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Action Research: What it is, Types, Stages & Examples

The best way to get things accomplished is to do it yourself. This statement is utilized in corporations, community projects, and national governments. These organizations are relying on action research to cope with their continuously changing and unstable environments as they function in a more interdependent world.

By engaging in cycles of planning, observation, action, and reflection, action research enables participants to identify challenges, implement solutions, and evaluate outcomes. This approach generates practical knowledge and empowers individuals and organizations to effect meaningful change in their contexts.

In practical educational contexts, this involves using systematic inquiry and reflective practice to address real-world challenges, improve teaching and learning, enhance student engagement, and drive positive changes within the educational system .

What is Action Research?

Action research is a strategy that tries to find realistic solutions to organizations’ difficulties and issues. It is similar to applied research.

Action research refers basically learning by doing. First, a problem is identified, then some actions are taken to address it, then how well the efforts worked are measured, and if the results are not satisfactory, the steps are applied again.

It can be put into three different groups:

• Positivist: This type of research is also called “classical action research.” It considers research a social experiment. This research is used to test theories in the actual world.
• Interpretive: This kind of research is called “contemporary action research.” It thinks that business reality is socially made, and when doing this research , it focuses on the details of local and organizational factors.
• Critical: This action research cycle takes a critical reflection approach to corporate systems and tries to enhance them.

Important Types of Action Research

Here are the main types of action research:

1. Practical Action Research

It focuses on solving specific problems within a local context, often involving teachers or practitioners seeking to improve practices.

2. Participatory Action Research (PAR)

A research process in which people, staff, and activists work together to generate knowledge from a study on an issue that adds value and supports their actions for social change.

3. Critical Action Research

Built to address power and social injustices in light of the Hegemonic Underpinnings, this research facilitates a callback, self-reflection, and thorough societal reformations.

4. Collaborative Action Research

In this form of research, a team of practitioners joins to do project work as part of an overall effort to improve. The work continues into the analysis phase with these same folks across all stages.

5. Reflective Action Research

This kind of research emphasizes individual or group reflection on practices. The key to this model is that it encourages reflective and deliberate practice, thus promoting learning and unfolding within ongoing experiences.

6. Transformative Action Research

This model empowers participants to address issues within their communities related to social justice and transformation.

Each type serves different contexts and goals, contributing to the overall effectiveness of action research.

Stages of Action Research

All research is about learning new things. Collaborative action research contributes knowledge based on investigations in particular and frequently useful circumstances. It starts with identifying a problem. After that, the research process is followed by the below stages:

Stage 1: Plan

For an action research project to go well, the researcher needs to plan it well. After coming up with an educational research topic or question after a research study, the first step is to develop an action plan to guide the research process. The research design aims to address the study’s question. The research strategy outlines what to undertake, when, and how.

Stage 2: Act

The next step is implementing the plan and gathering data. At this point, the researcher must select how to collect and organize research data . The researcher also needs to examine all tools and equipment before collecting data to ensure they are relevant, valid, and comprehensive.

Stage 3: Observe

Data observation is vital to any investigation. The action researcher needs to review the project’s goals and expectations before data observation . This is the final step before drawing conclusions and taking action.

Different kinds of graphs, charts, and networks can be used to represent the data. It assists in making judgments or progressing to the next stage of observing.

Stage 4: Reflect

This step involves applying a prospective solution and observing the results. It’s essential to see if the possible solution found through research can really solve the problem being studied.

The researcher must explore alternative ideas when the action research project’s solutions fail to solve the problem.

The Steps of Conducting Action Research

Action research is a systematic approach researchers, educators, and practitioners use to identify and address problems or challenges within a specific context. It involves a cyclical process of planning, implementing, reflecting, and adjusting actions based on the data collected. Here are the general steps involved in conducting an action research process:

Identify the action research question or problem

1. Identify The Action Research Question or Problem

Clearly define the issue or problem you want to address through your research. It should be specific, actionable, and relevant to your working context.

2. Review Existing Knowledge

Conduct a literature review to understand what research has already been done on the topic. This will help you gain insights, identify gaps, and inform your research design .

3. Plan The Research

Develop a research plan outlining your study’s objectives, methods, data collection tools , and timeline. Determine the scope of your research and the participants or stakeholders involved.

4. Collect Data

Implement your research plan by collecting relevant data. This can involve various methods such as surveys, interviews, observations, document analysis, or focus groups . Ensure that your data collection methods align with your research objectives and allow you to gather the necessary information.

5. Analyze The Data

Once you have collected the data, analyze it using appropriate qualitative or quantitative techniques. Look for patterns, themes, or trends in the data that can help you understand the problem better.

6. Reflect on The Findings

Reflect on the analyzed data and interpret the results in the context of your research question. Consider the implications and possible solutions that emerge from the data analysis. This reflection phase is crucial for generating insights and understanding the underlying factors contributing to the problem.

7. Develop an Action Plan

Based on your analysis and reflection, develop an action plan that outlines the steps you will take to address the identified problem. The plan should be specific, measurable, achievable, relevant, and time-bound (SMART goals). Consider involving relevant stakeholders in planning to ensure their buy-in and support.

8. Implement The Action Plan

Put your action plan into practice by implementing the identified strategies or interventions. This may involve making changes to existing practices, introducing new approaches, or testing alternative solutions. Document the implementation process and any modifications made along the way.

9. Evaluate and Monitor Progress

Continuously monitor and evaluate the impact of your actions. Collect additional data, assess the effectiveness of the interventions, and measure progress towards your goals. This evaluation will help you determine if your actions have the desired effects and inform any necessary adjustments.

10. Reflect and Iterate

Reflect on the outcomes of your actions and the evaluation results. Consider what worked well, what did not, and why. Use this information to refine your approach, make necessary adjustments, and plan for the next cycle of action research if needed.

Remember that participatory action research is an iterative process, and multiple cycles may be required to achieve significant improvements or solutions to the identified problem. Each cycle builds on the insights gained from the previous one, fostering continuous learning and improvement.

Explore Insightfully Contextual Inquiry in Qualitative Research

Examples of Action Research

Here are two real-life examples of action research.

Action research initiatives are frequently situation-specific. Still, other researchers can adapt the techniques. The example is from a researcher’s (Franklin, 1994) report about a project encouraging nature tourism in the Caribbean.

In 1991, this was launched to study how nature tourism may be implemented on the four Windward Islands in the Caribbean: St. Lucia, Grenada, Dominica, and St. Vincent.

For environmental protection, a government-led action study determined that the consultation process needs to involve numerous stakeholders, including commercial enterprises.

First, two researchers undertook the study and held search conferences on each island. The search conferences resulted in suggestions and action plans for local community nature tourism sub-projects.

Several islands formed advisory groups and launched national awareness and community projects. Regional project meetings were held to discuss experiences, self-evaluations, and strategies. Creating a documentary about a local initiative helped build community. And the study was a success, leading to a number of changes in the area.

Lau and Hayward (1997) employed action research to analyze Internet-based collaborative work groups.

Over two years, the researchers facilitated three action research problem -solving cycles with 15 teachers, project personnel, and 25 health practitioners from diverse areas. The goal was to see how Internet-based communications might affect their virtual workgroup.

First, expectations were defined, technology was provided, and a bespoke workgroup system was developed. Participants suggested shorter, more dispersed training sessions with project-specific instructions.

The second phase saw the system’s complete deployment. The final cycle witnessed system stability and virtual group formation. The key lesson was that the learning curve was poorly misjudged, with frustrations only marginally met by phone-based technical help. According to the researchers, the absence of high-quality online material about community healthcare was harmful.

Role clarity, connection building, knowledge sharing, resource assistance, and experiential learning are vital for virtual group growth. More study is required on how group support systems might assist groups in engaging with their external environment and boost group members’ learning. 

Advantages and Disadvantages of Action Research

Action research has both good and bad points.

• It is very flexible, so researchers can change their analyses to fit their needs and make individual changes.
• It offers a quick and easy way to solve problems that have been going on for a long time instead of complicated, long-term solutions based on complex facts.
• If It is done right, it can be very powerful because it can lead to social change and give people the tools to make that change in ways that are important to their communities.

Disadvantages

• These studies have a hard time being generalized and are hard to repeat because they are so flexible. Because the researcher has the power to draw conclusions, they are often not thought to be theoretically sound.
• Setting up an action study in an ethical way can be hard. People may feel like they have to take part or take part in a certain way.
• It is prone to research errors like selection bias , social desirability bias, and other cognitive biases.

Why QuestionPro Research Suite is Great for Action Research?

QuestionPro Research Suite is an ideal choice for action research, which typically involves multiple rounds of data collection , analysis, and intervention cycles. This is one reason it might be great for that:

01. Data Collection

QuestionPro offers flexible and adaptable methods for data dissemination. You can collect and store crucial business data from secure, personalized questionnaires , and distribute them through emails, SMSs, or even popular social media platforms and mobile apps.

This adaptability is particularly useful for action research, which often requires a variety of data collection techniques.

02. Advanced Analysis Tools

• Efficient Data Analysis: Built-in tools simplify both quantitative and qualitative analysis.
• Powerful Segmentation: Cross-tabulation lets you compare and track changes across cycles.
• Reliable Insights: This robust toolset enhances confidence in research outcomes.

03. Collaboration and Real-Time Reporting

Multiple researchers can collaborate within the platform, sharing permissions and changes in real-time while creating reports. Asynchronous collaboration: Conversation threads and comments can be in one place, ensuring all team members stay updated and are aligned with stakeholders throughout each action research phase.

04. User-Friendly Interface

At the user level, what kind of data visualization charts/graphs, tables, etc., should be provided to visualize the complex findings most often done through these)? Across all solutions, we need fully customizable dashboards to offer perfect vision to different people so they can make decisions and take action based on this data.

05. Automation and Integration Capabilities

• Workflow Automation: Enables recurring surveys or updates to run seamlessly.
• Time Savings: Frees up time in long-term research projects.
• Integrations: Connects with popular CRMs and other applications.
• Simplified Data Addition: This makes incorporating data from external sources easy.

These features make QuestionPro Research Suite a powerful tool for action research. It makes it easy to manage data, conduct analyses, and drive actionable insights through iterative research cycles.

Action research is a dynamic and participatory approach that empowers individuals and communities to address real-world challenges through systematic inquiry and reflection.

The methods used in action research help gather valuable insights and foster continuous improvement, leading to meaningful change across various fields. By promoting iterative cycles, action research generates knowledge and encourages a culture of learning and adaptation, making it a crucial tool for driving transformation.

At QuestionPro, we give researchers tools for collecting data, like our survey software, and a library of insights for any long-term study. Go to the Research Suite if you want to see a demo or learn more about it.

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Frequently Asked Questions(FAQ’s)

Action research is a systematic approach to inquiry that involves identifying a problem or challenge in a practical context, implementing interventions or changes, collecting and analyzing data, and using the findings to inform decision-making and drive positive change.

Action research can be conducted by various individuals or groups, including teachers, administrators, researchers, and educational practitioners. It is often carried out by those directly involved in the educational setting where the research takes place.

The steps of action research typically include identifying a problem, reviewing relevant literature, designing interventions or changes, collecting and analyzing data, reflecting on findings, and implementing improvements based on the results.

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Action Research: Steps, Benefits, and Tips

Introduction

History of action research, what is the definition of action research, types of action research, conducting action research.

Action research is an approach to qualitative inquiry in social science research that involves the search for practical solutions to everyday issues. Rooted in real-world problems, it seeks not just to understand but also to act, bringing about positive change in specific contexts. Often distinguished by its collaborative nature, the action research process goes beyond traditional research paradigms by emphasizing the involvement of those being studied in resolving social conflicts and effecting positive change.

The value of action research lies not just in its outcomes, but also in the process itself, where stakeholders become active participants rather than mere subjects. In this article, we'll examine action research in depth, shedding light on its history, principles, and types of action research.

Tracing its roots back to the mid-20th century, Kurt Lewin developed classical action research as a response to traditional research methods in the social sciences that often sidelined the very communities they studied. Proponents of action research championed the idea that research should not just be an observational exercise but an actionable one that involves devising practical solutions. Advocates believed in the idea of research leading to immediate social action, emphasizing the importance of involving the community in the process.

Applications for action research

Over the years, action research has evolved and diversified. From its early applications in social psychology and organizational development, it has branched out into various fields such as education, healthcare, and community development, informing questions around improving schools, minority problems, and more. This growth wasn't just in application, but also in its methodologies.

How is action research different?

Like all research methodologies, effective action research generates knowledge. However, action research stands apart in its commitment to instigate tangible change. Traditional research often places emphasis on passive observation , employing data collection methods primarily to contribute to broader theoretical frameworks . In contrast, action research is inherently proactive, intertwining the acts of observing and acting.

The primary goal isn't just to understand a problem but to solve or alleviate it. Action researchers partner closely with communities, ensuring that the research process directly benefits those involved. This collaboration often leads to immediate interventions, tweaks, or solutions applied in real-time, marking a departure from other forms of research that might wait until the end of a study to make recommendations.

This proactive, change-driven nature makes action research particularly impactful in settings where immediate change is not just beneficial but essential.

Action research is best understood as a systematic approach to cooperative inquiry. Unlike traditional research methodologies that might primarily focus on generating knowledge, action research emphasizes producing actionable solutions for pressing real-world challenges.

This form of research undertakes a cyclic and reflective journey, typically cycling through stages of planning , acting, observing, and reflecting. A defining characteristic of action research is the collaborative spirit it embodies, often dissolving the rigid distinction between the researcher and the researched, leading to mutual learning and shared outcomes.

Advantages of action research

One of the foremost benefits of action research is the immediacy of its application. Since the research is embedded within real-world issues, any findings or solutions derived can often be integrated straightaway, catalyzing prompt improvements within the concerned community or organization. This immediacy is coupled with the empowering nature of the methodology. Participants aren't mere subjects; they actively shape the research process, giving them a tangible sense of ownership over both the research journey and its eventual outcomes.

Moreover, the inherent adaptability of action research allows researchers to tweak their approaches responsively based on live feedback. This ensures the research remains rooted in the evolving context, capturing the nuances of the situation and making any necessary adjustments. Lastly, this form of research tends to offer a comprehensive understanding of the issue at hand, harmonizing socially constructed theoretical knowledge with hands-on insights, leading to a richer, more textured understanding.

Disadvantages of action research

Like any methodology, action research isn't devoid of challenges. Its iterative nature, while beneficial, can extend timelines. Researchers might find themselves engaged in multiple cycles of observation, reflection, and action before arriving at a satisfactory conclusion. The intimate involvement of the researcher with the research participants , although crucial for collaboration, opens doors to potential conflicts. Through collaborative problem solving, disagreements can lead to richer and more nuanced solutions, but it can take considerable time and effort.

Another limitation stems from its focus on a specific context: results derived from a particular action research project might not always resonate or be applicable in a different context or with a different group. Lastly, the depth of collaboration this methodology demands means all stakeholders need to be deeply invested, and such a level of commitment might not always be feasible.

Examples of action research

To illustrate, let's consider a few scenarios. Imagine a classroom where a teacher observes dwindling student participation. Instead of sticking to conventional methods, the teacher experiments with introducing group-based activities. As the outcomes unfold, the teacher continually refines the approach based on student feedback, eventually leading to a teaching strategy that rejuvenates student engagement.

In a healthcare context, hospital staff who recognize growing patient anxiety related to certain procedures might innovate by introducing a new patient-informing protocol. As they study the effects of this change, they could, through iterations, sculpt a procedure that diminishes patient anxiety.

Similarly, in the realm of community development, a community grappling with the absence of child-friendly public spaces might collaborate with local authorities to conceptualize a park. As they monitor its utilization and societal impact, continual feedback could refine the park's infrastructure and design.

Contemporary action research, while grounded in the core principles of collaboration, reflection, and change, has seen various adaptations tailored to the specific needs of different contexts and fields. These adaptations have led to the emergence of distinct types of action research, each with its unique emphasis and approach.

Collaborative action research

Collaborative action research emphasizes the joint efforts of professionals, often from the same field, working together to address common concerns or challenges. In this approach, there's a strong emphasis on shared responsibility, mutual respect, and co-learning. For example, a group of classroom teachers might collaboratively investigate methods to improve student literacy, pooling their expertise and resources to devise, implement, and refine strategies for improving teaching.

Participatory action research

Participatory action research (PAR) goes a step further in dissolving the barriers between the researcher and the researched. It actively involves community members or stakeholders not just as participants, but as equal partners in the entire research process. PAR is deeply democratic and seeks to empower participants, fostering a sense of agency and ownership. For instance, a participatory research project might involve local residents in studying and addressing community health concerns, ensuring that the research process and outcomes are both informed by and beneficial to the community itself.

Educational action research

Educational action research is tailored specifically to practical educational contexts. Here, educators take on the dual role of teacher and researcher, seeking to improve teaching practices, curricula, classroom dynamics, or educational evaluation. This type of research is cyclical, with educators implementing changes, observing outcomes, and reflecting on results to continually enhance the educational experience. An example might be a teacher studying the impact of technology integration in her classroom, adjusting strategies based on student feedback and learning outcomes.

Community-based action research

Another noteworthy type is community-based action research, which focuses primarily on community development and well-being. Rooted in the principles of social justice, this approach emphasizes the collective power of community members to identify, study, and address their challenges. It's particularly powerful in grassroots movements and local development projects where community insights and collaboration drive meaningful, sustainable change.

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Engaging in action research is both an enlightening and transformative journey, rooted in practicality yet deeply connected to theory. For those embarking on this path, understanding the essentials of an action research study and the significance of a research cycle is paramount.

Understanding the action research cycle

At the heart of action research is its cycle, a structured yet adaptable framework guiding the research. This cycle embodies the iterative nature of action research, emphasizing that learning and change evolve through repetition and reflection.

The typical stages include:

• Identifying a problem : This is the starting point where the action researcher pinpoints a pressing issue or challenge that demands attention.
• Planning : Here, the researcher devises an action research strategy aimed at addressing the identified problem. In action research, network resources, participant consultation, and the literature review are core components in planning.
• Action : The planned strategies are then implemented in this stage. This 'action' phase is where theoretical knowledge meets practical application.
• Observation : Post-implementation, the researcher observes the outcomes and effects of the action. This stage ensures that the research remains grounded in the real-world context.
• Critical reflection : This part of the cycle involves analyzing the observed results to draw conclusions about their effectiveness and identify areas for improvement.
• Revision : Based on the insights from reflection, the initial plan is revised, marking the beginning of another cycle.

Rigorous research and iteration

It's essential to understand that while action research is deeply practical, it doesn't sacrifice rigor . The cyclical process ensures that the research remains thorough and robust. Each iteration of the cycle in an action research project refines the approach, drawing it closer to an effective solution.

The role of the action researcher

The action researcher stands at the nexus of theory and practice. Not just an observer, the researcher actively engages with the study's participants, collaboratively navigating through the research cycle by conducting interviews, participant observations, and member checking . This close involvement ensures that the study remains relevant, timely, and responsive.

Drawing conclusions and informing theory

As the research progresses through multiple iterations of data collection and data analysis , drawing conclusions becomes an integral aspect. These conclusions, while immediately beneficial in addressing the practical issue at hand, also serve a broader purpose. They inform theory, enriching the academic discourse and providing valuable insights for future research.

Identifying actionable insights

Keep in mind that action research should facilitate implications for professional practice as well as space for systematic inquiry. As you draw conclusions about the knowledge generated from action research, consider how this knowledge can create new forms of solutions to the pressing concern you set out to address.

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What is action research and how do we do it?

In this article, we explore the development of some different traditions of action research and provide an introductory guide to the literature., contents : what is action research ·  origins · the decline and rediscovery of action research · undertaking action research · conclusion · further reading · how to cite this article . see, also: research for practice ..

In the literature, discussion of action research tends to fall into two distinctive camps. The British tradition – especially that linked to education – tends to view action research as research-oriented toward the enhancement of direct practice. For example, Carr and Kemmis provide a classic definition:

Action research is simply a form of self-reflective enquiry undertaken by participants in social situations in order to improve the rationality and justice of their own practices, their understanding of these practices, and the situations in which the practices are carried out (Carr and Kemmis 1986: 162).

Many people are drawn to this understanding of action research because it is firmly located in the realm of the practitioner – it is tied to self-reflection. As a way of working it is very close to the notion of reflective practice coined by Donald Schön (1983).

The second tradition, perhaps more widely approached within the social welfare field – and most certainly the broader understanding in the USA is of action research as ‘the systematic collection of information that is designed to bring about social change’ (Bogdan and Biklen 1992: 223). Bogdan and Biklen continue by saying that its practitioners marshal evidence or data to expose unjust practices or environmental dangers and recommend actions for change. In many respects, for them, it is linked into traditions of citizen’s action and community organizing. The practitioner is actively involved in the cause for which the research is conducted. For others, it is such commitment is a necessary part of being a practitioner or member of a community of practice. Thus, various projects designed to enhance practice within youth work, for example, such as the detached work reported on by Goetschius and Tash (1967) could be talked of as action research.

Kurt Lewin is generally credited as the person who coined the term ‘action research’:

The research needed for social practice can best be characterized as research for social management or social engineering. It is a type of action-research, a comparative research on the conditions and effects of various forms of social action, and research leading to social action. Research that produces nothing but books will not suffice (Lewin 1946, reproduced in Lewin 1948: 202-3)

His approach involves a spiral of steps, ‘each of which is composed of a circle of planning, action and fact-finding about the result of the action’ ( ibid. : 206). The basic cycle involves the following:

This is how Lewin describes the initial cycle:

The first step then is to examine the idea carefully in the light of the means available. Frequently more fact-finding about the situation is required. If this first period of planning is successful, two items emerge: namely, “an overall plan” of how to reach the objective and secondly, a decision in regard to the first step of action. Usually this planning has also somewhat modified the original idea. ( ibid. : 205)

The next step is ‘composed of a circle of planning, executing, and reconnaissance or fact-finding for the purpose of evaluating the results of the second step, and preparing the rational basis for planning the third step, and for perhaps modifying again the overall plan’ ( ibid. : 206). What we can see here is an approach to research that is oriented to problem-solving in social and organizational settings, and that has a form that parallels Dewey’s conception of learning from experience.

The approach, as presented, does take a fairly sequential form – and it is open to a literal interpretation. Following it can lead to practice that is ‘correct’ rather than ‘good’ – as we will see. It can also be argued that the model itself places insufficient emphasis on analysis at key points. Elliott (1991: 70), for example, believed that the basic model allows those who use it to assume that the ‘general idea’ can be fixed in advance, ‘that “reconnaissance” is merely fact-finding, and that “implementation” is a fairly straightforward process’. As might be expected there was some questioning as to whether this was ‘real’ research. There were questions around action research’s partisan nature – the fact that it served particular causes.

The decline and rediscovery of action research

Action research did suffer a decline in favour during the 1960s because of its association with radical political activism (Stringer 2007: 9). There were, and are, questions concerning its rigour, and the training of those undertaking it. However, as Bogdan and Biklen (1992: 223) point out, research is a frame of mind – ‘a perspective that people take toward objects and activities’. Once we have satisfied ourselves that the collection of information is systematic and that any interpretations made have a proper regard for satisfying truth claims, then much of the critique aimed at action research disappears. In some of Lewin’s earlier work on action research (e.g. Lewin and Grabbe 1945), there was a tension between providing a rational basis for change through research, and the recognition that individuals are constrained in their ability to change by their cultural and social perceptions, and the systems of which they are a part. Having ‘correct knowledge’ does not of itself lead to change, attention also needs to be paid to the ‘matrix of cultural and psychic forces’ through which the subject is constituted (Winter 1987: 48).

Subsequently, action research has gained a significant foothold both within the realm of community-based, and participatory action research; and as a form of practice-oriented to the improvement of educative encounters (e.g. Carr and Kemmis 1986).

Exhibit 1: Stringer on community-based action research

A fundamental premise of community-based action research is that it commences with an interest in the problems of a group, a community, or an organization. Its purpose is to assist people in extending their understanding of their situation and thus resolving problems that confront them….

Community-based action research is always enacted through an explicit set of social values. In modern, democratic social contexts, it is seen as a process of inquiry that has the following characteristics:

• It is democratic , enabling the participation of all people.

• It is equitable , acknowledging people’s equality of worth.

• It is liberating , providing freedom from oppressive, debilitating conditions.

