Comprehensive Spending Review 2025: A Strategic Inflection Point for Growth, Skills and Public Services

The UK Government’s 2025 Comprehensive Spending Review (CSR) has landed with a bold vision for the future. With major investments across housing, healthcare, education, research, and defence, the CSR signals a long-term commitment to tackling structural challenges and unlocking economic potential.

We spoke to our consultants to find out their thoughts in each of their sectors.

R&D and Innovation: A National Priority

Elizabeth James, Partner and Head of the Education, Local Government and Government Practices, highlighted the central role of research and development in this year’s review. “The subjects of research and development are woven throughout the Comprehensive Spending Review,” she said. “This represents a hard wiring of the Industrial Strategy priorities into the CSR, which is of course relevant to the UK’s universities’ relationships with growth-driving sectors.”

Among the most significant announcements is a £2 billion investment in artificial intelligence between 2026 and 2030. This funding will support collaboration between business and academia, the development of new AI courses, and the launch of a prestigious AI talent scholarship. Additional R&D investment will target sectors such as Advanced Manufacturing, Clean Energy, and the Creative Industries. A further £600 million will be allocated to launch the world’s first Health Data Research Service in partnership with DSIT and the Wellcome Trust. These investments reflect a long-term commitment to innovation, skills development, and the UK’s global competitiveness.

Healthcare: Reform and Digital Transformation

Corinne Attwood, Senior Researcher at Berwick Partners, focused on the £29 billion investment in the NHS. “It’s great to see a chunk of the investment going towards mental health care and provision, alongside making the move from analogue to digital — two areas of focus outlined by Labour to build an NHS ‘fit for the future’,” she said.

Corinne acknowledged ongoing uncertainty around workforce restructuring and the future of NHS England employees, but noted that the Government appears committed to bold decisions aimed at long-term sustainability for the NHS. The CSR’s healthcare commitments reflect a broader strategy to modernise the NHS, reduce waiting lists, and improve access to mental health services.

Housing: Confidence and Capacity

The government has committed £1.2 billion to training and apprenticeships for over 1.3 million 16–19-year-olds, alongside £625 million to train up to 60,000 skilled construction workers. These investments are designed to build a workforce that is ready to meet the demands of a rapidly evolving economy.

Bonnie Amos-English, Consultant in Social Housing, Place and Regeneration, highlighted the CSR’s strong emphasis on skills development. “This is particularly relevant for the housing sector,” she said. “Today saw the announcement of the biggest boost to social and affordable housing in a generation, with £39 billion added to the Affordable Homes Programme over 10 years.”

Bonnie noted that the sector has responded positively, with housebuilders like Vistry Group Plc seeing share prices rise nearly 7% following the announcement. “The overall feeling from the sector is one of positivity and opportunity,” she added. “But Housing Associations will need to consider whether they have the workforce to deliver further projects. Trades skills are in high demand and short supply, so there is a significant opportunity to partner across sectors such as Education and Infrastructure to train, upskill and deploy the skilled workers of the future.”

Leadership and Delivery: The Challenge Ahead

Caitlin Tickell, Principal Consultant for Central Government, reflected on the broader implications for public sector leadership. “This puts increased emphasis on the challenge to current leaders to deliver outcomes for citizens,” she said. “There’s good alignment with the areas identified in by this government in their missions, so a collaborative approach across government will be required to ensure that people feel the impact of the Government’s prioritisation of areas including health, housebuilding, and clean power.”

Caitlin also pointed to the importance of leadership through such complexity. “The CSR reinforces the need for collaborative, agile leadership to deliver on its ambitious goals. Policy and operational delivery colleagues will need to work in tandem to navigate this environment.”

Defence and Industrial Strategy: Certainty and Strategic Opportunity

The 2025 Spending Review sends a strong message about the UK’s long-term defence and security priorities. The confirmation of February’s announcement to raise defence spending to 2.6% of GDP from 2027 provides a rare degree of long-term certainty — a move that positions defence not only as a national security imperative but also as a key driver of industrial growth and innovation.

