The Spending Review 2025, presented by Chancellor Rachel Reeves in June, outlines how the government plans to spend its money, and the key improvements that can be expected.
The financial plans could have a huge impact on all types of business, from training and upskilling to funding and grant opportunities.
Here’s what it could mean for you:
Access to finance
The financial capacity of the British Business Bank is highly relevant to small and medium sized businesses (SMEs) as it dictates how much funding the government can offer through initiatives like Start Up Loans.
In a promising move for businesses, this Spending Review has increased the British Business Bank’s budget to £25.6 billion, suggesting that funding and finance options will be greater than they have been for quite some time.
Skills and training
Ms Reeves announced that by 2028-29, the government is to provide an additional £1.2 billion per year towards skills and training programmes across the country.
This includes a strong focus on funding for more than 1.3 million 16–19-year-olds to help them access high-quality training and support 65,000 additional learners.
In theory, this means the pool of skilled talent available to UK businesses should increase dramatically over the next few years.
Research and development
One of the more substantial announcements was that £22.6 billion a year will be dedicated to research and development in a move that the government says will support its “forthcoming modern Industrial Strategy”.
Of this £22.6 billion, £500m will go towards a R&D Missions Accelerator Programme “to break down barriers and accelerate the delivery of the government’s missions”; £410m goes towards a new Local Innovation Partnerships Fund, giving local leaders a central role in co-creating R&D programmes to support local economies; and more be used to support “vital investment in universities, research institutes and businesses across the UK”.
This is intended to demonstrate the government’s commitment to put the UK at the forefront of global innovation and industry from education providers upwards. It’s to be hoped that businesses committed to research and innovation will be brought in to contribute to this effort, receiving appropriate funding and support in the process.
Artificial intelligence
Over £2 billion has been pledged to the government’s AI Action Plan, including a 20-fold increase in support for compute capacity.
£160 million of this will go to TechFirst to ensure people have the right skills to deliver technological change, and the government also intends to push adoption of AI by small businesses, setting up ‘AI growth zones’ to speed up planning proposals, partnerships between AI vendors and start-ups.
There will also be a new UK Sovereign AI Unit working with the British Business Bank to support so-called ‘national AI champions’.
A £187 million national digital skills programme has also been announced – £18 million of which will go directly to small businesses.
Additional points of interest
- £3bn for R&D in advanced manufacturing
- Significant funding for clean energy industries
- Significant new funding for creative industries to “ensure the UK’s creative industries remain world-leading”.
- The Financial Services Growth and Competitiveness Strategy will be published alongside the Chancellor of the Exchequer’s Mansion House address on 15 July.
- Life sciences to receive up to £600, between 2026/27 and 2029/30.
- Significant additional for professional business services
Melanie Pizzey, CEO and founder of the Global Payroll Alliance, says: “The government’s funding plans for business, innovation, and R&D are welcome news indeed.
“It’s an investment that the UK desperately needs to catch up with other nations and we’re pleased to see this new level of commitment coming from the central government.
“However, these are very much long-term plans that many commentators have said will require the country to borrow huge amounts of money.
“While this is no bad thing – long-termism has been sorely missing from UK politics of late – it does leave these good intentions vulnerable to economic turbulence.
“If the UK economy struggles over the next few years, or we’re faced with another unplanned situation such a health pandemic or global financial crisis well outside of the UK’s control, money that is currently earmarked for innovation in 2030 could quickly evaporate or be directed elsewhere.
“In short, if these plans come to fruition, it’s great news for UK businesses, but the next couple of years will be a fraught wait to see if these plans remain viable and money does indeed start coming in towards the end of the decade.”