• It is life enhancing , enabling the expression of people’s full human potential.

(Stringer 1999: 9-10)

Undertaking action research

As Thomas (2017: 154) put it, the central aim is change, ‘and the emphasis is on problem-solving in whatever way is appropriate’. It can be seen as a conversation rather more than a technique (McNiff et. al. ). It is about people ‘thinking for themselves and making their own choices, asking themselves what they should do and accepting the consequences of their own actions’ (Thomas 2009: 113).

The action research process works through three basic phases:

Look -building a picture and gathering information. When evaluating we define and describe the problem to be investigated and the context in which it is set. We also describe what all the participants (educators, group members, managers etc.) have been doing.

Think – interpreting and explaining. When evaluating we analyse and interpret the situation. We reflect on what participants have been doing. We look at areas of success and any deficiencies, issues or problems.

Act – resolving issues and problems. In evaluation we judge the worth, effectiveness, appropriateness, and outcomes of those activities. We act to formulate solutions to any problems. (Stringer 1999: 18; 43-44;160)

The use of action research to deepen and develop classroom practice has grown into a strong tradition of practice (one of the first examples being the work of Stephen Corey in 1949). For some, there is an insistence that action research must be collaborative and entail groupwork.

Action research is a form of collective self-reflective enquiry undertaken by participants in social situations in order to improve the rationality and justice of their own social or educational practices, as well as their understanding of those practices and the situations in which the practices are carried out… The approach is only action research when it is collaborative, though it is important to realise that action research of the group is achieved through the critically examined action of individual group members. (Kemmis and McTaggart 1988: 5-6)

Just why it must be collective is open to some question and debate (Webb 1996), but there is an important point here concerning the commitments and orientations of those involved in action research.

One of the legacies Kurt Lewin left us is the ‘action research spiral’ – and with it there is the danger that action research becomes little more than a procedure. It is a mistake, according to McTaggart (1996: 248) to think that following the action research spiral constitutes ‘doing action research’. He continues, ‘Action research is not a ‘method’ or a ‘procedure’ for research but a series of commitments to observe and problematize through practice a series of principles for conducting social enquiry’. It is his argument that Lewin has been misunderstood or, rather, misused. When set in historical context, while Lewin does talk about action research as a method, he is stressing a contrast between this form of interpretative practice and more traditional empirical-analytic research. The notion of a spiral may be a useful teaching device – but it is all too easy to slip into using it as the template for practice (McTaggart 1996: 249).

Further reading

This select, annotated bibliography has been designed to give a flavour of the possibilities of action research and includes some useful guides to practice. As ever, if you have suggestions about areas or specific texts for inclusion, I’d like to hear from you.

Explorations of action research

Atweh, B., Kemmis, S. and Weeks, P. (eds.) (1998) Action Research in Practice: Partnership for Social Justice in Education, London: Routledge. Presents a collection of stories from action research projects in schools and a university. The book begins with theme chapters discussing action research, social justice and partnerships in research. The case study chapters cover topics such as: school environment – how to make a school a healthier place to be; parents – how to involve them more in decision-making; students as action researchers; gender – how to promote gender equity in schools; writing up action research projects.

Carr, W. and Kemmis, S. (1986) Becoming Critical. Education, knowledge and action research , Lewes: Falmer. Influential book that provides a good account of ‘action research’ in education. Chapters on teachers, researchers and curriculum; the natural scientific view of educational theory and practice; the interpretative view of educational theory and practice; theory and practice – redefining the problem; a critical approach to theory and practice; towards a critical educational science; action research as critical education science; educational research, educational reform and the role of the profession.

Carson, T. R. and Sumara, D. J. (ed.) (1997) Action Research as a Living Practice , New York: Peter Lang. 140 pages. Book draws on a wide range of sources to develop an understanding of action research. Explores action research as a lived practice, ‘that asks the researcher to not only investigate the subject at hand but, as well, to provide some account of the way in which the investigation both shapes and is shaped by the investigator.

Dadds, M. (1995) Passionate Enquiry and School Development. A story about action research , London: Falmer. 192 + ix pages. Examines three action research studies undertaken by a teacher and how they related to work in school – how she did the research, the problems she experienced, her feelings, the impact on her feelings and ideas, and some of the outcomes. In his introduction, John Elliot comments that the book is ‘the most readable, thoughtful, and detailed study of the potential of action-research in professional education that I have read’.

Ghaye, T. and Wakefield, P. (eds.) CARN Critical Conversations. Book one: the role of the self in action , Bournemouth: Hyde Publications. 146 + xiii pages. Collection of five pieces from the Classroom Action Research Network. Chapters on: dialectical forms; graduate medical education – research’s outer limits; democratic education; managing action research; writing up.

McNiff, J. (1993) Teaching as Learning: An Action Research Approach , London: Routledge. Argues that educational knowledge is created by individual teachers as they attempt to express their own values in their professional lives. Sets out familiar action research model: identifying a problem, devising, implementing and evaluating a solution and modifying practice. Includes advice on how working in this way can aid the professional development of action researcher and practitioner.

Quigley, B. A. and Kuhne, G. W. (eds.) (1997) Creating Practical Knowledge Through Action Research, San Fransisco: Jossey Bass. Guide to action research that outlines the action research process, provides a project planner, and presents examples to show how action research can yield improvements in six different settings, including a hospital, a university and a literacy education program.

Plummer, G. and Edwards, G. (eds.) CARN Critical Conversations. Book two: dimensions of action research – people, practice and power , Bournemouth: Hyde Publications. 142 + xvii pages. Collection of five pieces from the Classroom Action Research Network. Chapters on: exchanging letters and collaborative research; diary writing; personal and professional learning – on teaching and self-knowledge; anti-racist approaches; psychodynamic group theory in action research.

Whyte, W. F. (ed.) (1991) Participatory Action Research , Newbury Park: Sage. 247 pages. Chapters explore the development of participatory action research and its relation with action science and examine its usages in various agricultural and industrial settings

Zuber-Skerritt, O. (ed.) (1996) New Directions in Action Research , London; Falmer Press. 266 + xii pages. A useful collection that explores principles and procedures for critical action research; problems and suggested solutions; and postmodernism and critical action research.

Action research guides

Coghlan, D. and Brannick, D. (2000) Doing Action Research in your own Organization, London: Sage. 128 pages. Popular introduction. Part one covers the basics of action research including the action research cycle, the role of the ‘insider’ action researcher and the complexities of undertaking action research within your own organisation. Part two looks at the implementation of the action research project (including managing internal politics and the ethics and politics of action research). New edition due late 2004.

Elliot, J. (1991) Action Research for Educational Change , Buckingham: Open University Press. 163 + x pages Collection of various articles written by Elliot in which he develops his own particular interpretation of action research as a form of teacher professional development. In some ways close to a form of ‘reflective practice’. Chapter 6, ‘A practical guide to action research’ – builds a staged model on Lewin’s work and on developments by writers such as Kemmis.

Johnson, A. P. (2007) A short guide to action research 3e. Allyn and Bacon. Popular step by step guide for master’s work.

Macintyre, C. (2002) The Art of the Action Research in the Classroom , London: David Fulton. 138 pages. Includes sections on action research, the role of literature, formulating a research question, gathering data, analysing data and writing a dissertation. Useful and readable guide for students.

McNiff, J., Whitehead, J., Lomax, P. (2003) You and Your Action Research Project , London: Routledge. Practical guidance on doing an action research project.Takes the practitioner-researcher through the various stages of a project. Each section of the book is supported by case studies

Stringer, E. T. (2007) Action Research: A handbook for practitioners 3e , Newbury Park, ca.: Sage. 304 pages. Sets community-based action research in context and develops a model. Chapters on information gathering, interpretation, resolving issues; legitimacy etc. See, also Stringer’s (2003) Action Research in Education , Prentice-Hall.

Winter, R. (1989) Learning From Experience. Principles and practice in action research , Lewes: Falmer Press. 200 + 10 pages. Introduces the idea of action research; the basic process; theoretical issues; and provides six principles for the conduct of action research. Includes examples of action research. Further chapters on from principles to practice; the learner’s experience; and research topics and personal interests.

Action research in informal education

Usher, R., Bryant, I. and Johnston, R. (1997) Adult Education and the Postmodern Challenge. Learning beyond the limits , London: Routledge. 248 + xvi pages. Has some interesting chapters that relate to action research: on reflective practice; changing paradigms and traditions of research; new approaches to research; writing and learning about research.

Other references

Bogdan, R. and Biklen, S. K. (1992) Qualitative Research For Education , Boston: Allyn and Bacon.

Goetschius, G. and Tash, J. (1967) Working with the Unattached , London: Routledge and Kegan Paul.

McTaggart, R. (1996) ‘Issues for participatory action researchers’ in O. Zuber-Skerritt (ed.) New Directions in Action Research , London: Falmer Press.

McNiff, J., Lomax, P. and Whitehead, J. (2003) You and Your Action Research Project 2e. London: Routledge.

Thomas, G. (2017). How to do your Research Project. A guide for students in education and applied social sciences . 3e. London: Sage.

Acknowledgements : spiral by Michèle C. | flickr ccbyncnd2 licence

How to cite this article : Smith, M. K. (1996; 2001, 2007, 2017) What is action research and how do we do it?’, The encyclopedia of pedagogy and informal education. [ https://infed.org/mobi/action-research/ . Retrieved: insert date] .

© Mark K. Smith 1996; 2001, 2007, 2017

Created by the Great Schools Partnership , the GLOSSARY OF EDUCATION REFORM is a comprehensive online resource that describes widely used school-improvement terms, concepts, and strategies for journalists, parents, and community members. | Learn more »

Action Research

In schools, action research refers to a wide variety of evaluative, investigative, and analytical research methods designed to diagnose problems or weaknesses—whether organizational, academic, or instructional—and help educators develop practical solutions to address them quickly and efficiently. Action research may also be applied to programs or educational techniques that are not necessarily experiencing any problems, but that educators simply want to learn more about and improve. The general goal is to create a simple, practical, repeatable process of iterative learning, evaluation, and improvement that leads to increasingly better results for schools, teachers, or programs.

Action research may also be called a cycle of action or cycle of inquiry , since it typically follows a predefined process that is repeated over time. A simple illustrative example:

• Identify a problem to be studied
• Collect data on the problem
• Organize, analyze, and interpret the data
• Develop a plan to address the problem
• Implement the plan
• Evaluate the results of the actions taken
• Identify a new problem
• Repeat the process

Unlike more formal research studies, such as those conducted by universities and published in peer-reviewed scholarly journals, action research is typically conducted by the educators working in the district or school being studied—the participants—rather than by independent, impartial observers from outside organizations. Less formal, prescriptive, or theory-driven research methods are typically used when conducting action research, since the goal is to address practical problems in a specific school or classroom, rather than produce independently validated and reproducible findings that others, outside of the context being studied, can use to guide their future actions or inform the design of their academic programs. That said, while action research is typically focused on solving a specific problem (high rates of student absenteeism, for example) or answer a specific question (Why are so many of our ninth graders failing math?), action research can also make meaningful contributions to the larger body of knowledge and understanding in the field of education, particularly within a relatively closed system such as school, district, or network of connected organizations.

The term “action research” was coined in the 1940s by Kurt Lewin, a German-American social psychologist who is widely considered to be the founder of his field. The basic principles of action research that were described by Lewin are still in use to this day.

Educators typically conduct action research as an extension of a particular school-improvement plan, project, or goal—i.e., action research is nearly always a school-reform strategy. The object of action research could be almost anything related to educational performance or improvement, from the effectiveness of certain teaching strategies and lesson designs to the influence that family background has on student performance to the results achieved by a particular academic support strategy or learning program—to list just a small sampling.

For related discussions, see action plan , capacity , continuous improvement , evidence-based , and professional development .

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What is Action Research?

Action research involves a systematic process of examining the evidence. The results of this type of research are practical, relevant, and can inform theory. Action research is different than other forms of research as there is less concern for universality of findings, and more value is placed on the relevance of the findings to the researcher and the local collaborators.

Riel, M. (2020). Understanding action research. Center For Collaborative Action Research, Pepperdine University.  Retrieved January 31, 2021 from the Center for Collaborative Action Research.  https://www.actionresearchtutorials.org/  

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The short video below by John Spencer provides a quick overview of Action Research.

How is Action Research different?

This chart demonstrates the difference between traditional research and action research. Traditional research is a means to an end - the conclusion. They start with a theory, statistical analysis is critical and the researcher does not insert herself into the research.

Action research is often practiced by practitioners like teachers and librarians who remain in the middle of the research process. They are looking for ways to improve the specific situation for their clientele or students. Statistics may be collected but they are not the point of the research.

Adapted from: Mc Millan, J. H. & Wergin. J. F. (1998). Understanding and evaluating educational research. Prentice-Hall, Inc.

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• Last Updated: Aug 26, 2024 12:10 PM
• URL: https://guides.library.ucmo.edu/actionresearch

Action Research

Action research can be defined as “an approach in which the action researcher and a client collaborate in the diagnosis of the problem and in the development of a solution based on the diagnosis” [1] . In other words, one of the main characteristic traits of action research relates to collaboration between researcher and member of organisation in order to solve organizational problems.

Action study assumes social world to be constantly changing, both, researcher and research being one part of that change. [2] Generally, action researches can be divided into three categories: positivist, interpretive and critical.

Positivist approach to action research , also known as ‘classical action research’ perceives research as a social experiment. Accordingly, action research is accepted as a method to test hypotheses in a real world environment.

Interpretive action research , also known as ‘contemporary action research’ perceives business reality as socially constructed and focuses on specifications of local and organisational factors when conducting the action research.

Critical action research is a specific type of action research that adopts critical approach towards business processes and aims for improvements.

The following features of action research need to be taken into account when considering its suitability for any given study:

• It is applied in order to improve specific practices.  Action research is based on action, evaluation and critical analysis of practices based on collected data in order to introduce improvements in relevant practices.
• This type of research is facilitated by participation and collaboration of number of individuals with a common purpose
• Such a research focuses on specific situations and their context

Advantages of Action Research

• High level of practical relevance of the business research;
• Can be used with quantitative, as well as, qualitative data;
• Possibility to gain in-depth knowledge about the problem.

Disadvantages of Action Research

• Difficulties in distinguishing between action and research and ensure the application of both;
• Delays in completion of action research due to a wide range of reasons are not rare occurrences
• Lack of repeatability and rigour

It is important to make a clear distinction between action research and consulting. Specifically, action research is greater than consulting in a way that action research includes both action and research, whereas business activities of consulting are limited action without the research.

Action Research Spiral

Action study is a participatory study consisting of spiral of following self-reflective cycles:

• Planning in order to initiate change
• Implementing the change (acting) and observing the process of implementation and consequences
• Reflecting on processes of change and re-planning
• Acting and observing

Kemmis and McTaggart (2000) do acknowledge that individual stages specified in Action Research Spiral model may overlap, and initial plan developed for the research may become obselete in short duration of time due to a range of factors.

The main advantage of Action Research Spiral model relates to the opportunity of analysing the phenomenon in a greater depth each time, consequently resulting in grater level of understanding of the problem.

Disadvantages of Action Research Spiral model include its assumption each process takes long time to be completed which may not always be the case.

My e-book,  The Ultimate Guide to Writing a Dissertation in Business Studies: a step by step assistance  offers practical assistance to complete a dissertation with minimum or no stress. The e-book covers all stages of writing a dissertation starting from the selection to the research area to submitting the completed version of the work within the deadline.

References 

[1] Bryman, A. & Bell, E. (2011) “Business Research Methods” 3 rd  edition, Oxford University Press

[2] Collis, J. & Hussey, R. (2003) “Business Research. A Practical Guide for Undergraduate and Graduate Students” 2nd edition, Palgrave Macmillan

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1 What is Action Research for Classroom Teachers?

ESSENTIAL QUESTIONS

• What is the nature of action research?
• How does action research develop in the classroom?
• What models of action research work best for your classroom?
• What are the epistemological, ontological, theoretical underpinnings of action research?

Educational research provides a vast landscape of knowledge on topics related to teaching and learning, curriculum and assessment, students’ cognitive and affective needs, cultural and socio-economic factors of schools, and many other factors considered viable to improving schools. Educational stakeholders rely on research to make informed decisions that ultimately affect the quality of schooling for their students. Accordingly, the purpose of educational research is to engage in disciplined inquiry to generate knowledge on topics significant to the students, teachers, administrators, schools, and other educational stakeholders. Just as the topics of educational research vary, so do the approaches to conducting educational research in the classroom. Your approach to research will be shaped by your context, your professional identity, and paradigm (set of beliefs and assumptions that guide your inquiry). These will all be key factors in how you generate knowledge related to your work as an educator.

Action research is an approach to educational research that is commonly used by educational practitioners and professionals to examine, and ultimately improve, their pedagogy and practice. In this way, action research represents an extension of the reflection and critical self-reflection that an educator employs on a daily basis in their classroom. When students are actively engaged in learning, the classroom can be dynamic and uncertain, demanding the constant attention of the educator. Considering these demands, educators are often only able to engage in reflection that is fleeting, and for the purpose of accommodation, modification, or formative assessment. Action research offers one path to more deliberate, substantial, and critical reflection that can be documented and analyzed to improve an educator’s practice.

Purpose of Action Research

As one of many approaches to educational research, it is important to distinguish the potential purposes of action research in the classroom. This book focuses on action research as a method to enable and support educators in pursuing effective pedagogical practices by transforming the quality of teaching decisions and actions, to subsequently enhance student engagement and learning. Being mindful of this purpose, the following aspects of action research are important to consider as you contemplate and engage with action research methodology in your classroom:

• Action research is a process for improving educational practice. Its methods involve action, evaluation, and reflection. It is a process to gather evidence to implement change in practices.
• Action research is participative and collaborative. It is undertaken by individuals with a common purpose.
• Action research is situation and context-based.
• Action research develops reflection practices based on the interpretations made by participants.
• Knowledge is created through action and application.
• Action research can be based in problem-solving, if the solution to the problem results in the improvement of practice.
• Action research is iterative; plans are created, implemented, revised, then implemented, lending itself to an ongoing process of reflection and revision.
• In action research, findings emerge as action develops and takes place; however, they are not conclusive or absolute, but ongoing (Koshy, 2010, pgs. 1-2).

In thinking about the purpose of action research, it is helpful to situate action research as a distinct paradigm of educational research. I like to think about action research as part of the larger concept of living knowledge. Living knowledge has been characterized as “a quest for life, to understand life and to create… knowledge which is valid for the people with whom I work and for myself” (Swantz, in Reason & Bradbury, 2001, pg. 1). Why should educators care about living knowledge as part of educational research? As mentioned above, action research is meant “to produce practical knowledge that is useful to people in the everyday conduct of their lives and to see that action research is about working towards practical outcomes” (Koshy, 2010, pg. 2). However, it is also about:

creating new forms of understanding, since action without reflection and understanding is blind, just as theory without action is meaningless. The participatory nature of action research makes it only possible with, for and by persons and communities, ideally involving all stakeholders both in the questioning and sense making that informs the research, and in the action, which is its focus. (Reason & Bradbury, 2001, pg. 2)

In an effort to further situate action research as living knowledge, Jean McNiff reminds us that “there is no such ‘thing’ as ‘action research’” (2013, pg. 24). In other words, action research is not static or finished, it defines itself as it proceeds. McNiff’s reminder characterizes action research as action-oriented, and a process that individuals go through to make their learning public to explain how it informs their practice. Action research does not derive its meaning from an abstract idea, or a self-contained discovery – action research’s meaning stems from the way educators negotiate the problems and successes of living and working in the classroom, school, and community.

While we can debate the idea of action research, there are people who are action researchers, and they use the idea of action research to develop principles and theories to guide their practice. Action research, then, refers to an organization of principles that guide action researchers as they act on shared beliefs, commitments, and expectations in their inquiry.

Reflection and the Process of Action Research

When an individual engages in reflection on their actions or experiences, it is typically for the purpose of better understanding those experiences, or the consequences of those actions to improve related action and experiences in the future. Reflection in this way develops knowledge around these actions and experiences to help us better regulate those actions in the future. The reflective process generates new knowledge regularly for classroom teachers and informs their classroom actions.

Unfortunately, the knowledge generated by educators through the reflective process is not always prioritized among the other sources of knowledge educators are expected to utilize in the classroom. Educators are expected to draw upon formal types of knowledge, such as textbooks, content standards, teaching standards, district curriculum and behavioral programs, etc., to gain new knowledge and make decisions in the classroom. While these forms of knowledge are important, the reflective knowledge that educators generate through their pedagogy is the amalgamation of these types of knowledge enacted in the classroom. Therefore, reflective knowledge is uniquely developed based on the action and implementation of an educator’s pedagogy in the classroom. Action research offers a way to formalize the knowledge generated by educators so that it can be utilized and disseminated throughout the teaching profession.

Research is concerned with the generation of knowledge, and typically creating knowledge related to a concept, idea, phenomenon, or topic. Action research generates knowledge around inquiry in practical educational contexts. Action research allows educators to learn through their actions with the purpose of developing personally or professionally. Due to its participatory nature, the process of action research is also distinct in educational research. There are many models for how the action research process takes shape. I will share a few of those here. Each model utilizes the following processes to some extent:

• Plan a change;
• Take action to enact the change;
• Observe the process and consequences of the change;
• Reflect on the process and consequences;
• Act, observe, & reflect again and so on.

Figure 1.1 Basic action research cycle

There are many other models that supplement the basic process of action research with other aspects of the research process to consider. For example, figure 1.2 illustrates a spiral model of action research proposed by Kemmis and McTaggart (2004). The spiral model emphasizes the cyclical process that moves beyond the initial plan for change. The spiral model also emphasizes revisiting the initial plan and revising based on the initial cycle of research:

Figure 1.2 Interpretation of action research spiral, Kemmis and McTaggart (2004, p. 595)

Other models of action research reorganize the process to emphasize the distinct ways knowledge takes shape in the reflection process. O’Leary’s (2004, p. 141) model, for example, recognizes that the research may take shape in the classroom as knowledge emerges from the teacher’s observations. O’Leary highlights the need for action research to be focused on situational understanding and implementation of action, initiated organically from real-time issues:

Figure 1.3 Interpretation of O’Leary’s cycles of research, O’Leary (2000, p. 141)

Lastly, Macintyre’s (2000, p. 1) model, offers a different characterization of the action research process. Macintyre emphasizes a messier process of research with the initial reflections and conclusions as the benchmarks for guiding the research process. Macintyre emphasizes the flexibility in planning, acting, and observing stages to allow the process to be naturalistic. Our interpretation of Macintyre process is below:

Figure 1.4 Interpretation of the action research cycle, Macintyre (2000, p. 1)

We believe it is important to prioritize the flexibility of the process, and encourage you to only use these models as basic guides for your process. Your process may look similar, or you may diverge from these models as you better understand your students, context, and data.

Definitions of Action Research and Examples

At this point, it may be helpful for readers to have a working definition of action research and some examples to illustrate the methodology in the classroom. Bassey (1998, p. 93) offers a very practical definition and describes “action research as an inquiry which is carried out in order to understand, to evaluate and then to change, in order to improve educational practice.” Cohen and Manion (1994, p. 192) situate action research differently, and describe action research as emergent, writing:

essentially an on-the-spot procedure designed to deal with a concrete problem located in an immediate situation. This means that ideally, the step-by-step process is constantly monitored over varying periods of time and by a variety of mechanisms (questionnaires, diaries, interviews and case studies, for example) so that the ensuing feedback may be translated into modifications, adjustment, directional changes, redefinitions, as necessary, so as to bring about lasting benefit to the ongoing process itself rather than to some future occasion.

Lastly, Koshy (2010, p. 9) describes action research as:

a constructive inquiry, during which the researcher constructs his or her knowledge of specific issues through planning, acting, evaluating, refining and learning from the experience. It is a continuous learning process in which the researcher learns and also shares the newly generated knowledge with those who may benefit from it.

These definitions highlight the distinct features of action research and emphasize the purposeful intent of action researchers to improve, refine, reform, and problem-solve issues in their educational context. To better understand the distinctness of action research, these are some examples of action research topics:

Examples of Action Research Topics

• Flexible seating in 4th grade classroom to increase effective collaborative learning.
• Structured homework protocols for increasing student achievement.
• Developing a system of formative feedback for 8th grade writing.
• Using music to stimulate creative writing.
• Weekly brown bag lunch sessions to improve responses to PD from staff.
• Using exercise balls as chairs for better classroom management.

