Spending Review: Welcome progress, but falling short
What the recent Spending Review means for children and families.
The Spending Review is when the government sets out its plans for departmental budgets over the coming years. This covers all day-to-day spending by departments that can be planned in advance – around 40% of government spending (the rest, such as benefits, is demand-led and less predictable). It also confirms funding settlements for the devolved governments through the Barnett formula.
This blog outlines what the latest Spending Review, published on 11 June 2025, means for families, children and young people. Most of these headline announcements relate to England only, as they concern spending decisions that are devolved.
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There are 4.5 million children living in poverty in the UK. Through our services, we see the daily impact this has on children and families – parents skipping meals, children going to school hungry, and families unable to afford essentials.
The Spending Review confirmed that the government is extending Free School Meals to all those on Universal Credit in England from September 2025. This will make a tangible difference to children struggling through the school day on an empty stomach.
However, the policy is calculated to be worth around £500 a year, representing a relatively small income ‘gain’ for families. The government’s claim that it will keep 100,000 children out of poverty will not be achieved until 2030. The government also confirmed the national roll-out of free Breakfast Clubs, providing parents with thirty minutes of childcare as well as breakfast before school.
There was welcome multi-year investment in local crisis support through the new Crisis and Resilience Fund, creating a more permanent replacement for the Household Support Fund which provides emergency financial support and discretionary housing payments to struggling families.
The Chancellor’s £39bn investment in social and affordable housing over ten years could make a much more significant contribution to driving down poverty in the long term. Our Paying the Price report found that building 90,000 homes for social rent a year could keep almost half a million children out of poverty over the long-term, but this can only be achieved if funding is concentrated on social rent homes.
By themselves, these policies won’t deliver the drastic reduction in child poverty that we need and that the Prime Minister has promised. Much is riding on the delayed Child Poverty Strategy now due for release in the autumn, which must draw on all available levers to deliver transformational and necessary change over the short, medium and long-term.
Above all, it needs to invest in our inadequate social security system, starting with scrapping the two-child limit and benefit cap.
This alone would lift 400,000 children out of poverty overnight.
We were delighted to see big headline funding announcements for children’s social care.
The government has committed £555m to deliver all of the children’s social care commitments in the Children’s Wellbeing and Schools Bill by 2028, including £25m for fostering reforms announced in the spring and a new kinship allowance pilot.
This money comes from the cross-government Transformation Fund, designed to invest in long-term prevention. It is on top of £523 million already announced for this year to local authorities to fund the Families First Programme - the government’s reforms to safeguarding and child protection.
That funding will continue at the same level annually until 2029 and is a very welcome commitment to investing in preventative services.
Action for Children has long called for increased capital investments in care placements, and the announcement of £560 million to refurbish and expand children’s homes and foster care placements marks a significant step forward for the provision of children in care. However, there is little detail yet on how this funding will be used.
Our A Place to Call Home report shows that the system too often fails to deliver good experiences and outcomes for every child in care. There simply aren’t enough of the right homes in the right places. Too many children are living in unsuitable placements without the support they are entitled to. While the funding for children’s social care is a good start, it won’t be enough without system-wide reform.
As yet, there is no confirmed funding beyond April 2026 for the Family Hubs programme (for families with children up to age 25) and Start for Life (for 0-2 year olds), despite a commitment by the government to expand these vital early help services as part of its goal to reduce child poverty.
This is disappointing, as an announcement was expected on a national roll-out backed by a specific package of funding. It is essential that all families in England, and especially those experiencing poverty and disadvantage, can access the support these services provide. The government has named Family Hubs as one part of its child poverty strategy, and we’re optimistic that the expansion will be confirmed in the coming months.
Families facing problems and children in care deserve quality support to help them thrive. We’re calling for a system reset.
Funding has been confirmed to support the rollout of mental health support teams to all schools in England by 2029/30, with 60% of pupils having access by next April. However, a substantial gap in the Spending Review is the lack of new investment in support for children with Special Educational Needs and Disabilities (SEND), including children with emotional and behavioural support needs.
Advice on SEND is one of the most requested by parents using Action for Children’s Parent Talk service, with 170,000 accessing support on this topic last year through our articles and 1:1 chats with practitioners. Many of these parents reported long delays for assessments, schools unable to meet needs and exhausting battles to access the right provision for their child.
New figures released last week show that the number of children with Education, Health and Care Plans (EHCPs) has risen by 11% in just one year – a record high. Yet investment has not kept pace. The government announced £750m of funding for SEND in the March budget, but this falls far short of what’s needed. The Department for Education has itself estimated that local authorities will face a £4.6bn shortfall in SEND budgets by March 2026. This is a system in crisis.
The government's planned reforms, expected to include more school-led support, must be carefully implemented. Schools alone cannot solve the crisis; families need joined-up support across education, health and early help services. The upcoming Schools White Paper must address these issues.
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This Spending Review includes some important commitments for children and families – from free schools meals and crisis support to investment in children’s homes.
The use of the new Transformation Fund specifically for preventative measures is a good indication that the government understands the need to fund early help for children and families. But it does not yet meet the scale of the challenges that families face.
The systems that support children – social care, education, early help, SEND and social security – are under intense pressure. The Child Poverty Strategy and Schools White Paper must include bold reform to ensure that every child has a safe home and the chance to thrive that they deserve.
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