30 May 2025
by Mia Haffety

Spending Review: prioritise tech to drive Invest2035

On 11 June, the Chancellor of the Exchequer is set announce the next major fiscal event and complete the Comprehensive Spending Review. This will set departmental spending for the next three years and the decisions will shape the course for the rest of this Parliament, and decade...

The Spending Review, and Industrial Strategy (which we expect will follow the SR) mark a pivotal moment and a chance for the government to deliver actions that improve confidence for the UK tech sector and wider economy. The onus will be on the government to provide the stability necessary to drive investment and commit to true partnership with industry (read more on this here).

Spending Review, what do we know so far?

Phase 1 of the Spending Review 2025 took place alongside the most recent Autumn Budget (key announcements relevant for the tech sector can be found via our insight) and set departmental budgets for 2025 / 2026.

The government aim to use ‘Phase 2’ and this SR to deliver a mission-led, technology-enabled, and reform-driven settlement for public services.

Departments including the Department for Health and Social Care, and Ministry of Defence are rumoured to receive significant funding. The government also looks to boost capital spend and reduce day-to-day spend. Previous fiscal rules have freed up more than £100 billion in capital spend (longer-term projects) but this will mean a tight squeeze on day-to-day spending. Tech can play a role here, to make public services more efficient, user-friendly, and ultimately, more effective to improve lives.

Is growth still on the cards?

The UK Government is operating in a difficult environment, and economic and geopolitical headwinds continue to bite, but ‘growth’ is still the word.

The IMF has upgraded the UK’s expected growth rate this year to 1.2% from 1.1%, and predicts this will to rise to 1.4% by 2026, and reassured that an ‘economic recovery is under way’.

The domestic agenda for this government has been busy and a series of actions have signified steps to make change and guide growth:

  • Pension reforms to create ‘mega-funds’ and pool more patient capital into infrastructure and high-growth firms (read more here);
  • The AI Opportunities Action Plan to seize adoption and diffusion of AI across the private and public sector (read techUK take here);
  • Announcing longer-term R&D budgets that mark an opportunity to improve private sector confidence in backing the best new research has to offer (read techUK take here);
  • Planning reform to speed up planning decisions, make them more strategic and empower Mayors (albeit techUK call for more on telecoms infrastructure – read techUK take here);
  • Action on regulation to ‘cut red tape’ streamlining regulators remits and reducing complexity in the regulatory system (read techUK take here)

But the government still operate in a difficult economic backdrop. Deloitte’s latest CFO survey showed risk appetite among CFOs has declined in the first quarter, with just 12% reporting that now is a good time to take greater risk onto their balance sheet. This was mainly due to tariffs, sanctions and restrictions to market access.

The pressure is on for the Spending Review, and framework of the new Industrial Strategy, to cut through the noise and support government departments with allocated spending portfolios that can deliver for, and with, the tech sector.

Our call for the government?

The government's multi-year spending review settlement must ensure the foundations are in place (skills, tax, infrastructure) to support the adoption, diffusion and scaling of digital tech across the whole economy. Budget allocation and investments should focus on key infrastructure and innovative technologies (including AI, quantum, semiconductors, future connectivity) that define the future and bolster the UK’s competitive advantage in already growing markets. Along with delivering on the vision of a modern digital government to support this.

But acheiving growth will only be possible in partnership with the tech sector. The Industrial Strategy green paper and AI Opportunities Action Plan recognised this. Industry has the deep expertise, risk appetite and use-cases to guide what will, and can, work. Their solutions are already enabling the delivery of more effective public services. AI and automation are reducing waiting times for the NHS, where GP practices trialling AI-powered triaging systems have been able to achieve as much as a 73% reduction in patient waiting times for appointments and the DVLA's plans to use automation to reduce wait times for licenses free up the backlog.

techUK, on behalf of our members, stand ready to support this - whether to back the UK’s high-growth firms at the forefront of cutting-edge innovation via our Scale-Up Action Plan, pursue global leadership in semiconductor industry via our UK Plan for Chips or to harness smart, principles-based regulation via our Pro-Growth Digital Regulation paper.

As we look back on this decade, it should be remembered as a time of bold action for ‘tech2035’.

For more on the Spending Review and Industrial Startegy, visit our Hub.


Antony Walker

Antony Walker

Deputy CEO, techUK

Edward Emerson

Edward Emerson

Head of Digital Economy, techUK

Archie Breare

Archie Breare

Policy Manager - Skills & Digital Economy, techUK

Alice Campbell

Alice Campbell

Head of Public Affairs, techUK

Tess Newton

Team Assistant, Policy and Public Affairs, techUK

Audre Verseckaite

Audre Verseckaite

Senior Policy Manager, Data & AI, techUK

Nimmi Patel

Nimmi Patel

Head of Skills, Talent and Diversity, techUK

Theophile Maiziere

Theophile Maiziere

Policy Manager - EU, techUK

Oliver Alderson

Oliver Alderson

Junior Policy Manager, techUK

Jake Wall

Jake Wall

Policy Manager, Skills and Future of Work, techUK

Sabina Ciofu

Sabina Ciofu

Associate Director – International, techUK

Daniella Bennett Remington

Daniella Bennett Remington

Policy Manager - Digital Regulation, techUK

Mia Haffety

Mia Haffety

Policy Manager - Digital Economy, techUK

Samiah Anderson

Samiah Anderson

Head of Digital Regulation, techUK

Daniel Clarke

Daniel Clarke

Policy Manager for International Policy and Trade, techUK

 

Authors

Mia Haffety

Mia Haffety

Policy Manager - Digital Economy, techUK

Mia joined techUK in September 2023.

Mia focuses on shaping a policy environment that fosters the expansion of the UK tech sector while maximising the transformative potential of technology across all industries.

Prior to joining techUK, Mia worked as a Senior Policy Adviser at the Confederation of British Industry (CBI) within the Policy Unit.

Mia holds an MSc in International Development from the University of Manchester and a BA(Hons) in Politics and International Relations from the University of Nottingham.

Email:
[email protected]

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