Action Research in Theory

Action research-based inquiry in educational contexts and classrooms involves distinct participants – students, teachers, and other educational stakeholders within the system. All of these participants are engaged in activities to benefit the students, and subsequently society as a whole. Action research contributes to these activities and potentially enhances the participants’ roles in the education system. Participants’ roles are enhanced based on two underlying principles:

• communities, schools, and classrooms are sites of socially mediated actions, and action research provides a greater understanding of self and new knowledge of how to negotiate these socially mediated environments;
• communities, schools, and classrooms are part of social systems in which humans interact with many cultural tools, and action research provides a basis to construct and analyze these interactions.

In our quest for knowledge and understanding, we have consistently analyzed human experience over time and have distinguished between types of reality. Humans have constantly sought “facts” and “truth” about reality that can be empirically demonstrated or observed.

Social systems are based on beliefs, and generally, beliefs about what will benefit the greatest amount of people in that society. Beliefs, and more specifically the rationale or support for beliefs, are not always easy to demonstrate or observe as part of our reality. Take the example of an English Language Arts teacher who prioritizes argumentative writing in her class. She believes that argumentative writing demonstrates the mechanics of writing best among types of writing, while also providing students a skill they will need as citizens and professionals. While we can observe the students writing, and we can assess their ability to develop a written argument, it is difficult to observe the students’ understanding of argumentative writing and its purpose in their future. This relates to the teacher’s beliefs about argumentative writing; we cannot observe the real value of the teaching of argumentative writing. The teacher’s rationale and beliefs about teaching argumentative writing are bound to the social system and the skills their students will need to be active parts of that system. Therefore, our goal through action research is to demonstrate the best ways to teach argumentative writing to help all participants understand its value as part of a social system.

The knowledge that is conveyed in a classroom is bound to, and justified by, a social system. A postmodernist approach to understanding our world seeks knowledge within a social system, which is directly opposed to the empirical or positivist approach which demands evidence based on logic or science as rationale for beliefs. Action research does not rely on a positivist viewpoint to develop evidence and conclusions as part of the research process. Action research offers a postmodernist stance to epistemology (theory of knowledge) and supports developing questions and new inquiries during the research process. In this way action research is an emergent process that allows beliefs and decisions to be negotiated as reality and meaning are being constructed in the socially mediated space of the classroom.

Theorizing Action Research for the Classroom

All research, at its core, is for the purpose of generating new knowledge and contributing to the knowledge base of educational research. Action researchers in the classroom want to explore methods of improving their pedagogy and practice. The starting place of their inquiry stems from their pedagogy and practice, so by nature the knowledge created from their inquiry is often contextually specific to their classroom, school, or community. Therefore, we should examine the theoretical underpinnings of action research for the classroom. It is important to connect action research conceptually to experience; for example, Levin and Greenwood (2001, p. 105) make these connections:

• Action research is context bound and addresses real life problems.
• Action research is inquiry where participants and researchers cogenerate knowledge through collaborative communicative processes in which all participants’ contributions are taken seriously.
• The meanings constructed in the inquiry process lead to social action or these reflections and action lead to the construction of new meanings.
• The credibility/validity of action research knowledge is measured according to whether the actions that arise from it solve problems (workability) and increase participants’ control over their own situation.

Educators who engage in action research will generate new knowledge and beliefs based on their experiences in the classroom. Let us emphasize that these are all important to you and your work, as both an educator and researcher. It is these experiences, beliefs, and theories that are often discounted when more official forms of knowledge (e.g., textbooks, curriculum standards, districts standards) are prioritized. These beliefs and theories based on experiences should be valued and explored further, and this is one of the primary purposes of action research in the classroom. These beliefs and theories should be valued because they were meaningful aspects of knowledge constructed from teachers’ experiences. Developing meaning and knowledge in this way forms the basis of constructivist ideology, just as teachers often try to get their students to construct their own meanings and understandings when experiencing new ideas.  

Classroom Teachers Constructing their Own Knowledge

Most of you are probably at least minimally familiar with constructivism, or the process of constructing knowledge. However, what is constructivism precisely, for the purposes of action research? Many scholars have theorized constructivism and have identified two key attributes (Koshy, 2010; von Glasersfeld, 1987):

• Knowledge is not passively received, but actively developed through an individual’s cognition;
• Human cognition is adaptive and finds purpose in organizing the new experiences of the world, instead of settling for absolute or objective truth.

Considering these two attributes, constructivism is distinct from conventional knowledge formation because people can develop a theory of knowledge that orders and organizes the world based on their experiences, instead of an objective or neutral reality. When individuals construct knowledge, there are interactions between an individual and their environment where communication, negotiation and meaning-making are collectively developing knowledge. For most educators, constructivism may be a natural inclination of their pedagogy. Action researchers have a similar relationship to constructivism because they are actively engaged in a process of constructing knowledge. However, their constructions may be more formal and based on the data they collect in the research process. Action researchers also are engaged in the meaning making process, making interpretations from their data. These aspects of the action research process situate them in the constructivist ideology. Just like constructivist educators, action researchers’ constructions of knowledge will be affected by their individual and professional ideas and values, as well as the ecological context in which they work (Biesta & Tedder, 2006). The relations between constructivist inquiry and action research is important, as Lincoln (2001, p. 130) states:

much of the epistemological, ontological, and axiological belief systems are the same or similar, and methodologically, constructivists and action researchers work in similar ways, relying on qualitative methods in face-to-face work, while buttressing information, data and background with quantitative method work when necessary or useful.

While there are many links between action research and educators in the classroom, constructivism offers the most familiar and practical threads to bind the beliefs of educators and action researchers.  

Epistemology, Ontology, and Action Research

It is also important for educators to consider the philosophical stances related to action research to better situate it with their beliefs and reality. When researchers make decisions about the methodology they intend to use, they will consider their ontological and epistemological stances. It is vital that researchers clearly distinguish their philosophical stances and understand the implications of their stance in the research process, especially when collecting and analyzing their data. In what follows, we will discuss ontological and epistemological stances in relation to action research methodology.

Ontology, or the theory of being, is concerned with the claims or assumptions we make about ourselves within our social reality – what do we think exists, what does it look like, what entities are involved and how do these entities interact with each other (Blaikie, 2007). In relation to the discussion of constructivism, generally action researchers would consider their educational reality as socially constructed. Social construction of reality happens when individuals interact in a social system. Meaningful construction of concepts and representations of reality develop through an individual’s interpretations of others’ actions. These interpretations become agreed upon by members of a social system and become part of social fabric, reproduced as knowledge and beliefs to develop assumptions about reality. Researchers develop meaningful constructions based on their experiences and through communication. Educators as action researchers will be examining the socially constructed reality of schools. In the United States, many of our concepts, knowledge, and beliefs about schooling have been socially constructed over the last hundred years. For example, a group of teachers may look at why fewer female students enroll in upper-level science courses at their school. This question deals directly with the social construction of gender and specifically what careers females have been conditioned to pursue. We know this is a social construction in some school social systems because in other parts of the world, or even the United States, there are schools that have more females enrolled in upper level science courses than male students. Therefore, the educators conducting the research have to recognize the socially constructed reality of their school and consider this reality throughout the research process. Action researchers will use methods of data collection that support their ontological stance and clarify their theoretical stance throughout the research process.

Koshy (2010, p. 23-24) offers another example of addressing the ontological challenges in the classroom:

A teacher who was concerned with increasing her pupils’ motivation and enthusiasm for learning decided to introduce learning diaries which the children could take home. They were invited to record their reactions to the day’s lessons and what they had learnt. The teacher reported in her field diary that the learning diaries stimulated the children’s interest in her lessons, increased their capacity to learn, and generally improved their level of participation in lessons. The challenge for the teacher here is in the analysis and interpretation of the multiplicity of factors accompanying the use of diaries. The diaries were taken home so the entries may have been influenced by discussions with parents. Another possibility is that children felt the need to please their teacher. Another possible influence was that their increased motivation was as a result of the difference in style of teaching which included more discussions in the classroom based on the entries in the dairies.

Here you can see the challenge for the action researcher is working in a social context with multiple factors, values, and experiences that were outside of the teacher’s control. The teacher was only responsible for introducing the diaries as a new style of learning. The students’ engagement and interactions with this new style of learning were all based upon their socially constructed notions of learning inside and outside of the classroom. A researcher with a positivist ontological stance would not consider these factors, and instead might simply conclude that the dairies increased motivation and interest in the topic, as a result of introducing the diaries as a learning strategy.

Epistemology, or the theory of knowledge, signifies a philosophical view of what counts as knowledge – it justifies what is possible to be known and what criteria distinguishes knowledge from beliefs (Blaikie, 1993). Positivist researchers, for example, consider knowledge to be certain and discovered through scientific processes. Action researchers collect data that is more subjective and examine personal experience, insights, and beliefs.

Action researchers utilize interpretation as a means for knowledge creation. Action researchers have many epistemologies to choose from as means of situating the types of knowledge they will generate by interpreting the data from their research. For example, Koro-Ljungberg et al., (2009) identified several common epistemologies in their article that examined epistemological awareness in qualitative educational research, such as: objectivism, subjectivism, constructionism, contextualism, social epistemology, feminist epistemology, idealism, naturalized epistemology, externalism, relativism, skepticism, and pluralism. All of these epistemological stances have implications for the research process, especially data collection and analysis. Please see the table on pages 689-90, linked below for a sketch of these potential implications:

Again, Koshy (2010, p. 24) provides an excellent example to illustrate the epistemological challenges within action research:

A teacher of 11-year-old children decided to carry out an action research project which involved a change in style in teaching mathematics. Instead of giving children mathematical tasks displaying the subject as abstract principles, she made links with other subjects which she believed would encourage children to see mathematics as a discipline that could improve their understanding of the environment and historic events. At the conclusion of the project, the teacher reported that applicable mathematics generated greater enthusiasm and understanding of the subject.

The educator/researcher engaged in action research-based inquiry to improve an aspect of her pedagogy. She generated knowledge that indicated she had improved her students’ understanding of mathematics by integrating it with other subjects – specifically in the social and ecological context of her classroom, school, and community. She valued constructivism and students generating their own understanding of mathematics based on related topics in other subjects. Action researchers working in a social context do not generate certain knowledge, but knowledge that emerges and can be observed and researched again, building upon their knowledge each time.

Researcher Positionality in Action Research

In this first chapter, we have discussed a lot about the role of experiences in sparking the research process in the classroom. Your experiences as an educator will shape how you approach action research in your classroom. Your experiences as a person in general will also shape how you create knowledge from your research process. In particular, your experiences will shape how you make meaning from your findings. It is important to be clear about your experiences when developing your methodology too. This is referred to as researcher positionality. Maher and Tetreault (1993, p. 118) define positionality as:

Gender, race, class, and other aspects of our identities are markers of relational positions rather than essential qualities. Knowledge is valid when it includes an acknowledgment of the knower’s specific position in any context, because changing contextual and relational factors are crucial for defining identities and our knowledge in any given situation.

By presenting your positionality in the research process, you are signifying the type of socially constructed, and other types of, knowledge you will be using to make sense of the data. As Maher and Tetreault explain, this increases the trustworthiness of your conclusions about the data. This would not be possible with a positivist ontology. We will discuss positionality more in chapter 6, but we wanted to connect it to the overall theoretical underpinnings of action research.

Advantages of Engaging in Action Research in the Classroom

In the following chapters, we will discuss how action research takes shape in your classroom, and we wanted to briefly summarize the key advantages to action research methodology over other types of research methodology. As Koshy (2010, p. 25) notes, action research provides useful methodology for school and classroom research because:

Advantages of Action Research for the Classroom

• research can be set within a specific context or situation;
• researchers can be participants – they don’t have to be distant and detached from the situation;
• it involves continuous evaluation and modifications can be made easily as the project progresses;
• there are opportunities for theory to emerge from the research rather than always follow a previously formulated theory;
• the study can lead to open-ended outcomes;
• through action research, a researcher can bring a story to life.

Action Research Copyright © by J. Spencer Clark; Suzanne Porath; Julie Thiele; and Morgan Jobe is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License , except where otherwise noted.

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• What Is Action Research? | Definition & Examples

What Is Action Research? | Definition & Examples

Published on 27 January 2023 by Tegan George . Revised on 21 April 2023.

Table of contents

Types of action research, action research models, examples of action research, action research vs. traditional research, advantages and disadvantages of action research, frequently asked questions about action research.

There are 2 common types of action research: participatory action research and practical action research.

• Participatory action research emphasises that participants should be members of the community being studied, empowering those directly affected by outcomes of said research. In this method, participants are effectively co-researchers, with their lived experiences considered formative to the research process.
• Practical action research focuses more on how research is conducted and is designed to address and solve specific issues.

Both types of action research are more focused on increasing the capacity and ability of future practitioners than contributing to a theoretical body of knowledge.

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Action research is often reflected in 3 action research models: operational (sometimes called technical), collaboration, and critical reflection.

• Operational (or technical) action research is usually visualised like a spiral following a series of steps, such as “planning → acting → observing → reflecting.”
• Collaboration action research is more community-based, focused on building a network of similar individuals (e.g., college professors in a given geographic area) and compiling learnings from iterated feedback cycles.
• Critical reflection action research serves to contextualise systemic processes that are already ongoing (e.g., working retroactively to analyse existing school systems by questioning why certain practices were put into place and developed the way they did).

Action research is often used in fields like education because of its iterative and flexible style.

After the information was collected, the students were asked where they thought ramps or other accessibility measures would be best utilised, and the suggestions were sent to school administrators. Example: Practical action research Science teachers at your city’s high school have been witnessing a year-over-year decline in standardised test scores in chemistry. In seeking the source of this issue, they studied how concepts are taught in depth, focusing on the methods, tools, and approaches used by each teacher.

Action research differs sharply from other types of research in that it seeks to produce actionable processes over the course of the research rather than contributing to existing knowledge or drawing conclusions from datasets. In this way, action research is formative , not summative , and is conducted in an ongoing, iterative way.

As such, action research is different in purpose, context, and significance and is a good fit for those seeking to implement systemic change.

Action research comes with advantages and disadvantages.

• Action research is highly adaptable , allowing researchers to mould their analysis to their individual needs and implement practical individual-level changes.
• Action research provides an immediate and actionable path forward for solving entrenched issues, rather than suggesting complicated, longer-term solutions rooted in complex data.
• Done correctly, action research can be very empowering , informing social change and allowing participants to effect that change in ways meaningful to their communities.

Disadvantages

• Due to their flexibility, action research studies are plagued by very limited generalisability  and are very difficult to replicate . They are often not considered theoretically rigorous due to the power the researcher holds in drawing conclusions.
• Action research can be complicated to structure in an ethical manner . Participants may feel pressured to participate or to participate in a certain way.
• Action research is at high risk for research biases such as selection bias , social desirability bias , or other types of cognitive biases .

Action research is conducted in order to solve a particular issue immediately, while case studies are often conducted over a longer period of time and focus more on observing and analyzing a particular ongoing phenomenon.

Action research is focused on solving a problem or informing individual and community-based knowledge in a way that impacts teaching, learning, and other related processes. It is less focused on contributing theoretical input, instead producing actionable input.

Action research is particularly popular with educators as a form of systematic inquiry because it prioritizes reflection and bridges the gap between theory and practice. Educators are able to simultaneously investigate an issue as they solve it, and the method is very iterative and flexible.

A cycle of inquiry is another name for action research . It is usually visualized in a spiral shape following a series of steps, such as “planning → acting → observing → reflecting.”

Sources for this article

We strongly encourage students to use sources in their work. You can cite our article (APA Style) or take a deep dive into the articles below.

George, T. (2023, April 21). What Is Action Research? | Definition & Examples. Scribbr. Retrieved 1 November 2024, from https://www.scribbr.co.uk/research-methods/action-research-cycle/

Cohen, L., Manion, L., & Morrison, K. (2017). Research methods in education (8th edition). Routledge.

Naughton, G. M. (2001).  Action research (1st edition). Routledge.

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What is Action Research?

Considerations, creating a plan of action.

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Action research is a qualitative method that focuses on solving problems in social systems, such as schools and other organizations. The emphasis is on solving the presenting problem by generating knowledge and taking action within the social system in which the problem is located. The goal is to generate shared knowledge of how to address the problem by bridging the theory-practice gap (Bourner & Brook, 2019). A general definition of action research is the following: “Action research brings together action and reflection, as well as theory and practice, in participation with others, in the pursuit of practical solutions to issues of pressing concern” (Bradbury, 2015, p. 1). Johnson (2019) defines action research in the field of education as “the process of studying a school, classroom, or teacher-learning situation with the purpose of understanding and improving the quality of actions or instruction” (p.255).

Origins of Action Research

Kurt Lewin is typically credited with being the primary developer of Action Research in the 1940s. Lewin stated that action research can “transform…unrelated individuals, frequently opposed in their outlook and their interests, into cooperative teams, not on the basis of sweetness but on the basis of readiness to face difficulties realistically, to apply honest fact-finding, and to work together to overcome them” (1946, p.211).

Sample Action Research Topics

Some sample action research topics might be the following:

• Examining how classroom teachers perceive and implement new strategies in the classroom--How is the strategy being used? How do students respond to the strategy? How does the strategy inform and change classroom practices? Does the new skill improve test scores? Do classroom teachers perceive the strategy as effective for student learning?
• Examining how students are learning a particular content or objectives--What seems to be effective in enhancing student learning? What skills need to be reinforced? How do students respond to the new content? What is the ability of students to understand the new content?
• Examining how education stakeholders (administrator, parents, teachers, students, etc.) make decisions as members of the school’s improvement team--How are different stakeholders encouraged to participate? How is power distributed? How is equity demonstrated? How is each voice valued? How are priorities and initiatives determined? How does the team evaluate its processes to determine effectiveness?
• Examining the actions that school staff take to create an inclusive and welcoming school climate--Who makes and implements the actions taken to create the school climate? Do members of the school community (teachers, staff, students) view the school climate as inclusive? Do members of the school community feel welcome in the school? How are members of the school community encouraged to become involved in school activities? What actions can school staff take to help others feel a part of the school community?
• Examining the perceptions of teachers with regard to the learning strategies that are more effective with special populations, such as special education students, English Language Learners, etc.—What strategies are perceived to be more effective? How do teachers plan instructionally for unique learners such as special education students or English Language Learners? How do teachers deal with the challenges presented by unique learners such as special education students or English Language Learners? What supports do teachers need (e.g., professional development, training, coaching) to more effectively deliver instruction to unique learners such as special education students or English Language Learners?

Remember—The goal of action research is to find out how individuals perceive and act in a situation so the researcher can develop a plan of action to improve the educational organization. While these topics listed here can be explored using other research designs, action research is the design to use if the outcome is to develop a plan of action for addressing and improving upon a situation in the educational organization.

Considerations for Determining Whether to Use Action Research in an Applied Dissertation

• When considering action research, first determine the problem and the change that needs to occur as a result of addressing the problem (i.e., research problem and research purpose). Remember, the goal of action research is to change how individuals address a particular problem or situation in a way that results in improved practices.
• If the study will be conducted at a school site or educational organization, you may need site permission. Determine whether site permission will be given to conduct the study.
• Consider the individuals who will be part of the data collection (e.g., teachers, administrators, parents, other school staff, etc.). Will there be a representative sample willing to participate in the research?
• If students will be part of the study, does parent consent and student assent need to be obtained?
• As you develop your data collection plan, also consider the timeline for data collection. Is it feasible? For example, if you will be collecting data in a school, consider winter and summer breaks, school events, testing schedules, etc.
• As you develop your data collection plan, consult with your dissertation chair, Subject Matter Expert, NU Academic Success Center, and the NU IRB for resources and guidance.
• Action research is not an experimental design, so you are not trying to accept or reject a hypothesis. There are no independent or dependent variables. It is not generalizable to a larger setting. The goal is to understand what is occurring in the educational setting so that a plan of action can be developed for improved practices.

Considerations for Action Research

Below are some things to consider when developing your applied dissertation proposal using Action Research (adapted from Johnson, 2019):

• Research Topic and Research Problem -- Decide the topic to be studied and then identify the problem by defining the issue in the learning environment. Use references from current peer-reviewed literature for support.
• Purpose of the Study —What need to be different or improved as a result of the study?
• Research Questions —The questions developed should focus on “how” or “what” and explore individuals’ experiences, beliefs, and perceptions.
• Theoretical Framework -- What are the existing theories (theoretical framework) or concepts (conceptual framework) that can be used to support the research. How does existing theory link to what is happening in the educational environment with regard to the topic? What theories have been used to support similar topics in previous research?
• Literature Review -- Examine the literature, focusing on peer-reviewed studies published in journal within the last five years, with the exception of seminal works. What about the topic has already been explored and examined? What were the findings, implications, and limitations of previous research? What is missing from the literature on the topic?  How will your proposed research address the gap in the literature?
• Data Collection —Who will be part of the sample for data collection? What data will be collected from the individuals in the study (e.g., semi-structured interviews, surveys, etc.)? What are the educational artifacts and documents that need to be collected (e.g., teacher less plans, student portfolios, student grades, etc.)? How will they be collected and during what timeframe? (Note--A list of sample data collection methods appears under the heading of “Sample Instrumentation.”)
• Data Analysis —Determine how the data will be analyzed. Some types of analyses that are frequently used for action research include thematic analysis and content analysis.
• Implications —What conclusions can be drawn based upon the findings? How do the findings relate to the existing literature and inform theory in the field of education?
• Recommendations for Practice--Create a Plan of Action— This is a critical step in action research. A plan of action is created based upon the data analysis, findings, and implications. In the Applied Dissertation, this Plan of Action is included with the Recommendations for Practice. The includes specific steps that individuals should take to change practices; recommendations for how those changes will occur (e.g., professional development, training, school improvement planning, committees to develop guidelines and policies, curriculum review committee, etc.); and methods to evaluate the plan’s effectiveness.
• Recommendations for Research —What should future research focus on? What type of studies need to be conducted to build upon or further explore your findings.
• Professional Presentation or Defense —This is where the findings will be presented in a professional presentation or defense as the culmination of your research.

Adapted from Johnson (2019).

Considerations for Sampling and Data Collection

Below are some tips for sampling, sample size, data collection, and instrumentation for Action Research:

Sampling and Sample Size

Action research uses non-probability sampling. This is most commonly means a purposive sampling method that includes specific inclusion and exclusion criteria. However, convenience sampling can also be used (e.g., a teacher’s classroom).

Critical Concepts in Data Collection

Triangulation- - Dosemagen and Schwalbach (2019) discussed the importance of triangulation in Action Research which enhances the trustworthiness by providing multiple sources of data to analyze and confirm evidence for findings.

Trustworthiness —Trustworthiness assures that research findings are fulfill four critical elements—credibility, dependability, transferability, and confirmability. Reflect on the following: Are there multiple sources of data? How have you ensured credibility, dependability, transferability, and confirmability? Have the assumptions, limitations, and delimitations of the study been identified and explained? Was the sample a representative sample for the study? Did any individuals leave the study before it ended? How have you controlled researcher biases and beliefs? Are you drawing conclusions that are not supported by data? Have all possible themes been considered? Have you identified other studies with similar results?

Sample Instrumentation

Below are some of the possible methods for collecting action research data:

• Pre- and Post-Surveys for students and/or staff
• Staff Perception Surveys and Questionnaires
• Semi-Structured Interviews
• Focus Groups
• Observations
• Document analysis
• Student work samples
• Classroom artifacts, such as teacher lesson plans, rubrics, checklists, etc.
• Attendance records
• Discipline data
• Journals from students and/or staff
• Portfolios from students and/or staff

A benefit of Action Research is its potential to influence educational practice. Many educators are, by nature of the profession, reflective, inquisitive, and action-oriented. The ultimate outcome of Action Research is to create a plan of action using the research findings to inform future educational practice. A Plan of Action is not meant to be a one-size fits all plan. Instead, it is mean to include specific data-driven and research-based recommendations that result from a detailed analysis of the data, the study findings, and implications of the Action Research study. An effective Plan of Action includes an evaluation component and opportunities for professional educator reflection that allows for authentic discussion aimed at continuous improvement.