Colin Roope, Associate Partner in the Manufacturing & Engineering Practice, sees this as a pivotal moment for the sector. “With increased investment in sovereign capability, R&D, and skills, defence is being positioned as a catalyst for industrial transformation,” he said. “This commitment should encourage bold thinking across the UK’s manufacturing supply chain.”

Colin also highlighted the alignment between defence and the broader “Plan for Change” — a vision that links security, productivity, and resilience. “The focus on procurement reform, R&D, and skills development reflects a long-term commitment to building a more agile, future-ready force,” he added. “For leaders across the sector, this is a moment to think boldly about how to attract talent, foster innovation, and build partnerships that deliver both strategic advantage and economic value.”

Local Government: Balancing Delivery with Long-Term Reform

Jonathan Clark, Partner in the Local Government Practice at Berwick Partners, offered a sobering perspective on what the 2025 Spending Review means for local authorities. “Against a pretty bleak financial backdrop, the headline is that Local Government will benefit from a small increase in core funding,” he said. “But to make any meaningful difference, it is clear that rises in council tax will be necessary.”

Jonathan noted that social housing appears to be the biggest beneficiary, with almost £30 billion allocated — and Local Government, along with its supply chain, will be critical in delivering that ambition. However, he cautioned that while investment into the NHS is laudable, it must be supported by broader social care and public health systems focused on prevention and earlier intervention — areas that remain stretched.

He also expressed concern about the modest scale of additional funding for Children’s Services and the reform of the Special Educational Needs system, especially given the significant demand pressures and knock-on effects across the system.

“Future funding reform may affect the distribution and leave more rural councils with bigger deficits,” Clark warned. “This begs the question as to whether reorganisation can come soon enough to enable financial stability and sustainability.”

He pointed out that there seems to be little recognition of the cost of Local Government Reorganisation and, for those in the first wave, Devolution. With Mayoral elections scheduled for May 2026 and LGR not long after, the clock is ticking on both.

Jonathan concluded with a reflection on the leadership challenge: “The challenge for political and executive leadership continues to be one of ensuring delivery of services for residents and communities today whilst planning for tomorrow — even when that tomorrow is still to be fully defined.” He added that tensions between statutory and universal services are likely to increase, with many councils left with very little discretionary spend.

“Unsurprisingly, there are no magic money trees,” he said. “It will be for senior leaders to work within the art of the possible as they transform their organisations to be ever more efficient and cost-effective, whilst lobbying hard for positive funding reforms.”

Housing, Regeneration and Infrastructure: From Vision to Delivery

Marek Dobrowolski, Partner at Berwick Partners, welcomed the CSR’s focus on housing, regeneration and infrastructure. “The 2025 Comprehensive Spending Review offers a welcome degree of certainty across the housing, regeneration and infrastructure landscape — but it also sharpens the focus on delivery, capacity, and innovation,” he said.

“Homes England is an obvious winner — with a strengthened mandate and additional capital, the agency is now better positioned to drive regeneration and housing growth. This underlines its increasingly strategic role in shaping place-based investment and unlocking complex sites.”

Marek highlighted several key takeaways: “The Affordable Homes Programme and 10-year rent settlement provide a stable platform for long-term planning. The £950m boost to the Local Authority Housing Fund is a timely intervention to support temporary accommodation and unlock stalled sites. Infrastructure investment is aligned with local growth plans, offering a clearer path for regeneration.”

However, he cautioned that delivery remains the challenge. “Many local authorities still face capacity constraints and financial pressures. Innovation and collaboration across sectors will be critical to turn ambition into outcomes. Planning and procurement reform must keep pace with funding commitments.”

“As with all CSRs, much more detail will emerge in the coming weeks. But the direction is promising — and the opportunity is real.”

A Moment of Opportunity

With major investments in innovation, infrastructure, and public services, the challenge now lies in execution. As the UK looks to the future, the need for skilled leadership, cross-sector collaboration, and long-term thinking has never been greater.

At Berwick Partners, we remain committed to supporting organisations across the public and private sectors as they rise to meet this challenge — securing the senior talent needed to deliver on the UK’s ambitions.