Spending Review: What it means for the food system

What’s happening?

The government has published a Spending Review (SR25), covering the period up to 2030. This lays down the funds which will be allocated to Whitehall departments and to devolved governments.

SR25 differs from the annual Budget, which focuses more on the detail of economic policy and exactly how necessary funds will be raised.

The Autumn budget is approaching, and it’s evident that the Chancellor will require more cash – a lot more.

What’s in the Spending Review?

Given the situation, SR25 was widely expected to be tough, with the government forced to make difficult decisions. However, SR25 specifies continued growth in spending.

In “real terms” (i.e. accounting for inflation), total Departmental Expenditure Limits (DELs – capital investment and running costs, but not contingencies) will rise by 2.3% per year over the forecast period.

However, outcomes for individual departments will vary. Defence, health, local government, education and energy will see large increases in spending.

Other departments will do less well, including Defra, the department which overlaps most significantly with the food and drink system.

The DEL for Defra will move from £7.3bn in the current year to £7.4bn in 2028-29 but, due to inflation, it will shrink in “real terms” by an average of 0.7% per year over that time or 2.3% in total.

The impact of these decisions hinges on inflation projections. If inflation exceeds expectations, the government's spending power, and the value it delivers, could diminish.

Decisions made in SR25 may impact delivery of the government’s goals for the Food Strategy: food security, economic growth, healthy diets and resilience.

What it means – food security

Defra’s DEL is set to decline, but the government has committed to protecting subsidy payments made to farmers for environmental programmes.

This provides reassurance for farmers, as many rely on these payments to sustain their businesses, which might otherwise struggle to remain viable.

However, there is no additional money for farming, and it is important to note that most subsidy payments are made to protect the environment and nature, not to support food production.

So, actual food production and national food security will continue to be influenced mainly by market forces and the decisions made by individual businesses.

To safeguard the future of UK food production, government must focus on ensuring that farm businesses remain confident enough to invest in capacity and improvement.

What it means – economic growth

SR25 specifies major investments in transport infrastructure, energy and housing. There will also be investment in technology, skills and other items needed to support modern industry.

These investments will help to create a generally helpful environment for businesses at all stages in the food and drink supply chain, although there is nothing targeted at the food industry specifically.

However, policy design is critical, especially for skills. Historically, investment in skills has not always created the results that food businesses require. Apprenticeships have been especially criticised.

Food and drink businesses must define how they will leverage government investment in skills – ensuring they attract and retain talented individuals within the industry.

IGD’s Make Your Mark campaign is designed to encourage young adults to consider working for food and drink businesses.

What it means – healthy diets

Health spending will grow at around 3% per year in “real terms” over the life of SR25. The programme is complex, but it will include preventative healthcare.

The only example of preventative healthcare mentioned specifically targets smoking, but presumably, the government will be interested in other measures such as weight control and healthy diets. Recent findings from the National Diet and Nutrition Survey highlight the challenges in this area.

Food and drink businesses should therefore anticipate continued government focus on health and nutrition, with policy intervention if outcomes do not improve. The forthcoming NHS Ten Year Plan will be particularly of interest.

What it means – resilience

SR25, the UK government's spending review, outlines key investments shaping food system resilience. IGD’s recent report Building A Resilient Food System identifies climate change and geo-politics as the top two threats to resilience.  

To address these challenges, SR25 directs significant funding toward energy production – especially nuclear – and in climate resilience, aiming to bolster long-term reliability.

Higher spending on defence may also mitigate geo-political risks. However, with benefits still years away, food businesses must remain proactive, strengthening their resilience against evolving threats.

IGD opinion

In many ways, SR25 could have been much worse for the food and drink system. Defra has seen real-terms cuts to spending, but not to the degree that some feared.

Greater government investment in energy, infrastructure, and healthcare has strong potential—if implemented swiftly and effectively. However, the real impact remains distant, with individuals unlikely to see tangible benefits for years, or even decades.

However, a key part of the story is still missing: how will future spending be paid for? Debt is already growing ahead of plan, even though taxes are very high.

Budget 2025 must present a credible, detailed and sustainable plan for raising funds.

IGD expects most UK households to remain under financial strain, with tax burdens becoming a greater concern than inflation. As a result, most consumers will stay defensive, prioritising value and caution in their food and drink purchases.