Spending Review 2025: What small businesses need to know
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Posted: Wed 11th Jun 2025
Chancellor Rachel Reeves has announced the government's spending review for the next three years which sets the day-to-day budgets of government departments.
Here are the measures of interest to small businesses.
Government department budgets
According to BBC News, the funding provided to the Department for Business and Trade has been cut by 1.8%, with Department for Culture, Media and Sport seeing day-to-day spending fall by 1.2%.
In contrast, funding for the Department for Science, Innovation and Technology has increased by 7.4%.
Access to finance
The total financial capacity of the British Business Bank, which facilitates funding to smaller businesses including through Start Up Loans, will be increased to £25.6 billion, which the government says is a two-thirds increase compared to 2025-26. This expansion will take BBB investments to around £2.5 billion each year.
Skills and training
The government is providing £1.2 billion per year by 2028-29, which includes funding to support around 1.3 million 16-19 year olds to access training. The government said this will support 65,000 additional learners per year by 2028-29.
The funding also includes £625 million between 2025-26 and 2028-29 to train up to 60,000 skilled construction workers, as announced at the 2025 Spring Statement.
Artificial intellience (AI)
The government is providing £2 billion for its AI Action Plan.
The plan includes efforts to improve adoption of AI by small businesses, setting up "AI growth zones" to speed up planning proposals, partnerships between AI vendors and start-ups and training in AI skills and a new UK Sovereign AI Unit working with the British Business Bank to support national AI champions.
As part of this the government announced earlier this week a £187 million national digital skills programme, including £18 million for small businesses.
Research and development
The government will provide £22.6 billion per year for research and development by 2029‑30. This includes:
£500 million for a R&D Missions Accelerator Programme "to break down barriers and accelerate the delivery of the government's missions".
£410 million for a Local Innovation Partnership Fund "to support local leaders to drive innovation excellence across the UK".
New sectoral and technology programmes directly focused on the government's industrial strategy which is due to be published soon.
In details released earlier this week, the government said funding of at least £30 million will be provided to each of the mayoral strategic authorities in Greater Manchester, West Midlands, South Yorkshire, West Yorkshire, Liverpool City Region, North East, and Greater London as well as to one equivalent region in each of Scotland, Wales and Northern Ireland.
The fund will also include a competition, which will be open to all other parts of the UK.
Access to broadband
The spending review provides £1.9 billion for improving the UK digital infrastructure.
It includes connecting more homes and businesses to gigabit-capable broadband to reach 99% of UK premises by 2032, and working with industry to to ensure most remote areas have 4G coverage.
Funding for key sectors
The government's industrial strategy is focused on eight key sectors, with a sector plan due to be published for each. Ahead of that, the spending review outlined the following new details for how much funding each sector will get:
Advanced manufacturing: Over £3 billion R&D and capital funding.
Clean energy industries: "Significant additional funding".
Creative industries: "A significant increase in funding".
Digital and technologies: Over £2 billion for the AI Action Plan.
Financial services: Details will be in Financial Services Growth and Competitiveness Strategy published alongside the chancellor's Mansion House address on 15 July.
Life sciences: Up to £600 million from 2026‑27 to 2029‑30.
Professional business services: "Significant additional support".
HM Revenue & Customs
The government is providing £500 million from 2026‑27 to 2028‑29 to make HMRC a "digital-first organisation".
The government said the money will be used to improve digital services so people can easily get the information they need without having to call or write to HMRC, with AI being used to improve efficiency.
International trade
The spending review said that the settlement for the Department for Business and Trade "supports trade and investment promotion", with DBT due to "optimise its presence in overseas markets to maximise opportunities in the highest potential markets".
Business support
More details on what DBT will spend its money on is expected in the industrial strategy, but the spending review said the announcement will:
"...enable the transformation of DBT and its partner organisations to be more lean and agile, focused on delivering the highest growth impact policies, investment and services for business. This means funding can be reprioritised towards business investment and services with the highest impact on growth."
Transport
The government is providing £15.6 billion in total by 2031‑32 for transport projects in England outside of London.
£3 cap on single bus fares in England extended until March 2027.
Community regeneration and renewal
The Spending Review included a new fund providing up to £20 million each over the next 10 years to 25 "trailblazer neighbourhoods" which will be used to make improvements to local communities.
The 20 areas in England are:
Orchard Park, Kingston upon Hull
Little Layton and Little Carleton, Blackpool
Brinnington, Stockport
Bentilee and Ubberley, Stoke-on-Trent
Speke East, Liverpool
Thorntree, Middlesbrough
Batemoor and Jordanthorpe, Sheffield
Hartcliffe, Bristol
Benchill South and Wythenshawe Central, Manchester
Warndon West, Worcester
Birkenhead Central, Wirral
Middleton Park Avenue, Leeds
Penhill, Swindon
Parkwood and Senacre, Maidstone
Walker North, Newcastle upon Tyne
Bootle South, Sefton
Pendleton, Salford
Birchwood West, Lincoln
Central Stockton and Portrack, Stockton-on-Tees
Barrow Central, Westmorland and Furness
The five areas in Scotland, Wales and Northern Ireland will be a neighbourhood in:
Glasgow
Fife
Swansea
Cardiff
Belfast
Enterprise Nation's reaction
Polly Dhaliwal, COO of Enterprise Nation, said:
"The Spending Review is a very clear indication of the government's key priorities, so to see a £2 billion commitment to boost AI skills and a £1.2 billion boost to apprenticeships and training is excellent to see.
"The path to widespread digital adoption and AI use remains critical to our economy if our nation is to remain resilient and compete in a complex global marketplace.
"Small businesses need access to a high-aspiration national programme of support to equip SMEs with AI tools, skills and guidelines to boost confidence and productivity, such as Google's AI Works. It demonstrates the power and expertise that working with private sector can offer in upskilling the nation's SME community in the digital space, whilst delivering savings to the tax payer.
"Extra support for exporting is good to see, but it must not come at the expense of supporting small businesses to thrive at home.
"Enterprise Nation believes that a thriving SME sector not only fuels economic growth but also creates more prosperous and resilient communities. The success of small businesses is woven into the fabric of our society, and it is our duty to support them in every way possible.
"That's why we also welcome the chancellor's new Trailblazer Neighbourhoods project which offers a boost to deprived high streets and communities, but we'd like to see this rolled out more widely.
"We're pleased to see increases to the British Business Bank and research and sevelopment grants, but we also note a chunky decrease in day-to-day spending for the Department for Business and Trade. We hope this won't mean a decrease in support for small businesses at the time when they need it the most. Understanding more about the impact will hopefully be clarified when the Industrial Strategy and the Small Business Strategy are published later this month."
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