Further information on the Spring Spending Review

In June 2025, the Government announced the Spring Spending Review. We previously published an article explaining the impact on the Department for Environment, Food and Rural Affairs (Defra). In this article, we explore the announcements across all government departments and what this means for levy payers.

The spending review set government departmental budgets for day-to-day spending until 2028–29, and until 2029–30 for capital investment.

Across all departments budgets will be growing by 2.3% across the next 4–5 years.

The Government's key priorities are health, defence and economic growth which is where the key impacts can be seen.

The key headlines for these priorities are:

• Increase in NHS day-to-day spending of £29 billion real terms, which is a 3% annual real terms growth
• Defence spending will rise to 2.6% of GDP from 2027, with an ambition to reach 3%

Key points for levy payers

Across government, some of the other key priorities are digital transformation, investment in green technology and sustainability initiatives, building homes, energy security and reskilling the UK workforce.

Before the spending review there were reports of council tax increases. It was confirmed that the 3% threshold for maximum council tax increases will remain in place, however actual tax increases will still be the responsibility of local councils.  

Another key announcement for levy payers was the improvement to the UK digital infrastructure.

The Government committed £1.9 billion to investment in improving access to 4G and broadband.

There is now a target that 99% of UK premises will have access to broadband by 2032 which will be a huge benefit to rural businesses.

There will also be £86 billion for research and development over the next four years. This will allow for local 'innovation clusters' across the country.

There is also a commitment to build 1.5 million homes across the country as the government revises the national planning policy framework.

Additionally, there is the commitment to improving clean, home grown energy that is low in carbon. 

Defra funding

As discussed in previous articles, Defra will a see a 2.7% reduction in overall spending over the five-year period.

The key points for Defra are:

• Total funding: £7.4 billion in 2028–29
• Capital funding: £16 billion over the spending review period
• Sustainable farming and nature recovery: £2.7 billion per year from 2026–27 until 2028–29
• Flood defence projects: £4.2 billion from 2026–27 to 2028–29
• Digital service improvements: Over £300 million
• Direct payments will be phased out by 2027
• Farmers will benefit from £2.3bn for the Farming and Countryside Programme and up to £400m from additional nature projects. This includes increasing support for ELMs from £800m in 2023/24 to £2bn by 2028/29
• All existing SFI, CS and HLS agreements will be honoured and payments will continue. However the SFI scheme will be reformed to be more targeted to better meet priorities on food, farming and nature

What does this mean for levy payers?

Although the main parts of the spending review that are relevant to levy payers are related to the Defra funding, there are key points across all governmental departments that could impact farming businesses.

It is important to understand the potential impacts going forward.

With commitment to digital transformation, investment in green technology and sustainability, and energy security, there are impacts and opportunities for farming businesses.

We will be analysing the spending review further, looking at impact of funding changes as well as the role of agriculture in the governments key priority areas.