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Prime Minister Rachel Reeves has been warned that next week’s spending review is a “maker or break” moment of the government’s pledge to deliver 1.5 million new homes in the UK during this parliament, and a “maker or break” in the government’s pledge as fierce negotiations over Whitehall’s budget have entered the final stage.
Deputy Prime Minister Angela Rayner is holding back more money for her department, which funds local governments and housing, ahead of the end of Reeves’ spending review on June 11th.
Rayner was supported in Wednesday’s battle. The Cross-Party House of Commons Housing and Local Government Selection Committee has published a letter to Reeves urging her to maintain spending on social and affordable housing.
“Expense Review 2025 is a manufacturer or break with a target of 1.5 million,” says Florence Eharomi, Labour Chair of the Committee, calling for a “increase in the generation of social and affordable housing investments.”
Rayner’s allies hope that affordable housing will continue to be well-funded. It counts as capital expenditures. This is prioritized by Reeves as he plans to spend other legislatives.
While Rayner’s daily budget is under pressure with the serious knock-on effect for local government services, last year Reeves adjusted its fiscal rules to allow an additional £113 billion for investment in Parliament.
Rayner, Secretary of the Interior Yvette Cooper and Ena Ed Miliband are the last three ministers who still hold onto more money from the Treasury.
Reeves set up a tough “expenditure envelope” for the rest of Congress in last year’s budget. Overall daily sector spending will increase by 1.2% per year, on average from 2026 to 2027.
A veteran former Treasury spending negotiator warned on Wednesday that the trio were taking risks by enduring a bitter end.
Former Conservative Treasury Secretary David Gorke said that “expenditure ministers” would usually evoke the Prime Minister’s support at this stage and present a dilemma to Ir Kiel’s starme.
“If you enter into the habit of being a prime minister who undermines the Treasury, you will have moral hazards for future spending rounds,” Gork said. “The Prime Minister is putting pressure on him to be adjacent to the Prime Minister and the Prime Minister.”
Goke said that sometimes lobbying could help ministers for political or external public pressure, such as more money by police chiefs, but ultimately the Treasury could simply impose a final settlement.
He said the Prime Minister could find “money behind the couch” at the very end, but added, “If you don’t like what you get, you have to accept it or walk.”
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Sir Danny Alexander, former Liberal Democrat Treasury Secretary and architect of austerity imposed by the 2010-15 Union government, said as more pastors settle the budget, people still hugged for what remains in the pot.
“Expense envelopes are pre-set,” he said. “If everyone else has settled down, you’re leaving the rest of the things left. The real risk is that the settlement you’ve gained is out of your control.”
Alexander said that Tory Attorney General Ken Clark Lord Ken Clark, last settled in the 2010 spending round. “Memories depend on whether it was agreed or imposed,” he said.
One worker veteran said he had worked hard to the end and settled “about 2:30am” the night before the end of the spending review, heading towards Gordon Brown’s government cooper tail end, and then the tail end of the work and pension secretary.
Cooper and Miliband work for the Treasury and are the only members of the Star Ministers who were also in Brown’s senior ranks.
The worker veteran claimed that Rayner had no experience as a minister of the same length, but instead had hone her own leadership qualifications.
“I think she’s a little different because she’s not only hugging the department, but she’s withholding it for more political reasons,” they said.