When developing a Plan of Action, the following should be considered:

• How can this situation be approached differently in the future?
• What should change in terms of practice?
• What are the specific steps that individuals should take to change practices?
• What is needed to implement the changes being recommended (professional development, training, materials, resources, planning committees, school improvement planning, etc.)?
• How will the effectiveness of the implemented changes be evaluated?
• How will opportunities for professional educator reflection be built into the Action Plan?

Sample Action Research Studies

Anderson, A. J. (2020). A qualitative systematic review of youth participatory action research implementation in U.S. high schools. A merican Journal of Community Psychology, 65 (1/2), 242–257. https://onlinelibrary-wiley-com.proxy1.ncu.edu/doi/epdf/10.1002/ajcp.12389

Ayvaz, Ü., & Durmuş, S.(2021). Fostering mathematical creativity with problem posing activities: An action research with gifted students. Thinking Skills and Creativity, 40. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=edselp&AN=S1871187121000614&site=eds-live

Bellino, M. J. (2018). Closing information gaps in Kakuma Refugee Camp: A youth participatory action research study. American Journal of Community Psychology, 62 (3/4), 492–507. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ofs&AN=133626988&site=eds-live

Beneyto, M., Castillo, J., Collet-Sabé, J., & Tort, A. (2019). Can schools become an inclusive space shared by all families? Learnings and debates from an action research project in Catalonia. Educational Action Research, 27 (2), 210–226. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=135671904&site=eds-live

Bilican, K., Senler, B., & Karısan, D. (2021). Fostering teacher educators’ professional development through collaborative action research. International Journal of Progressive Education, 17 (2), 459–472. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=149828364&site=eds-live

Black, G. L. (2021). Implementing action research in a teacher preparation program: Opportunities and limitations. Canadian Journal of Action Research, 21 (2), 47–71. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=149682611&site=eds-live

Bozkuş, K., & Bayrak, C. (2019). The Application of the dynamic teacher professional development through experimental action research. International Electronic Journal of Elementary Education, 11 (4), 335–352. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=135580911&site=eds-live

Christ, T. W. (2018). Mixed methods action research in special education: An overview of a grant-funded model demonstration project. Research in the Schools, 25( 2), 77–88. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=135047248&site=eds-live

Jakhelln, R., & Pörn, M. (2019). Challenges in supporting and assessing bachelor’s theses based on action research in initial teacher education. Educational Action Research, 27 (5), 726–741. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=140234116&site=eds-live

Klima Ronen, I. (2020). Action research as a methodology for professional development in leading an educational process. Studies in Educational Evaluation, 64 . https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=edselp&AN=S0191491X19302159&site=eds-live

Messiou, K. (2019). Collaborative action research: facilitating inclusion in schools. Educational Action Research, 27 (2), 197–209. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=135671898&site=eds-live

Mitchell, D. E. (2018). Say it loud: An action research project examining the afrivisual and africology, Looking for alternative African American community college teaching strategies. Journal of Pan African Studies, 12 (4), 364–487. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ofs&AN=133155045&site=eds-live

Pentón Herrera, L. J. (2018). Action research as a tool for professional development in the K-12 ELT classroom. TESL Canada Journal, 35 (2), 128–139. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ofs&AN=135033158&site=eds-live

Rodriguez, R., Macias, R. L., Perez-Garcia, R., Landeros, G., & Martinez, A. (2018). Action research at the intersection of structural and family violence in an immigrant Latino community: a youth-led study. Journal of Family Violence, 33 (8), 587–596. https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=ccm&AN=132323375&site=eds-live

Vaughan, M., Boerum, C., & Whitehead, L. (2019). Action research in doctoral coursework: Perceptions of independent research experiences. International Journal for the Scholarship of Teaching and Learning, 13 . https://proxy1.ncu.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=edsdoj&AN=edsdoj.17aa0c2976c44a0991e69b2a7b4f321&site=eds-live

Sample Journals for Action Research

Educational Action Research

Canadian Journal of Action Research

Sample Resource Videos

Call-Cummings, M. (2017). Researching racism in schools using participatory action research [Video]. Sage Research Methods  http://proxy1.ncu.edu/login?URL=https://methods.sagepub.com/video/researching-racism-in-schools-using-participatory-action-research

Fine, M. (2016). Michelle Fine discusses community based participatory action research [Video]. Sage Knowledge. http://proxy1.ncu.edu/login?URL=https://sk-sagepub-com.proxy1.ncu.edu/video/michelle-fine-discusses-community-based-participatory-action-research

Getz, C., Yamamura, E., & Tillapaugh. (2017). Action Research in Education. [Video]. You Tube. https://www.youtube.com/watch?v=X2tso4klYu8

Bradbury, H. (Ed.). (2015). The handbook of action research (3rd edition). Sage.

Bradbury, H., Lewis, R. & Embury, D.C. (2019). Education action research: With and for the next generation. In C.A. Mertler (Ed.), The Wiley handbook of action research in education (1st edition). John Wiley and Sons. https://ebookcentral.proquest.com/lib/nu/reader.action?docID=5683581&ppg=205

Bourner, T., & Brook, C. (2019). Comparing and contrasting action research and action learning. In C.A. Mertler (Ed.), The Wiley handbook of action research in education (1st edition). John Wiley and Sons. https://ebookcentral.proquest.com/lib/nu/reader.action?docID=5683581&ppg=205

Bradbury, H. (2015). The Sage handbook of action research . Sage. https://www-doi-org.proxy1.ncu.edu/10.4135/9781473921290

Dosemagen, D.M. & Schwalback, E.M. (2019). Legitimacy of and value in action research. In C.A. Mertler (Ed.), The Wiley handbook of action research in education (1st edition). John Wiley and Sons. https://ebookcentral.proquest.com/lib/nu/reader.action?docID=5683581&ppg=205

Johnson, A. (2019). Action research for teacher professional development. In C.A. Mertler (Ed.), The Wiley handbook of action research in education (1st edition). John Wiley and Sons. https://ebookcentral.proquest.com/lib/nu/reader.action?docID=5683581&ppg=205

Lewin, K. (1946). Action research and minority problems. In G.W. Lewin (Ed.), Resolving social conflicts: Selected papers on group dynamics (compiled in 1948). Harper and Row.

Mertler, C. A. (Ed.). (2019). The Wiley handbook of action research in education. John Wiley and Sons. https://ebookcentral.proquest.com/lib/nu/detail.action?docID=5683581

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Action Research

What is action research.

Action research is a methodology that emphasizes collaboration between researchers and participants to identify problems, develop solutions and implement changes. Designers plan, act, observe and reflect, and aim to drive positive change in a specific context. Action research prioritizes practical solutions and improvement of practice, unlike knowledge generation, which is the priority of traditional methods.  

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Why is Action Research Important in UX Design?

Action research stands out as a unique approach in user experience design (UX design), among other types of research methodologies and fields. It has a hands-on, practical focus, so UX designers and researchers who engage in it devise and execute research that not only gathers data but also leads to actionable insights and solid real-world solutions. 

The concept of action research dates back to the 1940s, with its roots in the work of social psychologist Kurt Lewin. Lewin emphasized the importance of action in understanding and improving human systems. The approach rapidly gained popularity across various fields, including education, healthcare, social work and community development.  

Kurt Lewin, the Founder of social psychology.

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In UX design, the incorporation of action research appeared with the rise of human-centered design principles. As UX design started to focus more on users' needs and experiences, the participatory and problem-solving nature of action research became increasingly significant. Action research bridges the gap between theory and practice in UX design. It enables designers to move beyond hypothetical assumptions and base their design decisions on concrete, real-world data. This not only enhances the effectiveness of the design but also boosts its credibility and acceptance among users—vital bonuses for product designers and service designers. 

At its core, action research is a systematic, participatory and collaborative approach to research . It emphasizes direct engagement with specific issues or problems and aims to bring about positive change within a particular context. Traditional research methodologies tend to focus solely on the generation of theoretical knowledge. Meanwhile, action research aims to solve real-world problems and generate knowledge simultaneously .  

Action research helps designers and design teams gather first-hand insights so they can deeply understand their users' needs, preferences and behaviors. With it, they can devise solutions that genuinely address their users’ problems—and so design products or services that will resonate with their target audiences. As designers actively involve users in the research process, they can gather authentic insights and co-create solutions that are both effective and user-centric.  

Moreover, the iterative nature of action research aligns perfectly with the UX design process. It allows designers to continuously learn from users' feedback, adapt their designs accordingly, and test their effectiveness in real-world contexts. This iterative loop of planning, acting, observing and reflecting ensures that the final design solution is user-centric. However, it also ensures that actual user behavior and feedback validates the solution that a design team produces, which helps to make action research studies particularly rewarding for some brands. 

Designers can continuously learn from users’ feedback in action research and iterate accordingly.

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What is The Action Research Process?

Action research in UX design involves several stages. Each stage contributes to the ultimate goal: to create effective and user-centric design solutions. Here is a step-by-step breakdown of the process:  

1. Identify the Problem

This could be a particular pain point users are facing, a gap in the current UX design, or an opportunity for improvement.  

2. Plan the Action

Designers might need to devise new design features, modify existing ones or implement new user interaction strategies.  

3. Implement the Action

Designers put their planned actions into practice. They might prototype the new design, implement the new features or test the new user interaction strategies.  

4. Observe and Collect Data

As designers implement the action they’ve decided upon, it's crucial to observe its effects and collect data. This could mean that designers track user behaviors, collect user feedback, conduct usability tests or use other data collection methods.  

5. Reflect on the Results

From the collected data, designers reflect on the results, analyze the effectiveness of the action and draw insights. If the action has led to positive outcomes, they can further refine it and integrate it into the final design. If not, they can go back to plan new actions and repeat the process.  

An action research example could be where designers do the following: 

Identification : Designers observe a high abandonment rate during a checkout process for an e-commerce website. 

Planning : They analyze the checkout flow to identify potential friction points.  

Action : They isolate these points, streamline the checkout process, introduce guest checkout and optimize form fields.  

Observation : They monitor changes in abandonment rates and collect user feedback.  

Reflection : They assess the effectiveness of the changes as these reduce checkout abandonment.  

Outcome : The design team notices a significant decrease in checkout abandonment, which leads to higher conversion rates as more users successfully purchase goods.  

What Types of Action Research are there?

Action research splits into three main types: technical, collaborative and critical reflection.  

1. Technical Action Research

Technical action research focuses on improving the efficiency and effectiveness of a system or process. Designers often use it in organizational contexts to address specific issues or enhance operations. This could be where designers improve the usability of a website, optimize the load time of an application or enhance the accessibility of a digital product.  

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2. Collaborative Action Research

Collaborative action research emphasizes the active participation of stakeholders in the research process. It's about working together to identify issues, co-create solutions and implement changes. In the context of UX design, this could mean that designers collaborate with users to co-design a new feature, work with developers to optimize a process, or partner with business stakeholders to align the UX strategy with business goals.  

3. Critical Reflection Action Research

Critical reflection action research aims to challenge dominant power structures and social injustices within a particular context. It emphasizes the importance of where designers and design teams reflect on the underlying assumptions and values that drive research and decision-making processes. In UX design, this could be where designers question the design biases, challenge the stereotypes, and promote inclusivity and diversity in design decisions.  

What are the Benefits and Challenges of Action Research?

Like any UX research method or approach, action research comes with its own set of benefits and challenges.  

Benefits of Action Research

Real-world solutions.

Action research focuses on solving real-world problems. This quality makes it highly relevant and practical. It allows UX designers to create solutions that are not just theoretically sound but also valid in real-world contexts.  

User Involvement

Action research involves users in the research process, which lets designers gather first-hand insights into users' needs, preferences and behaviors. This not only enhances the accuracy and reliability of the research but also fosters user engagement and ownership long before user testing of high-fidelity prototypes.  

Continuous Learning

The iterative nature of action research promotes continuous learning and improvement. It enables designers to adapt their designs based on users' feedback and learn from their successes and failures. They can fine-tune better tools and deliverables, such as more accurate user personas, from their findings.

Author and Human-Computer Interaction Expert, Professor Alan Dix explains personas and why they are important: 

Challenges of Action Research

Time- and resource-intensive.

Action research involves multiple iterations of planning, acting, observing and reflecting, which can be time- and resource-intensive. 

Complexity of Real-world Contexts

It can be difficult to implement changes and observe their effects in real-world contexts. This is due to the complexity and unpredictability of real-world situations.  

Risk of Subjectivity

Since action research involves close collaboration with stakeholders, there's a risk of subjectivity and bias influencing the research outcomes. It's crucial for designers to maintain objectivity and integrity throughout the research process. 

Ethical Considerations

It can be a challenge to ensure all participants understand the nature of the research and agree to participate willingly. Also, it’s vital to safeguard the privacy of participants and sensitive data.  

Scope Creep

The iterative nature of action research might lead to expanding goals, and make the project unwieldy.  

Generalizability

The contextual focus of action research may limit the extent to which designers can generalize findings from field studies to other settings.  

Best Practices and Tips for Successful Action Research

1. define clear objectives.

To begin, designers should define clear objectives. They should ask the following: 

What is the problem to try to solve? 

What change is desirable as an outcome?  

To have clear objectives will guide their research process and help them stay focused.  

2. Involve Users

It’s vital to involve users in the research process. Designers should collaborate with them to identify issues, co-create solutions and implement changes in real time. This will not only enhance the relevance of the research but also foster user engagement and ownership.  

3. Use a Variety of Data Collection Methods

To conduct action research means to observe the effects of changes in real-world contexts. This requires a variety of data collection methods. Designers should use methods like surveys, user interviews, observations and usability tests to gather diverse and comprehensive data. 

UX Strategist and Consultant, William Hudson explains the value of usability testing in this video: 

4. Reflect and Learn

Action research is all about learning from action. Designers should reflect on the outcomes of their actions, analyze the effectiveness of their solutions and draw insights. They can use these insights to inform their future actions and continuously improve the design.  

5. Communicate and Share Findings

Lastly, designers should communicate and share their findings with all stakeholders. This not only fosters transparency and trust but also facilitates collective learning and improvement.  

What are Other Considerations to Bear in Mind with Action Research?

Quantitative data.

Action research involves both qualitative and quantitative data, but it's important to remember to place emphasis on qualitative data. While quantitative data can provide useful insights, designers who rely too heavily on it may find a less holistic view of the user experience. 

Professor Alan Dix explains the difference between quantitative and qualitative data in this video: 

User Needs and Preferences

Designers should focus action research on understanding user needs and preferences. If they ignore these in favor of more technical considerations, the resulting design solutions may not meet users' expectations or provide them with a satisfactory experience.  

User Feedback

It's important to seek user feedback at each stage of the action research process. Without this feedback, designers may not optimize design solutions for user needs. For example, they may find the information architecture confusing. Additionally, without user feedback, it can be difficult to identify any unexpected problems that may arise during the research process.  

Time Allocation

Action research requires time and effort to ensure successful outcomes. If designers or design teams don’t permit enough time for the research process, it can lead to rushed decisions and sloppy results. It's crucial to plan ahead and set aside enough time for each stage of the action research process—and ensure that stakeholders understand the time-consuming nature of research and digesting research findings, and don’t push for premature results. 

Contextual Factors

Contextual factors such as culture, environment and demographics play an important role in UX design. If designers ignore these factors, it can lead to ineffective design solutions that don't properly address users' needs and preferences or consider their context.  

Professor Alan Dix explains the need to consider users’ culture in design, in this video: 

Copyright holder: Tommi Vainikainen _ Appearance time: 2:56 - 3:03 Copyright license and terms: Public domain, via Wikimedia Commons

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Overall, in the ever-evolving field of UX design, this is one methodology that can serve as a powerful research tool for driving positive change and promoting continuous learning. Since to do action research means to actively involve users in the research process and research projects, and focus on real-world problem-solving, it allows designers to create more user-centered designs. These digital solutions and services will be more likely to resonate with the target users and deliver exceptional user experiences.  

Despite its challenges, the benefits of action research far outweigh the risks. Action research is therefore a valuable approach for UX designers who are keen on creating a wide range of impactful and sustainable design solutions. The biggest lesson with action research is to ensure that user needs and preferences are at the center of the research process. 

Learn More about Action Research  

Take our User Research: Methods and Best Practices course.  

Take our Master Class Radical Participatory Design: Insights From NASA’s Service Design Lead with Victor Udoewa, Service Design Lead, NASA SBIR/STTR Program. 

Read more in-depth information in 3 things design thinking can learn from action research by Amin Mojtahedi, PhD . 

Find additional insights in What Technical Communicators and UX Designers Can Learn From Participatory Action Research by Guiseppe . 

Discover more insights and tips in Action Research: Steps, Benefits, and Tips by Lauren Stewart .

Questions related to Action Research

Action research and design thinking are both methodologies to solve problems and implement changes, but they have different approaches and emphases. Here's how they differ:  

Objectives  

Action research aims to solve specific problems within a community or organization through a cycle of planning, action, observation and reflection. It focuses on iterative learning and solving real-world problems through direct intervention.  

Design thinking focuses on addressing complex problems by understanding the user's needs, re-framing the problem in human-centric ways, creating many ideas in brainstorming sessions, and adopting a hands-on approach in prototyping and testing. It emphasizes innovation and the creation of solutions that are desirable, feasible and viable.  

Process  

Action research involves a cyclic process that includes:  

- Identify a problem.  

- Plan an action.  

- Implement the action.  

- Observe and evaluate the outcomes.  

- Reflect on the findings and plan the next cycle. 

Design thinking follows a non-linear, iterative process that typically includes five phases:  

- Empathize: Understand the needs of those you're designing for.  

- Define: Clearly articulate the problem you want to solve.  

- Ideate: Brainstorm a range of creative solutions.  

- Prototype: Build a representation of one or more of your ideas.  

- Test: Return to your original user group and test your idea for feedback.  

User Involvement  

Action research actively involves participants in the research process. The participants are co-researchers and have a direct stake in the problem at hand.  

Design thinking prioritizes empathy with users and stakeholders to ensure that the solutions are truly user-centered. While users are involved, especially in the empathy and testing phases, they may not be as deeply engaged in the entire process as they are in action research.  

Outcome  

Action research typically aims for practical outcomes that directly improve practices or address issues within the specific context studied. Its success is measurable by the extent of problem resolution or improvement.  

Design thinking seeks to generate innovative solutions that may not only solve the identified problem but also provide a basis for new products, services or ways of thinking. The success is often measurable in terms of innovation, user satisfaction and feasibility of implementation.  

In summary, while both action research and design thinking are valuable in addressing problems, action research is more about participatory problem-solving within specific contexts, and design thinking is about innovative solution-finding with a strong emphasis on user needs. 

Take our Design Thinking: The Ultimate Guide course. 

To define the research question in an action research project, start by identifying a specific problem or area of interest in your practice or work setting. Reflect on this issue deeply to understand its nuances and implications. Then, narrow your focus to a question that is both actionable and researchable. This question should aim to explore ways to improve, change or understand the problem better. Ensure the question is clear, concise and aligned with the goals of your project. It must invite inquiry and suggest a path towards finding practical solutions or gaining deeper insights. 

For instance, if you notice a decline in user engagement with a product, your research question could be, "How can we modify the user interface of our product to enhance user engagement?" This question clearly targets an improvement, focuses on a specific aspect (the user interface) and implies actionable outcomes (modifications to enhance engagement). 

Take our Master Class Radical Participatory Design: Insights From NASA’s Service Design Lead with Victor Udoewa, Service Design Lead, NASA SBIR/STTR Program.  

Designers use several tools and methods in action research to explore problems and implement solutions. Surveys allow them to gather feedback from a broad audience quickly. Interviews offer deep insights through personal conversations, focusing on users' experiences and needs. Observations help designers understand how people interact with products or services in real environments. Prototyping enables the testing of ideas and concepts through tangible models, and allows for immediate feedback and iteration. Finally, case studies provide detailed analysis of specific instances and offer valuable lessons and insights. 

These tools and methods empower designers to collect data, analyze findings and make informed decisions. When designers employ a combination of these approaches, they ensure a comprehensive understanding of the issues at hand and develop effective solutions. 

CEO of Experience Dynamics, Frank Spillers explains the need to be clear about the problem that designers should address: 

To engage stakeholders in an action research project, first identify all individuals or groups with an interest in the project's outcome. These might include users, team members, clients or community representatives. Clearly communicate the goals, benefits and expected outcomes of the project to them. Use presentations, reports, or informal meetings to share your vision and how their involvement adds value. 

Involve stakeholders early and often by soliciting their feedback through surveys, interviews or workshops. This inclusion not only provides valuable insights but also fosters a sense of ownership and commitment to the project. Establish regular update meetings or newsletters to keep stakeholders informed about progress, challenges and successes. Finally, ensure there are clear channels for stakeholders to share their input and concerns throughout the project. 

This approach creates a collaborative environment where stakeholders feel valued and engaged, leading to more meaningful and impactful outcomes. 

To measure the impact of an action research project, start by defining clear, measurable objectives at the beginning. These objectives should align with the goals of your project and provide a baseline against which you can measure progress. Use quantitative metrics such as increased user engagement, sales growth or improved performance scores for a tangible assessment of impact. Incorporate qualitative data as well, such as user feedback and case studies, to understand the subjective experiences and insights gained through the project. 

Conduct surveys or interviews before and after the project to compare results and identify changes. Analyze this data to assess how well the project met its objectives and what effect it had on the target issue or audience. Document lessons learned and unexpected outcomes to provide a comprehensive view of the project's impact. This approach ensures a holistic evaluation, combining numerical data and personal insights to gauge the success and influence of your action research project effectively. 

Take our Master Class Design KPIs: From Insights to Impact with Vitaly Friedman, Senior UX consultant, European Parliament, and Creative Lead, Smashing Magazine. 

When unexpected results or obstacles emerge during action research, first, take a step back and assess the situation. Identify the nature of the unexpected outcome or obstacle and analyze its potential impact on your project. This step is crucial for understanding the issue at hand. 

Next, communicate with your team and stakeholders about the situation. Open communication ensures everyone understands the issue and can contribute to finding a solution. 

Then, consider adjusting your research plan or design strategy to accommodate the new findings or to overcome the obstacles. This might involve revisiting your research questions, methods or even the design problem you are addressing. 

Always document these changes and the reasons behind them. This documentation will be valuable for understanding the project's evolution and for future reference. 

Finally, view these challenges as learning opportunities. Unexpected results can lead to new insights and innovations that strengthen your project in the long run. 

By remaining flexible, communicating effectively, and being willing to adjust your approach, you can navigate the uncertainties of action research and continue making progress towards your goals. 

Professor Alan Dix explains externalization, a creative process that can help designers to adapt to unexpected roadblocks and find a good way forward: 

Action research can significantly contribute to inclusive and accessible design by directly involving users with diverse needs in the research and design process. When designers engage individuals from various backgrounds, abilities and experiences, they can gain a deeper understanding of the wide range of user requirements and preferences. This approach ensures that the products or services they develop cater to a broader audience, including those with disabilities. 

Furthermore, action research allows for iterative testing and feedback loops with users. This quality enables designers to identify and address accessibility challenges early in the design process. The continuous engagement helps in refining designs to be more user-friendly and inclusive. 

Additionally, action research fosters a culture of empathy and understanding within design teams, as it emphasizes the importance of seeing the world from the users' perspectives. This empathetic approach leads to more thoughtful and inclusive design decisions, ultimately resulting in products and services that are accessible to everyone. 

By prioritizing inclusivity and accessibility through action research, designers can create more equitable and accessible solutions that enhance the user experience for all. 

Take our Master Class How to Design for Neurodiversity: Inclusive Content and UX with Katrin Suetterlin, UX Content Strategist, Architect and Consultant. 

To ensure the reliability and validity of data in action research, follow these steps: 

Define clear research questions: Start with specific, clear research questions to guide your data collection. This clarity helps in gathering relevant and focused data. 

Use multiple data sources: Collect data from various sources to cross-verify information. This triangulation strengthens the reliability of your findings. 

Apply consistent methods: Use consistent data collection methods throughout your research. If conducting surveys or interviews, keep questions consistent across participants to ensure comparability. 

Engage in peer review: Have peers or experts review your research design and data analysis. Feedback can help identify biases or errors, and enhance the validity of your findings. 

Document the process: Keep detailed records of your research process, including how you collected and analyzed data. Documentation allows others to understand and validate your research methodology. 

Test and refine instruments: If you’re using surveys or assessment tools, test them for reliability and validity before using them extensively. Pilot testing helps refine these instruments, and ensures they accurately measure what they intend to. 

