Even for those of us who follow these kinds of things on a regular basis, the spending review is, frankly, a bit of a headache.
This is one of the biggest moments in Britain’s economic calendar – bigger, in some respects, than the annual budget.
After all, these reviews, which set departmental spending totals for years to come, only happen every few years, while budgets come around every 12 months (or sometimes more often).
Yet trying to get your head around the spending review – in particular this year’s spending review – is a far more fraught exercise than with the budget.
In large part that’s because the Office for Budget Responsibility (OBR), the quasi-independent body that scrutinises the government’s figures, is not playing a part this time around.
There will be no OBR report to cast light, or doubt, on some of the claims from the government. Added to this, the data on government spending are famously abstruse.
So perhaps the best place to start when approaching the review is to take a deep breath and a step back. With that in mind, here are five things you really need to know about the 2025 spending review.
1. It’s not about all spending
That might seem like a strange thing to say. Why would a spending review not concern itself with all government spending? But it turns out this review doesn’t even cover the majority of government spending in the coming years.
To see what I mean you need to remember that you can split total government spending (£1.4trn in this fiscal year) into two main categories.
First there’s what you might call non-discretionary spending. Spending on welfare, on pensions, on debt interest.
This is spending the government can’t really change very easily on a year-to-year basis. It’s somewhat uncontrolled, but since civil servants wince at that idea, they have given it a name that suggests precisely the opposite: “annually managed expenditure” or AME.
Then there’s the spending the government…
