Chancellor Reeves Announces Record UK Spending Plans, Council Tax Expected to Rise

Chancellor Rachel Reeves has announced a spending review featuring record investment in the NHS, social housing, and defence, including a £29 billion annual boost for the NHS and £39 billion over ten years for social housing. However, the review anticipates a council tax increase averaging 5% annually, resulting in an average bill rise of £359 by 2029, which has drawn sharp criticism from opposition figures who warn of higher taxes and borrowing ahead. Despite Reeves' assurances that the current spending commitments are funded through prior tax increases and fiscal rule changes, she declined to categorically rule out future tax rises, prompting accusations of a "spend-now, tax-later" approach. Economic data showing a 0.3% GDP contraction in April amid rising taxes and costs has intensified calls from business groups for the Chancellor to refrain from further tax hikes to support growth. Experts from the Institute for Fiscal Studies and others have expressed concerns about the sustainability of the spending plans without breaking manifesto pledges on taxation and borrowing, noting that some government departments face real-terms budget cuts despite the overall spending increases. The spending review also includes plans to save £1 billion by ending the use of asylum seeker hotels, though questions remain about managing the associated costs amid rising arrivals.