When you adhere to these principles, you can enhance the reliability and validity of your action research data, leading to more trustworthy and impactful outcomes. 

Take our Data-Driven Design: Quantitative Research for UX course.  

To analyze data collected during an action research project, follow these steps: 

Organize the data: Begin by organizing your data, categorizing information based on types, sources or research questions. This organization makes the data manageable and prepares you for in-depth analysis. 

Identify patterns and themes: Look for patterns, trends and themes within your data. This might mean to code qualitative data or use statistical tools for quantitative data to uncover recurring elements or significant findings. 

Compare findings to objectives: Match your findings against the research objectives. Assess how the data answers your research questions or addresses the issues you set out to explore. 

Use software tools: Consider using data analysis software, especially for complex or large data sets. Tools like NVivo for qualitative data or SPSS for quantitative data can simplify analysis and help in identifying insights. 

Draw conclusions: Based on your analysis, draw conclusions about what the data reveals. Look for insights that answer your research questions or offer solutions to the problem you are investigating. 

Reflect and act: Reflect on the implications of your findings. Consider how they impact your understanding of the research problem and what actions they suggest for improvement or further investigation. 

This approach to data analysis ensures a thorough understanding of the collected data, allowing you to draw meaningful conclusions and make informed decisions based on your action research project. 

Professor Ann Blandford, Professor of Human-Computer Interaction, UCL explains valuable aspects of data collection in this video: 

Baskerville, R. L., & Wood-Harper, A. T. (1996). A critical perspective on action research as a method for information systems research . Journal of Information Technology, 11(3), 235-246.   

This influential paper examines the philosophical underpinnings of action research and its application in information systems research, which is closely related to UX design. It highlights the strengths of action research in addressing complex, real-world problems, as well as the challenges in maintaining rigor and achieving generalizability. The paper helped establish action research as a valuable methodology in the information systems and UX design fields.  

Di Mascio, T., & Tarantino, L. (2015). New Design Techniques for New Users: An Action Research-Based Approach . In Proceedings of the 17th International Conference on Human-Computer Interaction with Mobile Devices and Services Adjunct (pp. 83-96). ACM. 

This paper describes an action research project that aimed to develop a novel data gathering technique for understanding the context of use of a technology-enhanced learning system for children. The authors argue that traditional laboratory experiments struggle to maintain relevance to the real world, and that action research, with its focus on solving practical problems, is better suited to addressing the needs of new ICT products and their users. The paper provides insights into the action research process and reflects on its value in defining new methods for solving complex, real-world problems. The work is influential in demonstrating the applicability of action research in the field of user experience design, particularly for designing for new and underserved user groups. 

Villari, B. (2014). Action research approach in design research . In Proceedings of the 5th STS Italia Conference A Matter of Design: Making Society through Science and Technology (pp. 306-316). STS Italia Publishing.  

This paper explores the application of action research in the field of design research. The author argues that design is a complex practice that requires interdisciplinary skills and the ability to engage with diverse communities. Action research is presented as a research strategy that can effectively merge theory and practice, linking the reflective dimension to practical activities. The key features of action research highlighted in the paper are its context-dependent nature, the close relationship between researchers and the communities involved, and the iterative process of examining one's own practice and using research insights to inform future actions. The paper is influential in demonstrating the value of action research in addressing the challenges of design research, particularly in terms of bridging the gap between theory and practice and fostering collaborative, user-centered approaches to design.  

Brandt, E. (2004). Action research in user-centred product development . AI & Society, 18(2), 113-133.  

This paper reports on the use of action research to introduce new user-centered work practices in two commercial product development projects. The author argues that the growing complexity of products and the increasing importance of quality, usability, and customization demand new collaborative approaches that involve customers and users directly in the development process. The paper highlights the value of using action research to support these new ways of working, particularly in terms of creating and reifying design insights in representations that can foster collaboration and continuity throughout the project. The work is influential in demonstrating the applicability of action research in the context of user-centered product development, where the need to bridge theory and practice and engage diverse stakeholders is paramount. The paper provides valuable insights into the practical challenges and benefits of adopting action research in this domain. 

1. Reason, P., & Bradbury, H. (Eds.). (2001). Handbook of action research: Participative inquiry and practice . SAGE Publications.  

This comprehensive handbook is considered a seminal work in the field of action research. It provides a thorough overview of the history, philosophical foundations, and diverse approaches to action research. The book features contributions from leading scholars and practitioners, covering topics such as participatory inquiry, critical action research, and the role of action research in organizational change and community development. It has been highly influential in establishing action research as a rigorous and impactful research methodology across various disciplines. 

 2. Stringer, E. T. (2013). Action Research (4th ed.) . SAGE Publications.  

This book by Ernest T. Stringer is a widely recognized and accessible guide to conducting action research. It provides clear, step-by-step instructions on the action research process, including gathering information, interpreting and explaining findings, and taking action to address practical problems. The book is particularly valuable for novice researchers and practitioners in fields such as education, social work, and community development, where action research is commonly applied. Its practical approach and real-life examples have made it a go-to resource for those seeking to engage in collaborative, solution-oriented research. 

3. McNiff, J. (2017). Action Research: All You Need to Know (1st ed.) . SAGE Publications.   

This book by Jean McNiff provides a comprehensive guide to conducting action research projects. It covers the key steps of the action research process, including identifying a problem, developing an action plan, implementing changes, and reflecting on the outcomes. The book is influential in the field of action research as it offers practical advice and strategies for practitioners across various disciplines, such as education, healthcare, and organizational development. It emphasizes the importance of critical reflection, collaboration, and the integration of theory and practice, making it a valuable resource for those seeking to engage in rigorous, transformative research. 

Answer a Short Quiz to Earn a Gift

What is a primary characteristic of action research in UX design?

• It drives practical changes through iterative cycles.
• It focuses solely on theoretical knowledge.
• It relies on external consultants to dictate changes.

Which type of action research improves system efficiency and effectiveness?

• Collaborative Action Research
• Critical Reflection Action Research
• Technical Action Research

What role do stakeholders play in collaborative action research?

• They participate actively in co-creating solutions.
• They provide financial support only.
• They review and approve final designs.

How do users in action research benefit the design process?

• They help make sure designs meet actual user needs and preferences.
• They help speed up the design process significantly.
• They limit the scope of design innovations.

What is the purpose of the reflection stage in the action research process?

• To document the research process for publication only
• To evaluate the effectiveness of actions and plan further improvements
• To finalize the product design without further changes

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Literature on Action Research

Here’s the entire UX literature on Action Research by the Interaction Design Foundation, collated in one place:

Learn more about Action Research

Take a deep dive into Action Research with our course User Research – Methods and Best Practices .

How do you plan to design a product or service that your users will love , if you don't know what they want in the first place? As a user experience designer, you shouldn't leave it to chance to design something outstanding; you should make the effort to understand your users and build on that knowledge from the outset. User research is the way to do this, and it can therefore be thought of as the largest part of user experience design .

In fact, user research is often the first step of a UX design process—after all, you cannot begin to design a product or service without first understanding what your users want! As you gain the skills required, and learn about the best practices in user research, you’ll get first-hand knowledge of your users and be able to design the optimal product—one that’s truly relevant for your users and, subsequently, outperforms your competitors’ .

This course will give you insights into the most essential qualitative research methods around and will teach you how to put them into practice in your design work. You’ll also have the opportunity to embark on three practical projects where you can apply what you’ve learned to carry out user research in the real world . You’ll learn details about how to plan user research projects and fit them into your own work processes in a way that maximizes the impact your research can have on your designs. On top of that, you’ll gain practice with different methods that will help you analyze the results of your research and communicate your findings to your clients and stakeholders—workshops, user journeys and personas, just to name a few!

By the end of the course, you’ll have not only a Course Certificate but also three case studies to add to your portfolio. And remember, a portfolio with engaging case studies is invaluable if you are looking to break into a career in UX design or user research!

We believe you should learn from the best, so we’ve gathered a team of experts to help teach this course alongside our own course instructors. That means you’ll meet a new instructor in each of the lessons on research methods who is an expert in their field—we hope you enjoy what they have in store for you!

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• Published: 27 April 2023

Participatory action research

• Flora Cornish   ORCID: orcid.org/0000-0002-3404-9385 1 ,
• Nancy Breton   ORCID: orcid.org/0000-0002-8388-0458 1 ,
• Ulises Moreno-Tabarez   ORCID: orcid.org/0000-0002-3504-8624 2 ,
• Jenna Delgado 3 ,
• Mohi Rua 4 ,
• Ama de-Graft Aikins 5 &
• Darrin Hodgetts 6  

Nature Reviews Methods Primers volume  3 , Article number:  34 ( 2023 ) Cite this article

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Participatory action research (PAR) is an approach to research that prioritizes the value of experiential knowledge for tackling problems caused by unequal and harmful social systems, and for envisioning and implementing alternatives. PAR involves the participation and leadership of those people experiencing issues, who take action to produce emancipatory social change, through conducting systematic research to generate new knowledge. This Primer sets out key considerations for the design of a PAR project. The core of the Primer introduces six building blocks for PAR project design: building relationships; establishing working practices; establishing a common understanding of the issue; observing, gathering and generating materials; collaborative analysis; and planning and taking action. We discuss key challenges faced by PAR projects, namely, mismatches with institutional research infrastructure; risks of co-option; power inequalities; and the decentralizing of control. To counter such challenges, PAR researchers may build PAR-friendly networks of people and infrastructures; cultivate a critical community to hold them to account; use critical reflexivity; redistribute powers; and learn to trust the process. PAR’s societal contribution and methodological development, we argue, can best be advanced by engaging with contemporary social movements that demand the redressingl of inequities and the recognition of situated expertise.

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Introduction.

For the authors of this Primer, participatory action research (PAR) is a scholar–activist research approach that brings together community members, activists and scholars to co-create knowledge and social change in tandem 1 , 2 . PAR is a collaborative, iterative, often open-ended and unpredictable endeavour, which prioritizes the expertise of those experiencing a social issue and uses systematic research methodologies to generate new insights. Relationships are central. PAR typically involves collaboration between a  community with lived experience of a social issue and professional researchers, often based in universities, who contribute relevant knowledge, skills, resources and networks. PAR is not a research process driven by the imperative to generate knowledge for scientific progress, or knowledge for knowledge’s sake; it is a process for generating knowledge-for-action and knowledge-through-action, in service of goals of specific communities. The position of a PAR scholar is not easy and is constantly tested, as PAR projects and roles straddle university and community boundaries, involving unequal  power relations and multiple, sometimes conflicting interests. This Primer aims to support researchers in preparing a PAR project, by providing a scaffold to navigate the processes through which PAR can help us to collaboratively envisage and enact emancipatory futures.

We consider PAR an emancipatory form of scholarship 1 . Emancipatory scholarship is driven by interest in tackling injustices and building futures supportive of human thriving, rather than objectivity and neutrality. It uses research not primarily to communicate with academic experts but to inform grassroots collective action. Many users of PAR aspire to projects of liberation and/or transformation . Users are likely to be critical of research that perpetuates oppressive power relations, whether within the research relationships themselves or in a project’s messages or outcomes, often aiming to trouble or transform power relations. PAR projects are usually concerned with developments not only in knowledge but also in action and in participants’ capacities, capabilities and performances.

PAR does not follow a set research design or particular methodology, but constitutes a strategic rallying point for collaborative, impactful, contextually situated and inclusive efforts to document, interpret and address complex systemic problems 3 . The development of PAR is a product of intellectual and activist work bridging universities and communities, with separate genealogies in several Indigenous 4 , 5 , Latin American 6 , 7 , Indian 8 , African 9 , Black feminist 10 , 11 and Euro-American 12 , 13 traditions.

PAR, as an authoritative form of enquiry, became established during the 1970s and 1980s in the context of anti-colonial movements in the Global South. As anti-colonial movements worked to overthrow territorial and economic domination, they also strived to overthrow symbolic and epistemic injustices , ousting the authority of Western science to author knowledge about dominated peoples 4 , 14 . For Indigenous scholars, the development of PAR approaches often comprised an extension of Indigenous traditions of knowledge production that value inclusion and community engagement, while enabling explicit engagements with matters of power, domination and representation 15 . At the same time, exchanges between Latin American and Indian popular education movements produced Orlando Fals Borda’s articulation of PAR as a paradigm in the 1980s. This orientation prioritized people’s participation in producing knowledge, instead of the positioning of local populations as the subject of knowledge production practices imposed by outside experts 16 . Meanwhile, PAR appealed to those inspired by Black and postcolonial feminists who challenged established knowledge hierarchies, arguing for the wisdom of people marginalized by centres of power, who, in the process of survivance, that is, surviving and resisting oppressive social structures, came to know and deconstruct those structures acutely 17 , 18 .

Some Euro-American approaches to PAR are less transformational and more reformist, in the action research paradigm, as developed by Kurt Lewin 19 to enhance organizational efficacy during and after World War II. Action research later gained currency as a popular approach for professionals such as teachers and nurses to develop their own practices, and it tended to focus on relatively small-scale adjustments within a given institutional structure, instead of challenging power relations as in anti-colonial PAR 13 , 20 . In the late twentieth century, participatory research gained currency in academic fields such as participatory development 21 , 22 , participatory health promotion 23 and creative methods 24 . Although participatory research includes participants in the conceptualization, design and conduct of a project, it may not prioritize action and social change to the extent that PAR does. In the early twenty-first century, the development of PAR is occurring through sustained scholarly engagements in anti-colonial 5 , 25 , abolitionist 26 , anti-racist 27 , 28 , gender-expansive 29 , climate activist 30 and other radical social movements.

This Primer bridges these traditions by looking across them for mutual learning but avoiding assimilating them. We hope that readers will bring their own activist and intellectual heritages to inform their use of PAR and adapt and adjust the suggestions we present to meet their needs.

Four key principles

Drawing across its diverse origins, we characterize PAR by four key principles. The first is the authority of direct experience. PAR values the expertise generated through experience, claiming that those who have been marginalized or harmed by current social relations have deep experiential knowledge of those systems and deserve to own and lead initiatives to change them 3 , 5 , 17 , 18 . The second is knowledge in action. Following the tradition of action research, it is through learning from the experience of making changes that PAR generates new knowledge 13 . The third key principle is research as a transformative process. For PAR, the research process is as important as the outcomes; projects aim to create empowering relationships and environments within the research process itself 31 . The final key principle is collaboration through dialogue. PAR’s power comes from harnessing the diverse sets of expertise and capacities of its collaborators through critical dialogues 7 , 8 , 32 .

Because PAR is often unfamiliar, misconstrued or mistrusted by dominant scientific 33 institutions, PAR practitioners may find themselves drawn into competitions and debates set on others’ terms, or into projects interested in securing communities’ participation but not their emancipation. Engaging communities and participants in participatory exercises for the primary purpose of advancing research aims prioritized by a university or others is not, we contend, PAR. We encourage PAR teams to articulate their intellectual and political heritage and aspirations, and agree their core principles, to which they can hold themselves accountable. Such agreements can serve as anchors for decision-making or counterweights to the pull towards inegalitarian or extractive research practices.

Aims of the Primer

The contents of the Primer are shaped by the authors’ commitment to emancipatory, engaged scholarship, and their own experience of PAR, stemming from their scholar-activism with marginalized communities to tackle issues including state neglect, impoverishment, infectious and non-communicable disease epidemics, homelessness, sexual violence, eviction, pollution, dispossession and post-disaster recovery. Collectively, our understanding of PAR is rooted in Indigenous, Black feminist and emancipatory education traditions and diverse personal experiences of privilege and marginalization across dimensions of race, class, gender, sexuality and disability. We use an inclusive understanding of PAR, to include engaging, emancipatory work that does not necessarily use the term PAR, and we aim to showcase some of the diversity of scholar-activism around the globe. The contents of this Primer are suggestions and reflections based on our own experience of PAR and of teaching research methodology. There are multiple ways of conceptualizing and conducting a PAR project. As context-sensitive social change processes, every project will pose new challenges.

This Primer is addressed primarily to university-based PAR researchers, who are likely to work in collaboration with members of communities or organizations or with activists, and are accountable to academic audiences as well as to community audiences. Much expertise in PAR originates outside universities, in community groups and organizations, from whom scholars have much to learn. The Primer aims to familiarize scholars new to PAR and others who may benefit with PAR’s key principles, decision points, practices, challenges, dilemmas, optimizations, limitations and work-arounds. Readers will be able to use our framework of ‘building blocks’ as a guide to designing their projects. We aim to support critical thinking about the challenges of PAR to enable readers to problem-solve independently. The Primer aims to inspire with examples, which we intersperse throughout. To illustrate some of the variety of positive achievements of PAR projects, Box  1 presents three examples.

Box 1 What does participatory action research do?

The Tsui Anaa Project 60 in Accra, Ghana, began as a series of interviews about diabetes experiences in one of Accra’s oldest indigenous communities, Ga Mashie. Over a 12-year period, a team of interdisciplinary researchers expanded the project to a multi-method engagement with a wide range of community members. University and community co-researchers worked to diagnose the burden of chronic conditions, to develop psychosocial interventions for cardiovascular and associated conditions and to critically reflect on long-term goals. A health support group of people living with diabetes and cardiovascular conditions, called Jamestown Health Club (JTHC), was formed, met monthly and contributed as patient advocates to community, city and national non-communicable disease policy. The project has supported graduate collaborators with mixed methods training, community engagement and postgraduate theses advancing the core project purposes.

Buckles, Khedkar and Ghevde 39 were approached by members of the Katkari tribal community in Maharashtra, India, who were concerned about landlords erecting fences around their villages. Using their institutional networks, the academics investigated the villagers’ legal rights to secure tenure and facilitated a series of participatory investigations, through which Katkari villagers developed their own understanding of the inequalities they faced and analysed potential action strategies. Subsequently, through legal challenges, engagement with local politics and emboldened local communities, more than 100 Katkari communities were more secure and better organized 5 years later.

The Morris Justice Project 74 in New York, USA, sought to address stop-and-frisk policing in a neighbourhood local to the City University of New York, where a predominantly Black population was subject to disproportionate and aggressive policing. Local residents surveyed their neighbours to gather evidence on experiences of stop and frisk, compiling their statistics and experiences and sharing them with the local community on the sidewalk, projecting their findings onto public buildings and joining a coalition ‘Communities United for Police Reform’, which successfully campaigned for changes to the city’s policing laws.

Experimentation

This section sets out the core considerations for designing a PAR project.

Owing to the intricacies of working within complex human systems in real time, PAR practitioners do not follow a highly proceduralized or linear set of steps 34 . In a cyclical process, teams work together to come to an initial definition of their social problem, design a suitable action, observe and gather information on the results, and then analyse and reflect on the action and its impact, in order to learn, modify their understanding and inform the next iteration of the research–action cycle 3 , 35 (Fig.  1 ). Teams remain open throughout the cycle to repeating or revising earlier steps in response to developments in the field. The fundamental process of building relationships occurs throughout the cycles. These spiral diagrams orient readers towards the central interdependence of processes of participation, action and research and the nonlinear, iterative process of learning by doing 3 , 36 .

Participatory action research develops through a series of cycles, with relationship building as a constant practice. Cycles of research text adapted from ref. 81 , and figure adapted with permission from ref. 82 , SAGE.

Building blocks for PAR research design

We present six building blocks to set out the key design considerations for conducting a PAR project. Each PAR team may address these building blocks in different ways and with different priorities. Table  1 proposes potential questions and indicative goals that are possible markers of progress for each building block. They are not prescriptive or exhaustive but may be a useful starting point, with examples, to prompt new PAR teams’ planning.

Building relationships

‘Relationships first, research second’ is our key principle for PAR project design 37 . Collaborative relationships usually extend beyond a particular PAR project, and it is rare that one PAR project finalizes a desired change. A researcher parachuting in and out may be able to complete a research article, with community cooperation, but will not be able to see through the hard graft of a programme of participatory research towards social change. Hence, individual PAR projects are often nested in long-term collaborations. Such collaborations are strengthened by institutional backing in the form of sustainable staff appointments, formal recognition of the value of university–community partnerships and provision of administrative support. In such a supportive context, opportunities can be created for achievable shorter-term projects to which collaborators or temporary researchers may contribute. The first step of PAR is sometimes described as the entry, but we term this foundational step building relationships to emphasize the longer-term nature of these relationships and their constitutive role throughout a project. PAR scholars may need to work hard with and against their institutions to protect those relationships, monitoring potential collaborations for community benefit rather than knowledge and resource extraction. Trustworthy relationships depend upon scholars being aware, open and honest about their own interests and perspectives.

The motivation for a PAR project may come from university-based or community-based researchers. When university researchers already have a relationship with marginalized communities, they may be approached by community leaders initiating a collaboration 38 , 39 . Alternatively, a university-based researcher may reach out to representatives of communities facing evident problems, to explore common interests and the potential for collaboration 40 . As Indigenous scholars have articulated, communities that have been treated as the subjects or passive objects of research, commodified for the scientific knowledge of distant elites, are suspicious of research and researchers 4 , 41 . Scholars need to be able to satisfy communities’ key questions: Who are you? Why should we trust you? What is in it for our community? Qualifications, scholarly achievements or verbal reassurances are less relevant in this context than past or present valued contributions, participation in a heritage of transformational action or evidence of solidarity with a community’s causes. Being vouched for by a respected community member or collaborator can be invaluable.

Without prior relationships one can start cold, as a stranger, perhaps attending public events, informal meeting places or identifying organizations in which the topic is of interest, and introducing oneself. Strong collaborative relationships are based on mutual trust, which must be earned. It is important to be transparent about our interests and to resist the temptation to over-promise. Good PAR practitioners do not raise unrealistic expectations. Box  2 presents key soft skills for PAR researchers.

Positionality is crucial to PAR relationships. A university-based researcher’s positionalities (including, for example, their gender, race, ethnicity, class, politics, skills, age, life stage, life experiences, assumptions about the problem, experience in research, activism and relationship to the topic) interact with the positionalities of community co-researchers, shaping the collective definition of the problem and appropriate solutions. Positionalities are not fixed, but can be changing, multiple and even contradictory 42 . We have framed categories of university-based and community-based researchers here, but in practice these positionings of ‘insiders’ and ‘outsiders’ are often more complex and shifting 43 . Consideration of diversity is important when building a team to avoid  tokenism . For example, identifying which perspectives are included initially and why, and whether members of the team or gatekeepers have privileged access owing to their race, ethnicity, class, gender and/or able-bodiedness.

The centring of community expertise in PAR does not mean that a community is ‘taken for granted’. Communities are sites of the production of similarity and difference, equality and inequalities, and politics. Knowledge that has the status of common sense may itself reproduce inequalities or perpetuate harm. Relatedly, strong PAR projects cultivate  reflexivity 44 among both university-based and community-based researchers, to enable a critical engagement with the diversity of points of view, positions of power and stakes in a project. Developing reflexivity may be uncomfortable and challenging, and good PAR projects create a supportive culture for processing such discomfort. Supplementary files  1 and   2 present example exercises that build critical reflexivity.

Box 2 Soft skills of a participatory action researcher

Respect for others’ knowledge and the expertise of experience

Humility and genuine kindness

Ability to be comfortable with discomfort

Sharing power; ceding control

Trusting the process

Acceptance of uncertainty and tensions

Openness to learning from collaborators

Self-awareness and the ability to listen and be confronted

Willingness to take responsibility and to be held accountable

Confidence to identify and challenge power relations

Establishing working practices

Partnerships bring together people with different sets of norms, assumptions, interests, resources, time frames and working practices, all nested in institutional structures and infrastructures that cement those assumptions. University-based researchers often take their own working practices for granted, but partnership working calls for negotiation. Academics often work with very extended time frames for analysis, writing and review before publication, hoping to contribute to gradually shifting agendas, discourses and politics 45 . The urgency of problems that face a community often calls for faster responsiveness. Research and management practices that are normal in a university may not be accessible to people historically marginalized through dimensions that include disability, language, racialization, gender, literacy practices and their intersections 46 . Disrupting historically entrenched power dynamics associated with these concerns can raise discomfort and calls for skilful negotiation. In short, partnership working is a complex art, calling for thoughtful design of joint working practices and a willingness to invest the necessary time.

Making working practices and areas of tension explicit is one useful starting point. Not all issues need to be fully set out and decided at the outset of a project. A foundation of trust, through building relationships in building block 1, allows work to move ahead without every element being pinned down in advance. Supplementary file  1 presents an exercise designed to build working relationships and communicative practices.

