Reeves and Home Office in standoff on spending

Rachel Reeves has been locked in a standoff over the policing and council budgets just days before the spending review, which is set to give billions to the NHS, defence and technology.

- Rowena Mason Whitehall editor

Yvette Cooper's Home Office and Angela Rayner's housing and local government ministry were still at the negotiating table yesterday fighting for more cash, after weeks of trying to reach a settlement.

Whitehall sources said the policing budget would not face a real terms cut, but there was still disagreement over the level of investment needed for the Home Office to meet its commitments.

Any failure to strike a deal would raise the prospect of a budget being imposed on an unwilling department.

Rayner's department is understood to have reached an agreement with the Treasury late yesterday after last-minute wrangling over housing, local councils and growth funds.

Wednesday's spending review is a chance for Reeves to point to billions of pounds of capital spending as a sign that she is working to repair public services after years of Tory austerity. After tweaking her fiscal rules last autumn, she has an additional £113bn funded by borrowing for capital spending.

Her plans will include £86bn for science and technology across four years and an extra £4.5bn for schools -taking funding per pupil to its highest level ever.

However, day-to-day spending is more constrained in some areas, while the NHS and defence swallow up higher allocations.

As well as policing, the Home Office budget covers the border force and spending on costs associated with claims for asylum, while the Ministry of Housing, Communities and Local Government has been battling for funds for the affordable homes programme, councils, homelessness and regional growth.