunity to end the cycle of merely filling potholes and instead begin to be much more proactive in their maintenance. This must include both more surface dressing to keep decent roads in good condition and resurfacing those that are at the end of their lives. It’s incumbent on councils to grasp this new opportunity and show all road users how it’s making a genuine difference in the quality of the roads they use every day.”
But the Asphalt Industry Alliance (AIA) said the Chancellor has missed the opportunity to make a long-term commitment to maintaining our local roads and warned of further deterioration and an even bigger bill to put this right in the future.
“So, while the Government’s commitment to additional funding for the 2025/26 financial year – the short-term cash injection with greater accountability announced in December – was welcome, it is unlikely to improve structural conditions or reduce road user complaints.
“It looks like overall DfT roads funding to 2030 has been cut to £24 billion (for both National Highways and local authorities) but further clarity on who will receive what share, how and when, is not evident. Nor is the level to which MHCLG resource funding allocations for highway maintenance may be impacted.
“That’s why we were hoping that the Government would commit to more certainty within this multi-year Spending Review funding horizon to give local highway engineers the visibility to allow them to ‘….invest in significantly improving the long-term condition of England’s road network…’ and not just manage the decline of the network.
“Ultimately, investing in local roads provides an effective return on investment for tax payers – provided that investment is sustained. It feels as if another opportunity has slipped by to help drive growth and make a lasting change to the condition of the roads on which we all rely.”
Finally, business group Logistics UK said the Government’s growth ambitions will only be realised if it prioritises the needs of the logistics sector in its forthcoming Industrial, Trade and Infrastructure strategies.
Kevin Green, policy director, commented: “The Spending Review makes some bold pledges for transport, power generation, defence, healthcare and home building, with transport capital investment to rise 3.9% across the Spending Review period. To turn these pledges into economic growth, it is vital that the government prioritises the logistics sector through the upcoming Industrial, Trade and Infrastructure Strategies – both by providing the infrastructure our sector needs to move goods efficiently, and by enabling our sector to efficiently deliver the country’s renewal that the Chancellor has committed to. It is why 30 Chief Executives of some of the UK’s biggest businesses recently wrote to Jonathan Reynolds, requesting that logistics is included as a foundational sector in the forthcoming Industrial Strategy.”