Establishing a common understanding of the issue

Co-researchers identify a common issue or problem to address. University-based researchers tend to justify the selection of the research topic with reference to a literature review, whereas in PAR, the topic must be a priority for the community. Problem definition is a key step for PAR teams, where problem does not necessarily mean something negative or a deficit, but refers to the identification of an important issue at stake for a community. The definition of a problem, however, is not always self-evident, and producing a problem definition can be a valid outcome of PAR. In the example of risks of eviction from Buckles, Khedkar and Ghevde 39 (Box  1 ), a small number of Katkari people first experienced the problem in terms of landlords erecting barbed wire fences. Other villages did not perceive the risk of eviction as a big problem compared with their other needs. Facilitating dialogues across villages about their felt problems revealed how land tenure was at the root of several issues, thus mobilizing interest. Problem definitions are political; they imply some forms of action and not others. Discussion and reflexivity about the problem definition are crucial. Compared with other methodologies, the PAR research process is much more public from the outset, and so practices of making key steps explicit, shareable, communicable and negotiable are essential. Supplementary file  3 introduces two participatory tools for collective problem definition.

Consideration of who should be involved in problem definition is important. It may be enough that a small project team works closely together at this stage. Alternatively, group or public meetings may be held, with careful facilitation 5 . Out of dialogue, a PAR team aims to agree on an actionable problem definition, responding to the team’s combination of skills, capacities and priorities. A PAR scholar works across the university–community boundary and thus is accountable to both university values and grassroots communities’ values. PAR scholars should not deny or hide the multiple demands of the role because communities with experience of marginalization are attuned to being manipulated. Surfacing interests and constraints and discussing these reflexively is often a better strategy. Creativity may be required to design projects that meet both academic goals (such as when a project is funded to produce certain outcomes) and the community’s goals.

For example, in the context of a PAR project with residents of a public housing neighbourhood scheduled for demolition and redevelopment, Thurber and colleagues 47 describe how they overcame differences between resident and academic researchers regarding the purposes of their initial survey. The academic team members preferred the data to be anonymous, to maximize the scientific legitimacy of their project (considered valuable for their credibility to policymakers), whereas the resident team wanted to use the opportunity to recruit residents to their cause, by collecting contact details. The team discussed their different objectives and produced the solution of two-person survey teams, one person gathering anonymous data for the research and a second person gathering contact details for the campaign’s contact list.

Articulating research questions is an early milestone. PAR questions prioritize community concerns, so they may differ from academic-driven research questions. For example, Buckles, Khedkar and Ghevde 39 facilitated a participatory process that developed questions along the lines of: What are the impacts of not having a land title for Katkari people? How will stakeholders respond to Katkari organizing, and what steps can Katkari communities take towards the goal of securing tenure? In another case, incarcerated women in New York state, USA, invited university academics to evaluate a local college in prison in the interest of building an empirical argument for the value of educational opportunities in prisons 38 , 48 Like other evaluations, it asked: “What is the impact of college on women in prison?” But instead of looking narrowly at the impact on re-offending as the relevant impact (as prioritized by politicians and policymakers), based on the incarcerated women’s advice, the evaluation tracked other outcomes: women’s well-being within the prison; their relationships with each other and the staff; their children; their sense of achievement; and their agency in their lives after incarceration.

As a PAR project develops, the problem definition and research questions are often refined through the iterative cycles. This evolution does not undermine the value of writing problem definitions and research questions in the early stages, as a collaboration benefits from having a common reference point to build from and from which to negotiate.

Observing, gathering and generating materials

With a common understanding of the problem, PAR teams design ways of observing the details and workings of this problem. PAR is not prescriptive about the methods used to gather or generate observations. Projects often use qualitative methods, such as storytelling, interviewing or ethnography, or participatory methods, such as body mapping, problem trees, guided walks, timelines, diaries, participatory photography and video or participatory theatre. Gathering quantitative data is an option, particularly in the tradition of participatory statistics 49 . Chilisa 5 distinguishes sources of spatial data, time-related data, social data and technical data. The selected methods should be engaging to the community and the co-researchers, suited to answering the research questions and supported by available professional skills. Means of recording the process or products, and of storing those records, need to be agreed, as well as ethical principles. Developing community members’ research skills for data collection and analysis can be a valued contribution to a PAR project, potentially generating longer-term capacities for local research and change-making 50 .

Our selection of data generation methods and their details depends upon the questions we ask. In some cases, methods to explore problem definitions and then to brainstorm potential actions, their risks and benefits will be useful (Supplementary file  3 ). Others may be less prescriptive about problems and solutions, seeking to explore experience in an open-ended way, as a basis for generating new understandings (see Supplementary file  2 for an example reflective participatory exercise).

Less-experienced practitioners may take a naive approach to PAR, which assumes that knowledge should emerge solely from an authentic community devoid of outside ideas. More established PAR researchers, however, work consciously to combine and exchange skills and knowledge through dialogue. Together with communities, we want to produce effective products, and we recognize that doing so may require specific skills. In Marzi’s 51 participatory video project with migrant women in Colombia, she engaged professional film-makers to provide the women with training in filming, editing and professional film production vocabulary. The women were given the role of directors, with the decision-making power over what to include and exclude in their film. In a Photovoice project with Black and Indigenous youth in Toronto, Canada, Tuck and Habtom 25 drew on their prior scholar–activist experience and their critical analysis of scholarship of marginalization, which often uses tropes of victimhood, passivity and sadness. Instead of repeating narratives of damage, they intended to encourage desire-based narratives. They supported their young participants to critically consider which photographs they wanted to include or exclude from public representations. Training participants to be expert users of research techniques does not devalue their existing expertise and skills, but takes seriously their role in co-producing valid, critical knowledge. University-based researchers equally benefit from training in facilitation methods, team development and the history and context of the community.

Data generation is relational, mediated by the positionalities of the researchers involved. As such, researchers position themselves across boundaries, and need to have, or to develop, skills in interpreting across boundaries. In the Tsui Anaa Project (Box  1 ) in Ghana, the project recruited Ga-speaking graduate students as researchers; Ga is the language most widely spoken in the community. The students were recruited not only for their language skills, but also for their Ga cultural sensibilities, reflected in their sense of humour and their intergenerational communicative styles, enabling fluid communication and mutual understanding with the community. In turn, two community representatives were recruited as advocates to represent patient perspectives across university and community boundaries.

University-based researchers trained in methodological rigour may need reminders that the process of a PAR project is as important as the outcome, and is part of the outcome. Facilitation skills are the most crucial skills for PAR practitioners at this stage. Productive facilitation skills encourage open conversation and collective understandings of the problem at hand and how to address it. More specifically, good facilitation requires a sensitivity to the ongoing and competing social context, such as power relations, within the group to help shift power imbalances and enable participation by all 52 . Box  3 presents a PAR project that exemplifies the importance of relationship building in a community arts project.

Box 3 Case study of the BRIDGE Project: relationship building and collective art making as social change

The BRIDGE Project was a 3-week long mosaic-making and dialogue programme for youth aged 14–18 years, in Southern California. For several summers, the project brought together students from different campuses to discuss inclusion, bullying and community. The goal was to help build enduring relationships among young people who otherwise would not have met or interacted, thereby mitigating the racial tensions that existed in their local high schools.

Youth were taught how to make broken tile mosaic artworks, facilitated through community-building exercises. After the first days, as relationships grew, so did the riskiness of the discussion topics. Youth explored ideas and beliefs that contribute to one’s individual sense of identity, followed by discussion of wider social identities around race, class, sex, gender, class, sexual orientation and finally their identities in relationship to others.

The art-making process was structured in a manner that mirrored the building of their relationships. Youth learned mosaic-making skills while creating individual pieces. They were discouraged from collaborating with anyone else until after the individual pieces were completed and they had achieved some proficiency. When discussions transitioned to focus on the relationship their identities had to each other, the facilitators assisted them in creating collaborative mosaics with small groups.

Staff facilitation modelled the relationship-building goal of the project. The collaborative art making was built upon the rule that no one could make any changes without asking for and receiving permission from the person or people who had placed the piece (or pieces) down. To encourage participants to engage with each other it was vital that they each felt comfortable to voice their opinions while simultaneously learning how to be accountable to their collaborators and respectful of others’ relationships to the art making.

The process culminated in the collective creation of a tile mosaic wall mural, which is permanently installed in the host site.

Collaborative analysis

In PAR projects, data collection and analysis are not typically isolated to different phases of research. Instead, a tried and tested approach to collaborative analysis 53 is to use generated data as a basis for reflection on commonalities, patterns, differences, underlying causes or potentials on an ongoing basis. For instance, body mapping, photography, or video projects often proceed through a series of workshops, with small-scale training–data collection–data analysis cycles in each workshop. Participants gather or produce materials in response to a prompt, and then come together to critically discuss the meaning of their productions.

Simultaneously, or later, a more formal data analysis may be employed, using established social science analytical tools such as grounded theory, thematic, content or discourse analysis, or other forms of visual or ethnographic analysis, with options for facilitated co-researcher involvement. The selection of a specific orientation or approach to analysis is often a low priority for community-based co-researchers. It may be appropriate for university-based researchers to take the lead on comprehensive analysis and the derivation of initial messages. Fine and Torre 29 describe the university-based researchers producing a “best bad draft” so that there is something on the table to react to and discuss. Given the multiple iterations of participants’ expressions of experiences and analyses by this stage, the university-based researchers should be in a position that their best bad draft is grounded in a good understanding of local perspectives and should not appear outlandish, one-sided or an imposition of outside ideas.

For the results and recommendations to reflect community interests, it is important to incorporate a step whereby community representatives can critically examine and contribute to emerging findings and core messages for the public, stakeholders or academic audiences.

Planning and taking action

Taking action is an integral part of a PAR process. What counts as action and change is different for each PAR project. Actions could be targeted at a wide range of scales and different stakeholders, with differing intended outcomes. Valid intended outcomes include creating supportive networks to share resources through mutual aid; empowering participants through sharing experiences and making sense of them collectively; using the emotional impact of artistic works to influence policymakers and journalists; mobilizing collective action to build community power; forging a coalition with other activist and advocacy groups; and many others. Selection between the options depends on underlying priorities, values, theories of how social change happens and, crucially, feasibility.

Articulating a theory of change is one way to demonstrate how we intend to bring about changes through designing an action plan. A theory of change identifies an action and a mechanism, directed at producing outcomes, for a target group, in a context. This device has often been used in donor-driven health and development contexts in a rather prescriptive way, but PAR teams can adapt the tool as a scaffolding for being explicit about action plans and as a basis for further discussions and development of those plans. Many health and development organizations (such as Better Evaluation ) have frameworks to help design a theory of change.

Alternatively, a community action plan 5 can serve as a tangible roadmap to produce change, by setting out objectives, strategies, timeline, key actors, required resources and the monitoring and evaluation framework.

Social change is not easy, and existing social systems benefit, some at the expense of others, and are maintained by power relations. In planning for action, analysis of the power relations at stake, the beneficiaries of existing systems and their potential resistance to change is crucial. It is often wise to assess various options for actions, their potential benefits, risks and ways of mitigating those risks. Sometimes a group may collectively decide to settle for relatively secure, and less-risky, small wins but with the building of sufficient power, a group may take on a bigger challenge 54 .

Ethical considerations are fundamental to every aspect of PAR. They include standard research ethics considerations traditionally addressed by research ethics committees or institutional review boards (IRBs), including key principles of avoidance of harm, anonymity and confidentiality, and voluntary informed consent, although these issues may become much more complex than traditionally presented, when working within a PAR framework 55 . PAR studies typically benefit from IRBs that can engage with the relational specificities of a case, with a flexible and iterative approach to research design with communities, instead of being beholden to very strict and narrow procedures. Wilson and colleagues 56 provide a comprehensive review of ethical challenges in PAR.

Beyond procedural research ethics perspectives, relational ethics are important to PAR projects and raise crucial questions regarding the purpose and conduct of knowledge production and application 37 , 57 , 58 . Relational ethics encourage an emphasis on inclusive practices, dialogue, mutual respect and care, collective decision-making and collaborative action 57 . Questions posed by Indigenous scholars seeking to decolonize Western knowledge production practices are pertinent to a relational ethics approach 4 , 28 . These include: Who designs and manages the research process? Whose purposes does the research serve? Whose worldviews are reproduced? Who decides what counts as knowledge? Why is this knowledge produced? Who benefits from this knowledge? Who determines which aspects of the research will be written up, disseminated and used, and how? Addressing such questions requires scholars to attend to the ethical practices of cultivating trusting and reciprocal relationships with participants and ensuring that the organizations, communities and persons involved co-govern and benefit from the project.

Reflecting on the ethics of her PAR project with young undocumented students in the USA, Cahill 55 highlights some of the intensely complex ethical issues of representation that arose and that will face many related projects. Determining what should be shared with which audiences is intensely political and ethical. Cahill’s team considered editing out stories of dropping out to avoid feeding negative stereotypes. They confronted the dilemma of framing a critique of a discriminatory educational system, while simultaneously advocating that this flawed system should include undocumented students. They faced another common dilemma of how to stay true to their structural analysis of the sources of harms, while engaging decision-makers invested in the current status quo. These complex ethical–political issues arise in different forms in many PAR projects. No answer can be prescribed, but scholar–activists can prepare themselves by reading past case studies and being open to challenging debates with co-researchers.

The knowledge built by PAR is explicitly knowledge-for-action, informed by the relational ethical considerations of who and what the knowledge is for. PAR builds both  local knowledge and conceptual knowledge. As a first step, PAR can help us to reflect locally, collectively, on our circumstances, priorities, diverse identities, causes of problems and potential routes to tackle them.

Such local knowledge might be represented in the form of statistical findings from a community survey, analyses of participants’ verbal or visual data, or analyses of workshop discussions. Findings may include elements such as an articulation of the status quo of a community issue; a participatory analysis of root causes and/or actionable elements of the problem; a power analysis of stakeholders; asset mapping; assessment of local needs and priorities. Analysis goes beyond the surface problems, to identify underlying roots of problems to inform potential lines of action.

Simultaneously, PAR also advances more global conceptual knowledge. As liberation theorists have noted, developments in societal understandings of inequalities, marginalization and liberation are often led by those battling such processes daily. For example, the young Black and Indigenous participants working with Tuck and Habtom 25 in Toronto, Canada, engaged as co-theorists in their project about the significance of social movements to young people and their post-secondary school futures. Through their photography project, they expressed how place, and its history, particularly histories of settler colonialism, matters in cities — against a more standard view that treated the urban as somehow interchangeable, modern or neutral. The authors argue for altered conceptions of urban and urban education scholarly literatures, in response to this youth-led knowledge.

A key skill in the art of PAR is in creating achievable actions by choosing a project that is engaging and ambitious with achievable elements, even where structures are resistant to change. PAR projects can produce actions across a wide range of scales (from ‘small, local’ to ‘large, structural’) and across different temporal scales. Some PAR projects are part of decades-long programmes. Within those programmes, an individual PAR project, taking place over 12 or 24 months, might make one small step in the process towards long-term change.

For example, an educational project with young people living in communities vulnerable to flooding in Brazil developed a portfolio of actions, including a seminar, a native seeds fair, support to an individual family affected by a landslide, a campaign for a safe environment for a children’s pre-school, a tree nursery at school and influencing the city’s mayor to extend the environmental project to all schools in the area 30 .

Often the ideal scenario is that such actions lead to material changes in the power of a community. Over the course of a 5-year journey, the Katkari community (Box  1 ) worked with PAR researchers to build community power to resist eviction. The community team compiled households’ proof of residence; documented the history of land use and housing; engaged local government about their situations and plans; and participated more actively in village life to cultivate support 39 . The university-based researchers collected land deeds and taught sessions on land rights, local government and how to acquire formal papers. They opened conversations with the local government on legal, ethical and practical issues. Collectively, their legal knowledge and groundwork gave them confidence to remove fencing erected by landlords and to take legal action to regularize their land rights, ultimately leading to 70 applications being made for formal village sites. This comprised a tangible change in the power relation between landlords and the communities. Even here, however, the authors do not simply celebrate their achievements, but recognize that power struggles are ongoing, landlords would continue to aggressively pursue their interests, and, thus, their achievements were provisional and would require vigilance and continued action.

Most crucially, PAR projects aim to develop university-based and community-based researchers’ collective agency, by building their capacities for collaboration, analysis and action. More specifically, collaborators develop multiple transferable skills, which include skills in conducting research, operating technology, designing outputs, leadership, facilitation, budgeting, networking and public speaking 31 , 59 , 60 .

University-based researchers build their own key capacities through exercising and developing skills, including those for collaboration, facilitation, public engagement and impact. Strong PAR projects may build capacities within the university to sustain long-term relationships with community projects, such as modified and improved infrastructures that work well with PAR modalities, appreciation of the value of long-term sustained reciprocal relations and personal and organizational relationships with communities outside the university.

Applications

PAR disrupts the traditional theory–application binary, which usually assumes that abstract knowledge is developed through basic science, to then be interpreted and applied in professional or community contexts. PAR projects are always applied in the sense that they are situated in concrete human and social problems and aim to produce workable local actions. PAR is a very flexible approach. A version of a PAR project could be devised to tackle almost any real-world problem — where the researchers are committed to an emancipatory and participatory epistemology. If one can identify a group of people interested in collectively generating knowledge-for-action in their own context or about their own practices, and as long as the researchers are willing and able to share power, the methods set out in this Primer could be applied to devise a PAR project.

PAR is consonant with participatory movements across multiple disciplines and sectors, and thus finds many intellectual homes. Its application is supported by social movements for inclusion, equity, representation of multiple voices, empowerment and emancipation. For instance, PAR responds to the value “nothing about us without us”, which has become a central tenet of disability studies. In youth studies, PAR is used to enhance the power of young people’s voices. In development studies, PAR has a long foundation as part of the demand for greater participation, to support locally appropriate, equitable and locally owned changes. In health-care research, PAR is used by communities of health professionals to reflect and improve on their own practices. PAR is used by groups of health-care service users or survivors to give a greater collective power to the voices of those at the sharp end of health care, often delegitimized by medical power. In environmental sciences, PAR can support local communities to take action to protect their environments. In community psychology, PAR is valued for its ability to nurture supportive and inclusive processes. In summary, PAR can be applied in a huge variety of contexts in which local ownership of research is valued.

Limitations to PAR’s application often stem from the institutional context. In certain (often dominant) academic circles, local knowledge is not valued, and contextually situated, problem-focused, research may be considered niche, applied or not generalizable. Hence, research institutions may not be set up to be responsive to a community’s situation or needs or to support scholar–activists working at the research–action boundary. Further, those who benefit from, or are comfortable with, the status quo of a community may actively resist attempts at change from below and may undermine PAR projects. In other cases, where a community is very divided or dispersed, PAR may not be the right approach. There are plenty of examples of PAR projects floundering, failing to create an active group or to achieve change, or completely falling through. Even such failures, however, shed light on the conditions of communities and the power relations they inhabit and offer lessons on ways of working and not working with groups in those situations.

Reproducibility and data deposition

Certain aspects of the open science movement can be productively engaged from within a PAR framework, whereas others are incompatible. A key issue is that PAR researchers do not strive for reproducibility, and many would contest the applicability of this construct. Nonetheless, there may be resonances between the open science principle of making information publicly available for re-use and those PAR projects that aim to render visible and audible the experience of a historically under-represented or mis-represented community. PAR projects that seek to represent previously hidden realities of, for example, environmental degradation, discriminatory experiences at the hands of public services, the social history of a traditionally marginalized group, or their neglected achievements, may consider creating and making public robust databases of information, or social history archives, with explicit informed permission of the relevant communities. For such projects, making knowledge accessible is an essential part of the action. Publicly relevant information should not be sequestered behind paywalls. PAR practitioners should thus plan carefully for cataloguing, storing and archiving information, and maintaining archives.

On the other hand, however, a blanket assumption that all data should be made freely available is rarely appropriate in a PAR project and may come into conflict with ethical priorities. Protecting participants’ confidentiality can mean that data cannot be made public. Protecting a community from reputational harm, in the context of widespread dehumanization, criminalization or stigmatization of dispossessed groups, may require protection of their privacy, especially if their lives or coping strategies are already pathologized 25 . Empirical materials do not belong to university-based researchers as data and cannot be treated as an academic commodity to be opened to other researchers. Open science practices should not extend to the opening of marginalized communities to knowledge exploitation by university researchers.

The principle of reproducibility is not intuitively meaningful to PAR projects, given their situated nature, that is, the fact that PAR is inherently embedded in particular concrete contexts and relationships 61 . Beyond reproducibility, other forms of mutual learning and cross-case learning are vitally important. We see increasing research fatigue in communities used, extractively, for research that does not benefit them. PAR teams should assess what research has been done in a setting to avoid duplication and wasting people’s time and should clearly prioritize community benefit. At the same time, PAR projects also aspire to produce knowledge with wider implications, typically discussed under the term generalizability or transferability. They do so by articulating how the project speaks to social, political, theoretical and methodological debates taking place in wider knowledge communities, in a form of “communicative generalisation” 62 . Collaborating and sharing experiences across PAR sites through visits, exchanges and joint analysis can help to generalize experiences 30 , 61 .

Limitations and optimizations

PAR projects often challenge the social structures that reproduce established power relations. In this section, we outline common challenges to PAR projects, to prompt early reflection. When to apply a workaround, compromise, concede, refuse or regroup and change strategy are decisions that each PAR team should make collectively. We do not have answers to all the concerns raised but offer mitigations that have been found useful.

Institutional infrastructure

Universities’ interests in partnerships with communities, local relevance, being outward-facing, public engagement and achieving social impact can help to create a supportive environment for PAR research. Simultaneously, university bureaucracies and knowledge hierarchies that prize their scientists as individuals rather than collaborators and that prioritize the methods of dominant science can undermine PAR projects 63 . When Cowan, Kühlbrandt and Riazuddin 45 proposed using gaming, drama, fiction and film-making for a project engaging young people in thinking about scientific futures, a grants manager responded “But this project can’t just be about having fun activities for kids — where is the research in what you’re proposing?” Research infrastructures are often slow and reluctant to adapt to innovations in creative research approaches.

Research institutions’ funding time frames are also often out of sync with those of communities — being too extended in some ways and too short in others 45 , 64 . Securing funding takes months and years, especially if there are initial rejections or setbacks. Publishing findings takes further years. For community-based partners, a year is a long time to wait and to maintain people’s interest. On the other hand, grant funding for one-off projects over a year or two (or even five) is rarely sufficient to create anything sustainable, reasserting precarity and short-termism. Institutions can better support PAR through infrastructure such as bridging funds between grants, secure staff appointments and institutional recognition and resources for community partners.

University infrastructures can value the long-term partnership working of PAR scholars by recognizing partnership-building as a respected element of an academic career and recognizing collaborative research as much as individual academic celebrity. Where research infrastructures are unsupportive, building relationships within the university with like-minded professional and academic colleagues, to share work-arounds and advocate collectively, can be very helpful. Other colleagues might have developed mechanisms to pay co-researchers, or to pay in advance for refreshments, speed up disbursement of funds, or deal with an ethics committee, IRB, finance office or thesis examiner who misunderstands participatory research. PAR scholars can find support in university structures beyond the research infrastructure, such as those concerned with knowledge exchange and impact, campus–community partnerships, extension activities, public engagement or diversity and inclusion 64 . If PAR is institutionally marginalized, exploring and identifying these work-arounds is extremely labour intensive and depends on the cultivation of human, social and cultural capital over many years, which is not normally available to graduate students or precariously employed researchers. Thus, for PAR to be realized, institutional commitment is vital.

Co-option by powerful structures

When PAR takes place in collaboration or engagement with powerful institutions such as government departments, health services, religious organizations, charities or private companies, co-option is a significant risk. Such organizations experience social pressure to be inclusive, diverse, responsive to communities and participatory, so they may be tempted to engage communities in consultation, without redistributing power. For instance, when ‘photovoice’ projects invite politicians to exhibitions of photographs, their activity may be co-opted to serving the politician’s interest in being seen to express support, but result in no further action. There is a risk that using PAR in such a setting risks tokenizing marginalized voices 65 . In one of our current projects, co-researchers explore the framing of sexual violence interventions in Zambia, aiming to promote greater community agency and reduce the centrality of approaches dominated by the Global North 66 . One of the most challenging dilemmas is the need to involve current policymakers in discussions without alienating them. The advice to ‘be realistic’, ‘be reasonable’ or ‘play the game’ to keep existing power brokers at the table creates one of the most difficult tensions for PAR scholars 48 .

