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As the Chancellor stood up this lunchtime to announce the results of the first Spending Review since 2021, there were two tasks at hand.
The first was a political one.
Labour has faced a tough ride in the polls in recent weeks, including a disappointing performance in recent local elections. Today’s Spending Review was a chance to reset the political narrative.
It was an opportunity for the Government to demonstrate to its own MPs, the business community and voters that, to quote Keir Starmer’s words to cabinet earlier in the day, the Party is “moving to a new phase that delivers on the promise of change for working people all around the country and invests in Britain’s renewal.”
The second task falling to the Chancellor was to set out a coherent departmental spending plan, which demonstrated fiscal responsibility and reassured the markets, whilst delivering the investment that would kickstart much needed economic growth.
So, where has Labour prioritised investment, and what did today’s Spending Review mean for businesses?
One of the big winners of the day is the Department for Science, Innovation and Technology. The Chancellor announced an increase of £22bn in annual funding for R&D projects and the Department’s overall budget will increase by an annual average of 7.4%.
Much of this investment is in AI, with £500 million for the creation of a new UK Sovereign AI Unit, £48 million for the Tech Expert programme to drive collaboration with universities to expand AI course provision, and £240 million for the AI Security Institute.
The supercomputer at Edinburgh University, previously axed, is now back with £750m of funding.
Meanwhile, investment totalling £113 billion across the NHS, Defence, Transport, and Energy were all announced prior to the Spending Review.
The Chancellor framed these investments as investing in Britain’s “renewal”, in national and economic security, and as a form of what she terms “securonomics” – buying, making, and selling more in Britain.
Core to Labour’s economic argument is the need to provide public investment, not just to improve public services and raise productivity, but also to leverage private investment too.
Every department is being charged with supporting growth: the NHS by getting more people back into work, defence investment creating jobs and export opportunities, new nuclear to insulate the UK economy from volatile gas prices, and targeted transport investments to drive productivity growth in regions requiring better connectivity.
Labour was quick to announce supply side measures, such as planning reforms, when it took office. Today’s Spending Review was the reverse side of the coin – spending announcements designed to drive demand, in the hope of stimulating growth.
As the dust settles on today’s announcements, businesses will need to consider the implications of the Spending Review for their sector, and how to respond.
Here are three things you should be doing as part of your engagement with government.
1. Lead with efficiency and impact
Whether it’s the NHS, defence, transport or digital infrastructure, government is investing in outcomes – not just inputs.
Businesses should revisit how they communicate their value to government. The focus must be on efficiency, scalability, deliverability, and impact.
How does your organisation help deliver better public services for less? How do your solutions unlock long-term economic growth?
If you can answer those questions clearly, you’ll be better placed to gain traction with government stakeholders.
2. Engage across the right parts of government
The Spending Review has mapped out where capital will flow, but there are still many unknowns about exactly how the money will be spent. To influence subsequent decisions, businesses need to:
The most successful organisations will be those that understand and navigate the full machinery of government.
3. Be a partner, not just a provider
The Government is looking for businesses that bring more than just commercial solutions – it wants strategic allies and trusted partners that can help deliver economic growth and its “Plan for Change”.
That means working with policymakers. Whether it’s offering policy insight, piloting new delivery models, or co-designing tech platforms, businesses need to demonstrate that they’re invested in the bigger picture.
Labour is betting big on growth. But the message from ministers is clear: this is a shared mission, and business must play its part.
Indeed, Labour is increasingly encouraging business to engage – and there are opportunities to do that: Party Conference, business summits, direct engagement with Number 10 and the ministers that shape your policy environment.
If your organisation wants to shape, support and benefit from this new direction, it needs to engage now, with relevance, purpose and a partnership mindset.
To explore what the Spending Review means for your organisation, contact us at [email protected].
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