What is the UK Spending Review and Parliament’s Role? Budget Differences, Approval Process, and Why It Matters

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What role does Parliament play in the Spending Review?

9 Jun 2025

Rt Hon Rachel Reeves MP, The Chancellor of the Exchequer, 29 July 2024. Image credit: House of Commons

The UK Spending Review outlines how Government funds will be allocated over several years. Unlike the Budget, which raises revenue, the Review decides how it is spent. But how is it approved? What role does Parliament play if it doesn’t vote on the Review itself? This blog explores how the Spending Review works, how it differs from the Budget, and how Parliament holds the Government to account through the Estimates process.

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Director , Hansard Society

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What is a Spending Review, and why does it matter?

A Spending Review (SR) is the process by which the UK Government sets out its spending priorities and departmental budgets for the years ahead. Unlike the Budget, which is focused on raising money (primarily through taxation), the Spending Review is about how that money will be allocated across government departments and programmes.

The upcoming Spending Review will cover the financial years 2026-27 to 2028-29 for resource spending, and extends to 2029-30 for capital investment. It is a critical tool for shaping public services, setting out the Departmental Expenditure Limits (DELs) for each department. These DELs are divided into:

Resource DEL (RDEL): day-to-day running costs such as salaries, supplies, and administration; and
Capital DEL (CDEL): investment in assets like infrastructure, equipment, and buildings.

Does Parliament approve the Spending Review?

When the Chancellor presents the Spending Review, it is in the form of an oral statement to which no immediate parliamentary approval procedure is attached. Unlike the Budget – where MPs debate formal Budget resolutions over several days, which then form the basis for the Finance Bill – MPs can only question the Chancellor following her oral statement.

After the Chancellor’s statement, Select Committees and individual MPs may scrutinise the plans further using the usual parliamentary mechanisms of inquiries and evidence sessions, questions to ministers, adjournment or backbench debates, and so on.

However, the House of Commons will play a crucial role in approving the departmental expenditure plans through the Estimates cycle when the Government formally makes a request for the money each financial year.

Later this month the House of Commons will be asked to approve the Main Estimates for departmental spending in the current financial year, which will form the basis for this year’s Supply and Appropriation Bill. These Estimates were laid before Parliament on 15 May and will be debated and voted on by MPs on 24 and 25 June. They relate to funding decisions outlined in the Chancellor’s Budget Statement in October 2024 for the current financial year, preceding the Spending Review period.

The spending outlined in the Spending Review will thus emerge in next year’s Estimates process as set out below:

Vote on Account - likely in February 2026: the Government will seek approval of around 45% of departmental budgets before the start of the 2026-27 financial year on 1 April; and
Main Estimates – in late Spring/early Summer 2026: the Government will present the balance of the annual expenditure limits for each department. When approved, these Estimates will form the basis of the Supply and Appropriation Bill, which enshrines the spending in law.

The Hansard Society’s guide to how Parliament debates and approves Government spending provides more information on the Estimates process.

How much public spending does the Spending Review actually cover?

The Spending Review is not comprehensive. According to the House of Commons Library, it covers about 40% of total public expenditure. This includes planned spending that departments can control and negotiate in advance.

Excluded from the SR is Annually Managed Expenditure (AME) – spending that fluctuates with demand, which includes pensions, welfare benefits and debt interest payments.

Because this spending is inherently unpredictable, it is handled separately and reviewed annually.

How is the Spending Review different from the Budget or the Spring Statement?

The Budget is about taxation and raising revenue. It may include some spending measures, but its core function is to outline how money will be collected through taxation (known as “charges on the people”) or other measures to fund the Government’s spending plans.

The Spring Statement is an update on the state of the economy, including new forecasts from the Office for Budget Responsibility (OBR). It addresses the economic outlook over the course of the Parliament and may set out the need for adjustments to future plans.

In contrast, the Spending Review focuses on dividing up the Government-wide total spending pot by department and determining how each department should then allocate their money to specific policies to address the Government’s ‘missions’, manifesto commitments and departmental objectives. The division of money is determined through a negotiation process led by Ministers and their departmental teams engaging directly with the Treasury.

Can the Government change the Spending Review after it’s announced?

In theory, the SR sets out firm spending limits for the agreed period. But in practice, these figures are not carved in stone. Political pressures, economic shocks, or national emergencies can lead to significant revisions.

Moreover, because AME (which makes up most of the spending) is not controlled by the Spending Review, a large portion of Government spending remains outside the SR’s scope, making spending deviations common.

Does the Government have to hold a Spending Review?

No, it is not a constitutional or parliamentary requirement. The tradition of multi-year Spending Reviews was introduced by Chancellor of the Exchequer Gordon Brown in 1998. Since then, SRs have been held irregularly, often shaped by the political and economic climate. Recent reviews took place in 2010, 2013, 2015, 2019 and 2021.

That said, under the Charter for Budget Responsibility (which was updated by this Government in January 2025), the Government now commits to holding a Spending Review at least every two years, covering at least three financial years each time. This framework, backed by the National Audit Act 2011, will ensure a degree of regularity and parliamentary scrutiny of the plans.

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