We also caution against scholars idealizing PAR as an ideal, egalitarian, inclusive or perfect process. The term ‘participation’ has become a policy buzzword, invoked in a vaguely positive way to strengthen an organization’s case that they have listened to people. It can equally be used by researchers to claim a moral high ground without disrupting power relations. Depriving words of their associated actions, Freire 7 warns us, leads to ‘empty blah’, because words gain their meaning in being harnessed to action. Labelling our work PAR does not make it emancipatory, without emancipatory action. Equally, Freire cautions against acting without the necessary critical reflection.

To avoid romanticization or co-option, PAR practitioners benefit from being held accountable to their shared principles and commitments by their critical networks and collaborators. Our commitments to community colleagues and to action should be as real for us as any institutional pressures on us. Creating an environment for that accountability is vital. Box  4 offers a project exemplar featuring key considerations regarding power concerns.

Box 4 Case study: participatory power and its vulnerability

Júba Wajiín is a pueblo in a rural mountainous region in the lands now called Guerrero, Mexico, long inhabited by the Me’phaa people, who have fiercely resisted precolonial, colonial and postcolonial displacement and dispossession. Using collective participatory action methods, this small pueblo launched and won a long legal battle that now challenges extractive mining practices.

Between 2001 and 2012, the Mexican government awarded massive mining concessions to mining companies. The people of Júba Wajiín discovered in mid-2013 that, unbeknown to them, concessions for mining exploration of their lands had been awarded to the British-based mining company Horschild Mexico. They engaged human rights activists who used participatory action research methods to create awareness and to launch a legal battle. Tlachinollan, a regional human rights organization, held legal counselling workshops and meetings with local authorities and community elders.

The courts initially rejected the case by denying that residents could be identified as Indigenous because they practised Catholicism and spoke Spanish. A media organization, La Sandia Digital , supported the community to collectively document their syncretic religious and spiritual practices, their ability to speak Mhe’paa language and their longstanding agrarian use of the territory. They produced a documentary film Juba Wajiin: Resistencia en la Montaña , providing visual legal evidence.

After winning in the District court, they took the case to the Supreme Court, asking it to review the legality and validity of the mining concessions. Horschild, along with other mining companies, stopped contesting the case, which led to the concessions being null and void.

The broader question of Indigenous peoples’ territorial rights continued in the courts until mid-2022 when the Supreme Court ruled that Indigenous peoples had the constitutional right to be consulted before any mining activities in their territory. This was a win, but a partial one. ‘Consultations’ are often manipulated by state and private sectors, particularly among groups experiencing dire impoverishment. Júba Wajiín’s strategies proved successful but the struggle against displacement and dispossession is continual.

Power inequalities within PAR

Power inequalities also affect PAR teams and communities. For all the emphasis on egalitarian relationships and dialogue, communities and PAR teams are typically composed of actors with unequal capacities and powers, introducing highly complex challenges for PAR teams.

Most frequently, university-based researchers engaging with marginalized communities do not themselves share many aspects of the identities or life experiences of those communities. They often occupy different, often more privileged, social networks, income brackets, racialized identities, skill sets and access to resources. Evidently, the premise of PAR is that people with different lives can productively collaborate, but gulfs in life experience and privilege can yield difficult tensions and challenges. Expressions of discomfort, dissatisfaction or anger in PAR projects are often indicative of power inequalities and an opportunity to interrogate and challenge hierarchies. Scholars must work hard to undo their assumptions about where expertise and insights may lie. A first step can be to develop an analysis of a scholar’s own participation in the perpetuation of inequalities. Projects can be designed to intentionally redistribute power, by redistributing skills, responsibilities and authority, or by redesigning core activities to be more widely accessible. For instance, Marzi 51 in a participatory video project, used role swapping to distribute the leadership roles of chairing meetings, choosing themes for focus and editing, among all the participants.

Within communities, there are also power asymmetries. The term ‘community participation’ itself risks homogenizing a community, such that one or a small number of representatives are taken to qualify as the community. Yet, communities are characterized by diversity as much as by commonality, with differences across sociological lines such as class, race, gender, age, occupation, housing tenure and health status. Having the time, resources and ability to participate is unlikely to be evenly distributed. Some people need to devote their limited time to survival and care of others. For some, the embodied realities of health conditions and disabilities make participation in research projects difficult or undesirable 67 . If there are benefits attached to participation, careful attention to the distribution of such benefits is needed, as well as critical awareness of the positionality of those involved and those excluded. Active efforts to maximize accessibility are important, including paying participants for their valued time; providing accommodations for people with health conditions, disabilities, caring responsibilities or other specific needs; and designing participatory activities that are intuitive to a community’s typical modes of communication.

Lack of control and unpredictability

For researchers accustomed to leading research by taking responsibility to drive a project to completion, using the most rigorous methods possible, to achieve stated objectives, the collaborative, iterative nature of PAR can raise personal challenges. Sense 68 likens the facilitative role of a PAR practitioner to “trying to drive the bus from the rear passenger seat—wanting to genuinely participate as a passenger but still wanting some degree of control over the destination”. PAR works best with collaborative approaches to leadership and identities among co-researchers as active team members, facilitators and participants in a research setting, prepared to be flexible and responsive to provocations from the situation and from co-researchers and to adjust project plans accordingly 28 , 68 , 69 . The complexities involved in balancing control issues foreground the importance of reflexive practice for all team members to learn together through dialogue 70 . Training and socialization into collaborative approaches to leadership and partnership are crucial supports. Well-functioning collaborative ways of working are also vital, as their trusted structure can allow co-researchers to ‘trust the process’, and accept uncertainties, differing perspectives, changes of emphasis and disruptions of assumptions. We often want surprises in PAR projects, as they show that we are learning something new, and so we need to be prepared to accept disruption.

The PAR outlook is caught up in the ongoing history of the push and pull of popular movements for the recognition of local knowledge and elite movements to centralize authority and power in frameworks such as universal science, professional ownership of expertise, government authority or evidence-based policy. As a named methodological paradigm, PAR gained legitimacy and recognition during the 1980s, with origins in popular education for development, led by scholars from the Global South 16 , 32 , and taken up in the more Global-North-dominated field of international development, where the failings of externally imposed, contextually insensitive development solutions had become undeniable 21 . Over the decades, PAR has both participated in radical social movements and risked co-option and depoliticization as it became championed by powerful institutions, and it is in this light that we consider PAR’s relation to three contemporary societal movements.

Decolonizing or re-powering

The development of PAR took place in tandem with anti-colonial movements and discourses during the 1970s and 1980s, in which the colonization of land, people and knowledge were all at stake. During the mid-2010s, calls for decolonization of the university were forced onto the agenda of the powerful by various groups, including African students and youth leading the ‘Rhodes Must Fall’, ‘Fees must Fall’ and ‘Gandhi must Fall’ movements 71 , followed by the eruption of Black Lives Matter protests in 2020 (ref. 72 ). PAR is a methodology that stands to contribute to decolonization-colonization through the development of alternatives to centralizing knowledge and power. As such, the vitality of local and global movements demanding recognition of grassroots knowledge and the dismantling of oppressive historical power–knowledge systems heralds many openings and exciting potential collaborations and causes for PAR practitioners 73 , 74 . As these demands make themselves felt in powerful institutions, they create openings for PAR.

Yet, just as PAR has been subject to co-option and depoliticization, the concept of decolonization too is at risk of appropriation by dominant groups and further tokenization of Indigenous groups, as universities, government departments and global health institutions absorb the concept, fitting it into their existing power structures 41 , 75 . In this context, Indigenous theorists in Aotearoa/New Zealand are working on an alternative concept of ‘re-powering Indigenous knowledge’ instead of ‘decolonizing knowledge’. By doing so, they centre Indigenous people and their knowledge, instead of the knowledge or actions of colonizers, and foreground the necessity of changes to power relations. African and African American scholars working on African heritage and political agency have drawn on the Akan philosophy of Sankofa for a similar purpose 76 . Sankofa derives from a Twi proverb Se wo were fi na wosan kofa a yenkyiri (It is not taboo to fetch what is at risk of being left behind). Going back to fetch what is lost is a self-grounded act that draws on the riches of Indigenous history to re-imagine and restructure the future 77 . It is also an act independent of the colonial and colonizing gaze. Contributing to a mid-twenty-first century re-powering community knowledge is a promising vision for PAR. More broadly, the loud voices and visionary leadership of contemporary anti-racist, anti-colonial, Indigenous, intersectional feminist and other emancipatory movements provide a vibrant context to re-invent and renew PAR.

Co-production

In fields concerned with health and public service provision, a renewed discourse of respectful engagement with communities and service users has centred in recent years on the concept of  co-production 78 . In past iterations, concepts such as citizen engagement, patient participation, community participation and community mobilization had a similar role. Participatory methods have proved their relevance within such contexts, for example, providing actionable and wise insights to clinicians seeking to learn from patients, or to providers of social services seeking to target their services better. Thus, the introduction of co-production may create a receptive environment for PAR in public services. Yet again, if users are participating in something, critical PAR scholars should question in which structures they are participating, instantiating which power relations and to whose benefit. PAR scholars can find themselves compromised by institutional requirements. Identifying potential compromises, lines that cannot be crossed and areas where compromises can be made; negotiating with institutional orders; and navigating discomfort and even conflict are key skills for practitioners of PAR within institutional settings.

One approach to engaging with institutional structures has been to gather evidence for the value of PAR, according to the measures and methods of dominant science. Anyon and colleagues 59 systematically reviewed the Youth PAR literature in the United States. They found emerging evidence that PAR produces positive outcomes for youth and argued for further research using experimental designs to provide harder evidence. They make the pragmatic argument that funding bodies require certain forms of evidence to justify funding, and so PAR would benefit by playing by those rules.

A different approach, grounded in politics rather than the academy, situates co-production as sustained by democratic struggles. In the context of sustainability research in the Amazon, for instance, Perz and colleagues 79 argue that the days of externally driven research are past. Mobilization by community associations, Indigenous federations, producer cooperatives and labour unions to demand influence over the governance of natural resources goes hand in hand with expectations of local leadership and ownership of research, often implemented through PAR. These approaches critically question the desirability of institutional, external funding or even non-monetary support for a particular PAR project.

Global–local inequality and solidarity

Insufferable global and local inequalities continue to grow, intensified by climate catastrophes, the coronavirus disease 2019 (COVID-19) pandemic and extreme concentrations of wealth and political influence, and contested by increasingly impactful analyses, protests and refusals by those disadvantaged and discriminated against. Considering the impact of the COVID-19 pandemic on PAR projects, Auerbach and colleagues 64 identify increasing marketization and austerity in some universities, and the material context of growing pressure on marginalized communities to simply meet their needs for survival, leaving little capacity for participating in and building long-term partnerships. They describe university-based researchers relying on their own capacities to invent new modes of digital collaboration and nourish their partnerships with communities, often despite limited institutional support.

We suggest that building solidaristic networks, and thus building collective power, within and beyond universities offers the most promising grounding for a fruitful outlook for PAR. PAR scholars can find solidarity across a range of disciplines, traditions, social movements, topics and geographical locations. Doing so offers to bridge traditions, share strategies and resonances, build methodologies and politics, and crucially, build power. In global health research, Abimbola and colleagues 80 call for the building of Southern networks to break away from the dominance of North–South partnerships. They conceptualize the South not only as a geographical location, as there are of course knowledge elites in the South, but as the communities traditionally marginalized from centres of authority and power. We suggest that PAR can best maximize its societal contribution and its own development and renewal by harnessing the diverse wisdom of knowledge generation and participatory methods across Southern regions and communities, using that wisdom to participate in global solidarities and demands for redistribution of knowledge, wealth and power.

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Acknowledgements

The authors thank their PAR collaborators and teachers, who have shown us how to take care of each other, our communities and environments. They thank each other for generating such a productive critical thinking space and extending care during challenging times.

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Flora Cornish & Nancy Breton

Departmento de Gestion para el Desarrollo Sustentable, CONACyT–Universidad Autonoma de Guerrero, Acapulco, Guerrero, Mexico

Ulises Moreno-Tabarez

Department of Communication Studies, California State University, Northridge, CA, USA

Jenna Delgado

Māori Studies, University of Auckland, Auckland, Aotearoa, New Zealand

Institute of Advanced Studies, University College London, London, UK

Ama de-Graft Aikins

School of Psychology, Massey University, Albany, Aotearoa, New Zealand

Darrin Hodgetts

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Supplementary information

Supplementary information.

Involving multiple team members in the analysis and interpretation of materials generated, typically in iterative cycles of individual or pair work and group discussion.

Both a structure and a process, community refers to a network of often diverse and unequal persons engaged in common tasks or actions, stakes or interests that lead them to form social ties or commune with one another.

A process through which a person or group’s activities are altered or appropriated to serve another group’s interests.

A term typically used in service provision to describe partnership working between service providers and service users, to jointly produce decisions or designs.

A call to recognize and dismantle the destructive legacies of colonialism in societal institutions, to re-power indigenous groups and to construct alternative relationships between peoples and knowledges that liberate knowers and doers from colonial extraction and centralization of power.

Scholarship that creates knowledge of the conditions that limit or oppress us to liberate ourselves from those conditions and to support others in their own transformations.

Injustices in relation to knowledge, including whose knowledge counts and which knowledge is deemed valid or not.

Research that extracts information and exploits relationships, places and peoples, producing benefit for scholars or institutions elsewhere, and depleting resources at the sites of the research.

Knowledge that is rooted in experience in a particular social context, often devalued by social science perspectives that make claims to generalizability or universality.

The relationships of domination, subordination and resistance between individuals or social groups, allowing some to advance their perspectives and interests more than others.

A methodological practice through which scholars critically reflect on their own positionality and how it impacts on participants and co-researchers, understanding of the topic and the knowledge produced.

An approach to ethical conduct that situates ethics as ongoingly negotiated within the context of respectful relationships, beyond following the procedural rules often set out by ethics committees.

A dual role in which scholars use their knowledge (scholarship) to tackle injustices and instigate changes (activism) in collaboration with marginalized communities and/or organizations.

Doing something or appointing a person for reasons other than in the interest of enabling meaningful change.

A systemic change in which relationships and structures are fundamentally altered, often contrasted with smaller-scale changes such as varying or refining existing relations.

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U.S. Government Accountability Office

Federal Research Centers: DHS Actions Could Reduce the Potential for Unnecessary Overlap among Its R&D Projects

The Department of Homeland Security uses Federally Funded Research and Development Centers to work on projects that DHS or contractors can't do as effectively. Since 2004, DHS has committed over $3 billion to projects at the centers, which are run by non-profit organizations.

DHS reviews proposed research and development projects, including center projects, to check if they overlap—i.e., unnecessarily pursue the same goals. But 5 agencies within DHS could be funding research and development projects that may not be checked for overlap.

We recommended requiring overlap reviews of centers' projects with the 5 agencies, and more.

What GAO Found

The Department of Homeland Security (DHS) Science and Technology Directorate (S&T) is responsible for coordinating and overseeing the department's research and development (R&D) activities and, with selected DHS components, funding these activities. To help meet its R&D needs, DHS sponsors Federally Funded Research and Development Centers (FFRDCs), two of which are overseen by S&T's FFRDC Program Management Office (PMO).

S&T has a coordination process that includes steps for reviewing proposed R&D projects with DHS component-funded R&D projects that S&T funds, oversees, or otherwise supports. S&T officials told GAO that they review proposed FFRDC projects for unnecessary overlap as part of this coordination process. However, GAO's review of DHS and S&T policies found that the five DHS components that receive R&D appropriations are not required to share their component-funded R&D activities with S&T. Thus, S&T's overall coordination reviews may not always include these DHS component-funded R&D activities. A leading practice from prior GAO work states that establishing a means to operate across agency boundaries can reduce or better manage program overlap. S&T could reduce the potential for conducting similar R&D work by amending its policies to require that officials review proposed FFRDC projects for unnecessary overlap with DHS component-funded R&D projects.

FFRDC PMO is responsible for assessing the performance of the two FFRDCs it oversees. Federal requirements and DHS guidance require FFRDC PMO officials to assess FFRDC performance each year and more comprehensively every 5 years. FFRDC PMO has developed two tools—a performance framework that identifies 11 performance metrics and a FFRDC user feedback survey—to assess FFRDC performance.

Department of Homeland Security's (DHS) Federally Funded Research and Development Center Performance Assessment Process

GAO found that FFRDC PMO's response rates for FFRDC user feedback surveys ranged in recent years from 100 percent to 43 percent across the two FFRDCs. FFRDC PMO officials said they have not analyzed the extent to which these variations in response rates could have impacted the validity of the overall survey data. Low response rates raise the risk that the survey responses do not represent the views of all FFRDC users. If the views of the users who did not respond to the survey differ from those who did, the survey results could produce a different outcome than what would be found across all users. Given the importance of the surveys in assessing FFRDC performance, analyzing the risk of low response rates could help FFRDC PMO identify whether further steps, such as increasing such rates, are needed to mitigate the risk of those responses not representing all users.

Why GAO Did This Study

DHS uses FFRDCs—not-for-profit organizations—to meet special, long-term R&D needs that its components and other contractors cannot meet as effectively. Since DHS established its first FFRDC in 2004, as statutorily required, the department has obligated over $3 billion through fiscal year 2023 on FFRDC contracts. According to DHS, FFRDCs are to provide independent and objective advice on critical homeland security issues.

GAO was asked to review the oversight of FFRDCs. This report addresses, among other issues, the extent to which (1) S&T has reviewed DHS's proposed FFRDC projects for potential unnecessary overlap with other DHS R&D activities and (2) FFRDC PMO has developed tools to assess FFRDCs' performance and receives, analyzes, and shares key performance information.

GAO reviewed DHS and S&T policies and procedures. GAO also selected a sample of 118 out of 732 FFRDC task orders—orders for services placed against established contracts—over a 9-year period to reflect a range in value and volume. GAO also interviewed officials from S&T, FFRDC PMO, selected DHS components, and the FFRDCs.

Recommendations

GAO is making eight recommendations, including that DHS (1) amend policies to require S&T to review FFRDC projects for potential overlap with DHS R&D activities and (2) ensure FFRDC PMO analyzes the risk of low response rates for FFRDC user surveys. DHS concurred with all eight recommendations and identified planned actions to address them.

Recommendations for Executive Action

Full report, gao contacts, media inquiries, public inquiries.

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HM Treasury

Autumn budget 2024 (html).

Published 30 October 2024

© Crown copyright 2024

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Executive summary

This is a Budget to fix the foundations of the economy and deliver change by protecting working people, fixing the NHS and rebuilding Britain.

In July the government published an audit of public spending. This set out £22 billion of in-year pressures. These pressures were not limited to 2024-25, with the vast majority recurring in future years.

Compensation payments for victims of the Post Office Horizon IT and Infected Blood scandals had also not been fully accounted for. The government is providing compensation to the victims in full averaging £2.3 billion a year over the forecast period.

There has additionally not been a Spending Review since 2021, so departmental budgets have not been systematically re-planned to account for the recent spike in inflation and other factors that have caused significant cost pressures.

Plans set at Spring Budget 2024 were for day-to-day departmental spending to fall from 16.7% of GDP in 2023-24 to 16.0% in 2028-29 and for public sector net investment to fall from 2.5% of GDP in 2023-24 to 1.7% in 2028-29. This was in the context of declining public service performance and GDP per capita lower than at the start of the last Parliament.

The government is taking a different approach. Autumn Budget 2024 is:

• Putting the public finances on a sustainable path by strengthening the fiscal framework, including announcing new fiscal rules, and taking difficult decisions on tax, welfare and spending.
• Growing day-to-day departmental spending at an average of 2.0% per year in real terms between 2023-24 and 2029-30 to support public services, including to deliver 40,000 extra elective appointments a week and reduce NHS waiting lists.
• Boosting capital investment by over £100 billion over the next five years, including in transport, housing and research and development (R&D), with a greater focus on value for money and delivery to help unlock long-term growth.

The Office for Budget Responsibility (OBR) has assessed the impact of the government’s decisions. In the OBR’s Economic and Fiscal Outlook, growth is forecast to increase to 2.0% in 2025 before moderating to 1.6% by 2029.

Public sector net investment averages 2.6 % of GDP over the Parliament. The OBR judges that higher investment will add to GDP during the forecast period, and if sustained will increase the size of the economy in the long term.

Strengthening the fiscal framework

To support economic and fiscal stability, the government is confirming a set of responsible reforms to the fiscal framework that improve certainty, transparency and accountability.

This includes announcing new fiscal rules:

• Stability rule: to move the current budget into balance, so day-to-day spending is met by revenues, and the government will only borrow for investment.
• Investment rule: to reduce net financial debt (public sector net financial liabilities) as a proportion of GDP. This rule keeps debt on a sustainable path while allowing the step change needed in investment, by capturing not just the debt that government owes, but also financial assets that are expected to generate future returns.

This is the last year that the fiscal rules will target the fifth and final year of the forecast. The rules must be met by 2029-30 at this Budget, and until 2029-30 becomes the third year of the forecast, at which point both rules will target the third year of the rolling forecast period.

The OBR confirms that the government is meeting the stability and investment rules. The current budget is in surplus and net financial debt falls as a share of the economy by 2029-30. Both rules are met early with the current budget in surplus from 2027-28 and net financial debt falling by 2027-28. Public sector net debt also falls as a share of the economy by 2029-30.

The fiscal rules are set out in a new Charter for Budget Responsibility, which implements a more stable and transparent framework. This includes committing to one major fiscal event a year, more regular Spending Reviews, and improved sharing of departmental spending information with the OBR.

Fixing the foundations

The government is driving efficiencies and reducing wasteful spending. The Budget sets a 2% productivity, efficiencies and savings target for government departments and has formally launched the Office for Value for Money to realise benefits from every pound of public spending.

The government will shortly appoint a Covid Corruption Commissioner. They will lead work to recover public funds from companies that took unfair advantage of government schemes during the COVID-19 pandemic.

The government is reforming its approach to welfare, including setting a new welfare cap for 2029-30 with strengthened accountability, to support spending control and ensure that welfare spending is sustainable in the medium term.

Fraud and error in the welfare system costs the government almost £10 billion a year. The government is cracking down on this with a package of measures saving £4.3 billion in 2029-30. The government will set out reforms to health and disability benefits early in 2025 to ensure the system supports people who can work to remain in or start employment, in a way that is fair and fiscally sustainable.

The government is ensuring that tax that is owed is paid by introducing the most ambitious ever package to close the tax gap, raising £6.5 billion in additional tax revenue per year by 2029-30.

Supporting people with the cost of living

The government is boosting wages for the low paid by accepting the recommendations of the Low Pay Commission in full, meaning the National Living Wage will increase. This represents an increase of over £1,400 to the annual earnings of a full-time worker on the National Living Wage and is expected to benefit over 3 million low paid workers across the UK.

To protect vulnerable people, the government will provide £1 billion, including Barnett, to extend the Household Support Fund and Discretionary Housing Payments in 2025-26, which will be used by local authorities to address immediate hardship and crisis.

The government will maintain the State Pension Triple Lock for the duration of this Parliament. The basic and new State Pension will increase by 4.1% in 2025-26, in line with earnings growth, meaning over 12 million pensioners will receive up to £470 per year. Working age benefits will be uprated in full in 2025-26 by the September 2024 Consumer Price Index (CPI) inflation rate of 1.7%.

The government is also creating a new Fair Repayment Rate, which caps debt repayments made in Universal Credit, allowing 1.2 million households to keep more of their Universal Credit award. The Carer’s Allowance weekly earnings limit will also be raised to improve financial security for carers to support them into work or to work more hours if they choose.

Protecting working people

Despite challenging fiscal circumstances and the need to raise additional revenue to repair the public finances, the government is protecting working people.

The government has committed to not increase taxes on working people, which is why it is not increasing the basic, higher or additional rates of income tax, National Insurance contributions (NICs) or VAT.

The government is freezing fuel duty and extending the temporary 5p cut for one year, at a cost of £3 billion next year, to support hard-working families and businesses. This will save the average car driver £59 in 2025-26.

