Reeves gambles on 'renewing Britain' to win trust of voters

NHS and defence the big winners as billions spent on infrastructure

- Pippa Crerar Political editor Heather Stewart Economics editor

Rachel Reeves gambled billions of pounds of infrastructure spending yesterday on "renewing Britain" before the next election but faces a battle to convince voters that Labour can deliver change amid deep cuts to everyday spending.

The chancellor admitted that "too many people in too many parts of our country" were yet to feel the benefits of the change they voted for when Labour was swept to power with a huge majority last year.

With many Labour MPs unsettled about the electoral threat of Reform UK, Reeves has already launched a charm offensive to persuade them that her spending review yesterday was not a return to austerity.

Economists warned that mounting pressures on spending, including the U-turn on winter fuel payments for pensioners and Labour MPs' backlash against disability benefit cuts, meant that Reeves could be forced to raise taxes or look for more savings in the autumn.

Other tax increases could lie ahead, given that the Treasury's calculations are based on assumptions that local authorities will put up council tax by the maximum 4.99% a year for three years to fund services, including adult social care.

Writing in the Guardian, Keir Starmer said that departmental budgets, which will rise by 2.3% a year in real terms, showed the government had "entered a new stage" in its efforts to transform the country.

"It is an investment in Britain's renewal, so working people have more money in their pocket, more pride in their community and more hope for their children's future," he added.

The NHS and defence were the big winners of the spending review. According to the Resolution Foundation, 90% of the increase in the day-to-day budget over the next three years is going to health and 80% of the boost in capital spending to defence.