Hi John,

Rachel Reeves spending review yesterday was a welcome departure from Tory austerity. 

The Labour Chancellor’s first year in office has so far been largely defined by cuts to Winter Fuel Payments and upcoming cuts to PIP, but what was included in Reeves’ plans for the rest of the Parliament? And how could a closer relationship with Europe help her mission?

1) Homes under the hammer

One of Reeves’ headline acts was to commit £39 billion towards social housing over the next decade. 

Naomi Smith, Best for Britain CEO responded to the spending review by calling for the removal of the technical barriers to trade which “artificially increase the cost of equipment”. Further alignment with the EU on environmental standards would also lower the cost of construction materials, meaning that the government’s investment into the sector could go further and faster.

The youth mobility experience promised at the recent UK-EU Summit could also help the UK’s construction sector address its shortage of builders. The Home Builders Federation has criticised Brexit for creating skills shortages, warning in December that the UK needed tens of thousands of new recruits to meet Labour's housing targets.

2) NH-Yes

Another one of Labour’s key manifesto commitments was to mend the NHS after 14 years of Tory neglect. The Chancellor announced a 2.8% annual real terms increase for the Department of Health and Social Care budget over the next three years. 

To give the NHS the best possible chance to hit waiting list targets, the government should work alongside the EU to undo some of the damage caused by Brexit. At a time when the UK is struggling with a shortage of medical professionals, research by the Nuffield Trust shows that there are 4,000 fewer EU doctors working in the NHS than there would otherwise have been without Brexit. More damning still, almost 2,000 companies reported medicine shortages in 2024 alone, driven by “a reduction in EU imports”. 

By easing the technical trade barriers at the border, pharmaceutical goods could cross the channel more freely, cutting costs and improving reliability. Not to mention the extra tax revenue generated for public services if we realised the +2.2% GDP growth that could be generated by our Common Sense Deal with Europe. 

3) Money for munitions 

With the spectre of Russian expansionism and American isolationism hanging over Europe, it was no surprise to see Defence Secretary John Healy emerge as a big winner on Wednesday. The Ministry of Defence will see an £11 billion increase in spending, focused on increasing capital spending. 

Like any manufacturing sector, defence production relies on complex trans-national supply chains and benefits from smooth trade across borders. By pursuing deep alignment in goods and services with the EU, the UK government could reduce these technical barriers to trade, easing friction and cutting costly red tape for the UK’s manufacturing sector.

4) Education, education, education

When Labour entered office last year, the education system was in disarray. Crumbling class rooms, chronic underfunding and swollen class sizes are still  limiting the potential of British children.

In an attempt to change that, the Chancellor has confirmed that the government is planning to invest £4.7 billion to fix crumbling classes and rebuild dilapidated schools. Further, Reeves announced that free school meals will be extended to half a million extra kids, lifting around 100,000 children out of poverty according to the Department of Education.

A closer relationship with Europe could help the Chancellor by giving young Brits the opportunity to pursue training or work in the EU currently unavailable to them. And the government should agree to the mutual recognition of professional qualifications with the EU so that those who have benefited from the Chancellors investment in tertiary education can work across the continent with ease.

5) Devolution’s evolution

In an attempt to address growing regional inequality between the four nations of the United Kingdom, Reeves announced record investment into Scotland (£52 billion), Northern Ireland (£20 billion) and Wales (£23 billion).

However, independent research carried out by Frontier Economics on behalf of Best for Britain suggests that one of the best ways to undo regional inequality across the UK is to pursue deeper beneficial alignment with the EU on goods and services. The research suggests that  the Midlands and Yorkshire would benefit most, while the shielding effect of deep alignment with the EU from American tariffs is particularly pronounced in Scotland, Wales and Northern Ireland. 

The provisions of the spending review are an important step forward, and away from austerity. But to truly unlock Britain's potential and renew the nation, the government must pursue the more ambitious relationship with the EU that voters want.

Yours,

Cal

Cal Roscow

Director of Campaigns, Best for Britain

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