The government will not extend the freeze to income tax and National Insurance contributions thresholds. From April 2028, these personal tax thresholds will be uprated in line with inflation.

Supporting businesses

The government will deliver a fairer business rates system through permanently lower business rates multipliers for retail, hospitality and leisure (RHL) properties from 2026-27. The Budget also provides £1.9 billion of support to small businesses and the high street in 2025-26 by freezing the small business multiplier and providing 40% relief on bills for RHL properties, up to a £110,000 cash cap.

To recognise the economic and cultural importance of British pubs, and commitment to supporting smaller brewers, the government is cutting alcohol duty on draught products from February next year, reducing it by 1 penny per average strength pint. Alcohol duty on non-draught products will increase in line with Retail Price Index (RPI) inflation from the same date.

The government is supporting spirits producers, such as the Scotch Whisky industry, by removing mandatory duty stamps for spirits and increasing investment in the Spirit Drinks Verification Scheme, which allows producers to verify the geographic origin of their products.

The government is providing stability and predictability to support businesses to invest by publishing a Corporate Tax Roadmap, which confirms that the government will cap the rate of Corporation Tax at 25%, the lowest in the G7, for the duration of the Parliament.

Raising revenue to fund public services

To repair the public finances and help raise the revenue required to increase funding for public services, the government is taking the difficult decision to increase the rate of employer NICs by 1.2 percentage points to 15%. The per‑employee threshold at which employers start to pay National Insurance will be reduced from £9,100 per year to £5,000 per year. These changes will apply from 6 April 2025.

To support small businesses with these changes, the government is increasing the Employment Allowance from £5,000 to £10,500 and removing the £100,000 threshold, expanding this to all eligible employers. This means that 865,000 employers will pay no NICs next year.

The Budget increases the lower rate of Capital Gains Tax (CGT) from 10% to 18% and the higher rate from 20% to 24%. This ensures asset owners pay their fair share whilst keeping the UK tax system internationally competitive, with lower rates than comparable EU countries. CGT rates for Business Asset Disposal Relief and Investors’ Relief will rise gradually to 14% from 6 April 2025 and match the main lower rate of 18% from 6 April 2026, to allow business owners time to adjust to the changes.

The government is making the inheritance tax system fairer by applying inheritance tax to unspent pensions pots and restricting the generosity of agricultural property relief and business property relief for the wealthiest estates.

To ensure Air Passenger Duty (APD) revenues remain sustainable, the government will adjust all APD rates in 2026-27, adding £2 for those flying economy to short-haul destinations. Higher rates for private jets will increase by 50% and the government is consulting on extending the higher rate to include more private jets.

To help drive the transition to electric vehicles (EVs) the government is strengthening incentives to purchase EVs by widening the differentials in Vehicle Excise Duty First Year Rates between EVs and hybrids or internal combustion engine cars. The government is also maintaining EV incentives in the Company Car Tax regime and extending 100% First Year Allowances for zero emission cars and EV chargepoints for a further year.

Delivering on tax commitments

The government is delivering on its commitments to make the tax system fairer and raise revenue to fund public services.

The Budget is closing loopholes in the tax system, including ending the unfair current treatment of carried interest and replacing the non-dom tax regime with a new residence-based system to make sure that everyone who makes their home in the UK pays their taxes here.

The government is supporting first-time and main home buyers by increasing the Higher Rates for Additional Dwellings in Stamp Duty Land Tax on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property, from 3% to 5% from 31 October 2024.

To help make the UK a clean energy superpower, oil and gas companies will contribute more to support the energy transition. The government is increasing the rate of the Energy Profits Levy (EPL) from 35% to 38%, removing the 29% investment allowance, and extending the levy until 31 March 2030. To provide certainty and to support a stable energy transition, 100% first-year allowances in the EPL will remain and the government will consult in early 2025 on how the oil and gas tax regime should respond to price shocks once the EPL ends in 2030.

To help fund the government’s priorities for education and young people it is delivering on its commitment to charge VAT on private school fees and to remove business rates charitable relief in England.

Fixing the NHS and reforming public services

Through Phase 1 of Spending Review 2025 the government is resetting public spending for 2024-25 and setting departmental budgets for 2025-26.

The government is providing an additional £22.6 billion of resource spending in 2025-26, compared to 2023-24 outturn, for the Department of Health and Social Care. This will support the NHS in England to deliver an additional 40,000 elective appointments a week and make progress towards the commitment that patients should expect to wait no longer than 18 weeks from referral to consultant-led treatment.

The government is boosting capital investment in public services in 2025-26 including £1.5 billion to deliver capacity for more than 30,000 NHS procedures, over 1.25 million more diagnostic tests and new beds across the NHS estate, and £1 billion to reduce the backlog of critical NHS maintenance, repairs and upgrades. The government is also investing £1.4 billion to help rebuild schools, £1.2 billion to deliver extra prison places, and almost £1.6 billion in local roads maintenance.

The government is delivering on its other first steps, including supporting recruitment of 6,500 new teachers in England through a £2.3 billion increase to the core schools budget, launching Great British Energy and a new Border Security Command, and cracking down on antisocial behaviour by supporting neighbourhood policing.

The Budget fixes the envelope for Phase 2 of the Spending Review, which will deliver a new mission-led, technology-enabled, and reform-driven settlement for public services. The Spending Review will conclude in late spring 2025.

Rebuilding Britain

The government is delivering its growth mission by prioritising stability, investment and reform to drive prosperity across the UK. The Budget takes the difficult decisions to put the public finances on a sustainable path to create the conditions for growth.

Supported by the new fiscal framework, the Budget increases public investment by more than £100 billion over the next five years to boost growth and help crowd in private investment in the long run. Capital investment will increase by £13 billion next year, taking total departmental capital spending to £131 billion in 2025-26.

This includes investing in transport, kickstarting the delivery of 1.5 million homes, supporting new industries and job creation, and protecting record R&D funding. The Budget also increases investment in public services, recognising that a well-functioning NHS and education system are critical to the economy.

With new guardrails that will govern the approach to capital spending, and new and strengthened institutions, the government is reforming the way it plans, assures, delivers and evaluates capital spending. These changes will provide greater certainty for departments, investors and supply chains, and greater assurance that investment achieves value for money, is well delivered and supports growth.

The government will work in partnership with the private sector to further increase investment. The government has created the National Wealth Fund to catalyse over £70 billion of private investment, set out plans for a modern Industrial Strategy to support investment in growth-driving sectors, and launched a pensions review to unlock greater investment in UK growth assets.

The government is making the reforms needed to deliver sustained growth in the long-term. These include ambitious planning reforms to remove barriers to growth, the development of a 10-year infrastructure strategy to be published alongside Phase 2 of the Spending Review, the forthcoming publication of the Get Britain Working White Paper, and the establishment of Skills England to ensure we have the highly-trained workforce needed to deliver economic growth.

The government’s growth policy priorities, under the framework of stability, investment and reform, have been structured into seven pillars, as illustrated in chapter 3. These priorities are being taken forward in partnership with business, and backed by a continuous focus on delivery supported by a Growth Delivery Unit established in HM Treasury.

Autumn Budget 2024 is fixing the foundations of the economy and beginning a decade of national renewal. The government is protecting working people, fixing the NHS, and boosting investment to deliver growth and prosperity for all parts of the country.

Economic and fiscal context

Since 2010, the UK economy has experienced low productivity growth, rising debt levels, and declining public service performance. In July, the government published an audit of public spending which set out £22 billion of in-year spending pressures, the vast majority of which are recurring costs. [footnote 1]

The government is fixing the foundations by supporting economic and fiscal stability, boosting investment, increasing spending on public services, and setting the public finances on a sustainable path. These are essential foundations for long-run economic growth.

The government is announcing robust fiscal rules, which the independent Office for Budget Responsibility (OBR) confirms the government is on track to meet:

• Stability rule: to move the current budget into balance so that day-to-day spending is met by revenues.
• Investment rule: to reduce net financial debt as a share of the economy.

To support economic stability and underpin the commitment to fiscal responsibility, the government is confirming a set of responsible reforms to the fiscal framework that improve certainty, transparency and accountability. The government is publishing a new Charter for Budget Responsibility and ‘A strong fiscal framework’, setting out the detail of the fiscal rules and these wider changes. [footnote 2] , [footnote 3]

The Budget completes Phase 1 of Spending Review 2025, which resets departmental budgets for 2024-25 and sets budgets for 2025-26. Phase 1 focuses on stabilising and supporting public services and delivers a real terms increase in departmental spending of 4.3% per year on average over 2024-25 and 2025-26.

The Spending Review (SR) now moves to Phase 2, which will conclude in late spring 2025. Phase 2 will take a mission-led, reform-driven, technology-enabled approach to funding public services while investing in long-term growth. To mobilise private investment, and achieve higher long-run growth, and start to rebuild Britain, the government is announcing over £100 billion of additional capital investment over the next five years. [footnote 4]

The economy is expected to continue its recovery from a recession in 2023 and weak performance since the Global Financial Crisis (GFC). Growth is set to increase to 2.0% in 2025 and 1.8% in 2026, before settling close to its trend rate in the later years of the forecast. The OBR judges that this Budget will, if sustained, permanently increase the size of the economy in the long term.

Fiscal and economic context

Fiscal context.

Economic and fiscal instability creates uncertainty for households, businesses, and markets. UK economic policy uncertainty has been higher than the global measure in recent years. [footnote 5] Over the same period, the public finances deteriorated, and debt increased. Public sector net debt (PSND) as a proportion of gross domestic product (GDP) is at its highest level since the early 1960s, at 98.5% in September. [footnote 6] Public sector net financial liabilities (PSNFL) – net financial debt for short – as a proportion of GDP remains close to its highest recorded level reached in the COVID-19 pandemic.

Without a spending review since 2021, departmental budgets did not account for the significant spike in inflation and other factors. It also meant departmental planning horizons had shrunk to less than one year.

In July the audit of public spending set out £22 billion of in-year pressures against departmental budgets for 2024-25. [footnote 7] The government has published the full breakdown of the £22 billion pressure in the ‘Government Response to the OBR Review of DEL Forecasting’. [footnote 8] As shown in Chart 1.1 below, the effect of these pressures is apparent in published public sector finances data, where current spending for the first half of the year is £11.8 billion higher than predicted in the OBR’s March 2024 forecast profile. [footnote 9]

Chart 1.1: Year-to-date central government current expenditure compared to the OBR Spring 2024 forecast profile and indicative overspend trajectories

Source: Office for National Statistics, Office for Budget Responsibility and HM Treasury calculations.

The vast majority of pressures identified by the audit are recurring costs in future years, including public sector pay settlements, health pressures, asylum and illegal immigration costs, rail passenger service and maintenance costs, and a significant majority of the ‘Normal Reserve Claims’. In addition, compensation payments for victims of the Infected Blood and Post Office Horizon IT scandals had not been fully accounted for by the previous government and will cost an average of £2.3 billion a year over the next forecast period.

Plans set at Spring Budget 2024 were for day-to-day spending to fall from 16.7% of GDP in 2023-24 to 16.0% of GDP in 2028-29 and for public sector net investment (PSNI) to fall from 2.5% in 2023-24 to 1.7% of GDP in 2028-29. [footnote 10] Public services performance had reached historic lows across health, education, housing, police, justice, and social care services. [footnote 11] These outcomes do not just affect people directly, but can also drag on the wider economy. In the latest data, output in the health sector remains nearly 16% below its pre-pandemic level. [footnote 12]

Economic context

The UK economy has flatlined in recent years. On a per-capita basis, GDP remains lower than pre-pandemic levels. Low productivity (GDP per hour) growth since 2010 has driven the UK’s weak growth over that period, as outlined in Box 1.A. Weak economic performance has undermined living standards and contributed to the challenging fiscal position. If the UK economy had grown at the average rate of Organisation for Economic Co-operation and Development (OECD) economies over the past 14 years, then GDP would be £171 billion larger. [footnote 13]

Box 1.A UK growth performance since the GFC

UK economic growth since the GFC has been substantially lower than in previous decades. GDP per capita grew at only 1.3% annually in the decade after the GFC, a fall of around 1 percentage point from the decade prior to the GFC (1998-2007). Other advanced economies experienced a similar slowdown, but the reduction in the UK’s growth rate was more pronounced than in France (0.8 percentage points), Germany (0.1 percentage points) and the US (0.4 percentage points). [footnote 14]

GDP per capita growth can be decomposed into growth in the 16+ population ratio (16+ population as a share of total population), the employment rate, average hours worked, and productivity. While a rising employment rate supported GDP per capita growth in the decade following the GFC, productivity growth slowed even more sharply than GDP per capita growth. Annual productivity growth fell by around 1.5 percentage points, from an average of 2.1% in the decade prior to the GFC, to 0.6% between 2010 and 2019.

Chart 1.2: Contributions to annual GDP per capita growth

Source: HM Treasury calculations based on Office for National Statistics data.

Productivity and wages are highly correlated; higher productivity enables higher wages and living standards. The slowdown in productivity growth in the decade following the GFC has been observed across advanced economies, but it has been particularly sharp in the UK. In the decade prior to the GFC, the UK’s average productivity growth rate exceeded that of Germany and France, and was only slightly lower than that of the US. The UK’s average rate of productivity growth in the decade after the financial crisis (0.6%), was slower than in France (0.9%), Germany (1.2%), and the US (0.9%). [footnote 15]

The productivity slowdown can be decomposed into three components: capital deepening (growth in the capital stock, both private and public, available to workers), labour composition (characteristics of those employed, such as industry, age, and education), and Total Factor Productivity (TFP – a measure of the efficiency with which labour and capital are combined in the production process). Slower growth in capital deepening has played a larger role in the UK’s slowdown compared to other countries. [footnote 16]

Business investment, a key component of capital deepening, has been particularly weak in the UK relative to other countries over the past few decades. Since Q2 2010, real business investment in the UK has averaged 9.6% of GDP, the lowest level in the G7. [footnote 17] There are several factors that may have accounted for this, but it is likely that elevated levels of economic policy uncertainty in recent years have been a major contributor (Box 1.B) and public investment has been low historically with frequent changes to planned spending.

The UK’s lower productivity growth compared to Germany and the US in the decade following the GFC has increased existing sizeable productivity gaps to these countries. [footnote 18] The benefits of closing these productivity gaps are significant. If the UK were as productive as Germany, GDP per capita would be around £8,000 higher in today’s prices. If it reached US levels, it would be around £9,000 higher. [footnote 19]

The UK economy has many enduring strengths. It has high-quality research institutions, many innovative firms, a recognised set of strong institutions for regulation and competition, a pro-entrepreneurial environment, a highly skilled workforce, and investment opportunities across the country. Coupled with its status as a global trading nation with comparative advantage in high-value sectors across services and manufacturing, these strengths mean the UK can close the gap on peer nations. However, policy uncertainty has held back growth.

Employment growth, previously a strong positive contributor to GDP growth, has stalled since the start of the pandemic. Weak employment growth has reflected an increase in the rate of economic inactivity. The UK is the only country in the G7 to not have returned to pre-pandemic levels. [footnote 20] The working-age inactivity rate has increased steadily from 20.8% in 2019 Q4 to 22.2% in 2024 Q2, largely accounted for by a rise in inactivity due to ill-health. [footnote 21] Long-term sickness related inactivity has risen to a record high of 2.8 million people in 2024. Reducing economic inactivity will be essential to reaching the government’s ambition of an 80% employment rate.

Looking ahead, several trends will fundamentally reshape the UK and global economy. Technological advancements, shifts in global trade, the transition to a low-carbon economy, and demographic change all present opportunities and risks. Adapting to these trends is key to securing sustainable growth and improving living standards.

Delivering economic stability

The UK economy has faced unprecedented shocks, including the pandemic and Russia’s illegal invasion of Ukraine, which contributed to the largest increase in inflation in almost 50 years. The policy response shaped the economic effect of these shocks. External shocks have been exacerbated by UK-specific factors, resulting in elevated levels of domestic policy uncertainty that have far outstripped global trends. This is why the government is taking action to restore stability, to protect working people and create the necessary conditions for investment and growth. Box 1.B sets out in more detail the importance of a stable macroeconomic environment.

Box 1.B Macroeconomic stability and growth

Macroeconomic and policy stability influences economic growth directly and indirectly.

• Economic stability provides certainty for firms and households to plan spending and investment. Households may respond to certainty by increasing consumption and reducing precautionary saving. [footnote 22] Firms may accelerate or increase investment due to the increased predictability of future returns, driving capital accumulation and productivity. [footnote 23] , [footnote 24] , [footnote 25]
• Stable public finances and a robust fiscal framework can support growth by avoiding crises, helping to anchor inflation expectations, lowering borrowing costs, and protecting investment. [footnote 26]
• Clear and well-executed policy encourages investors by giving confidence about the role the public sector will play in supporting growth. [footnote 27]

Measures of uncertainty, such as the Economic Policy Uncertainty Index, have been elevated globally in recent years (Chart 1.3). [footnote 28] UK policy uncertainty has been higher than global policy uncertainty for most of the past 15 years. There was a noticeable spike around the time of the referendum on the UK‘s membership of the European Union in 2016. UK policy uncertainty has continued to be elevated since then. This suggests that wider domestic factors have played an important role in the UK’s uncertain outlook.

Chart 1.3: Economic Policy Uncertainty Index (UK compared to Global index)

Notes: Dates used for calculating averages; (1) pre-Global Financial Crisis: Jan 1997–Jul 2007, (2) since the Global Financial Crisis: Jan 2009–Sep 2024, (3) since the referendum on EU membership: Jul 2016–Sep 2024

Source: Baker, Bloom and Davis, Economic Policy Uncertainty Index, retrieved from FRED, Federal Reserve Bank of St. Louis.

Governments cannot completely mitigate the impact of broad, global macroeconomic fluctuations, just as they cannot entirely prevent all forms of uncertainty. However, institutional arrangements can support businesses and households to manage these shocks.

Low and stable price inflation is an essential element of a stable macroeconomic environment, and a pre-requisite for sustainable economic growth and improving living standards. Consumer Prices Index (CPI) inflation is normalising after an inflationary shock resulted in it peaking at 11.1% in October 2022, and spending 33 consecutive months above target. While inflation may rise slightly in the near term, the OBR expects it to remain close to the 2% target throughout the forecast.

The government is strengthening the UK’s independent institutions, including through its reforms to the fiscal framework. Independent operation of monetary policy, targeting low and stable inflation, is at the heart of the macroeconomic framework that delivers stability and protects working people. When the government updates the remit for the Monetary Policy Committee (MPC) at Mansion House on 14 November, it will maintain the MPC’s target of two per cent inflation, as measured by the 12-month increase in the CPI. The government is supporting low and stable inflation by reducing borrowing year on year after 2024‑25. New remit letters for the Financial Policy Committee, Prudential Regulation Committee, Financial Conduct Authority, and Payment Systems Regulator will also be published alongside Mansion House.

A strong fiscal framework

The government’s objective for fiscal policy is to support sustainable economic growth and the provision of high-quality public services and investment across the UK, through the effective management of the public finances and sustainable taxes and borrowing. At Autumn Budget 2024 the government is publishing a new Charter for Budget Responsibility, implementing its reforms to the fiscal framework to strengthen the public finances and improve transparency.

The government is announcing its fiscal rules:

• Stability rule: to move the current budget into balance, so that day-to-day spending is met by revenues.

Stability rule

The stability rule (which is the government’s fiscal mandate) requires that the current budget must be in surplus in 2029-30, until 2029-30 becomes the third year of the forecast period. From that point, the current budget must then remain in balance or in surplus from the third year of the rolling forecast period, where balance is defined as a range: in surplus, or in deficit of no more than 0.5% of GDP. This range will support the government’s commitment to a single fiscal event every year by avoiding the need for policy adjustment at forecasts outside of fiscal events. If the range is used between fiscal events, the current budget must return to surplus from the third year at the following fiscal event.

The current budget excludes borrowing for capital investment, measuring the difference between current receipts and all other expenditure. Balancing the current budget means that the government’s day-to-day spending is met by revenues and so ensures that, over the medium term, borrowing is only for investment. This means future generations will not be burdened with the costs of public services today. The transition to targeting the third year of the forecast will provide a strong anchor for fiscal sustainability, while providing the necessary flexibility to respond to macroeconomic shocks.

Investment rule

The government is increasing investment in the economy to support growth, while ensuring debt is on a sustainable trajectory.

The government’s fiscal mandate is supplemented by a target to ensure debt, defined as public sector net financial liabilities (PSNFL or net financial debt for short), is falling as a share of the economy by 2029-30, until 2029-30 becomes the third year of the forecast period. [footnote 29] Debt should then fall by the third year of the rolling forecast period.

Box 1.C What is net financial debt?

Net financial debt, defined as public sector net financial liabilities (PSNFL), is an official statistic that has been published by the Office for National Statistics since 2016, based on international statistical guidance.

Net financial debt includes all the debt and assets counted within PSND but is a broader and more comprehensive measure. [footnote 30] In addition to the government’s stock of debt captured in PSND, it includes all other financial liabilities (including funded pensions obligations and standardised guarantees). In addition to the liquid assets (like cash and deposits) captured in PSND, it also recognises illiquid financial assets (such as equity holdings and loans), which are netted off the debt held to calculate the overall measure of the public sector balance sheet. [footnote 31] Net financial debt does not include non-financial assets like school and hospital buildings.

Compared to PSND, in 2023-24 net financial debt included an additional £1,058 billion of financial assets, principally loan and equity assets, and an additional £667 billion of liabilities, principally around £507 billion worth of funded public sector pensions liabilities. [footnote 32]

Public sector net borrowing (PSNB) is one of the best-understood flow measures of the surplus or deficit of the public finances. One simple way to think of net financial debt is as the stock measure that corresponds to the flow of PSNB.

The path for net financial debt has broadly tracked PSND over time. This is because the assets and liabilities captured in PSND make up the majority of those included in net financial debt. Year-on-year changes to both measures are primarily driven by PSNB. Further detail is set out in ‘A strong fiscal framework’. [footnote 33]

Targeting net financial debt allows the government to deliver a step change in investment spending, while maintaining a strong fiscal anchor. Net financial debt:

• Strengthens fiscal management by providing a fuller account of what government owes and owns. The Institute for Fiscal Studies notes that net financial debt provides a ‘more complete picture of the government’s financial position, while removing some of the perverse incentives associated with a narrow focus on PSND’. [footnote 34]
• Recognises the value of financial assets. Unlike PSND, net financial debt reflects that financial investments, like loans, have a positive value. Not recognising the value of government’s financial assets could overly constrain public investment.
• Enables investments in financial assets, such as those delivered by the National Wealth Fund, that are expected to grow the economy while delivering a positive return for the Exchequer. Using a debt metric that does not recognise financial assets creates an incentive for government to forgo profitable investments. Where investments make a return above the government’s cost of finance they lower (not increase) the debt burden.

Before the measures announced in Autumn Budget 2024, the OBR forecast that the margin against net financial debt falling as a share of GDP in 2029-30 would be £8.7 billion higher than for PSND, and £20.9 billion higher than PSND excluding the Bank of England (PSND ex BoE). [footnote 35] This gap has narrowed relative to the OBR’s March 2024 forecast, when it had been £37.1 billion and £53.0 billion in the fifth year respectively. This reflects changes by the OBR to the forecast methodology for net financial debt to capture the effects of asset purchase facility (APF) sales and redemption losses, as well as other changes to the underlying pre-measures forecast for both metrics. The change is detailed in the OBR’s October 2024 Economic and Fiscal Outlook.

A reformed fiscal framework for stability and transparency

The government is reforming the fiscal framework to support stability by creating a predictable fiscal policy-making environment and to increase transparency. Robust guardrails will ensure investments are consistent with fiscal sustainability and decisions represent value for money. Box 1.D provides details on the new framework.

Box 1.D The strong fiscal framework

The improvements to the fiscal framework are set out in ‘A strong fiscal framework’ [footnote 36] and include:

• New guiding fiscal principles to move towards only borrowing for investment, and to keep debt on a sustainable path.
• The new stability and investment rules, which implement these principles.
• A move away from five-year targets, which have been widely criticised for enabling continual delays to fiscal consolidation. [footnote 37] , [footnote 38]
• Improvements to fiscal management by monitoring a wide range of metrics.
• A commitment to hold one major fiscal event per year to give families and businesses stability and certainty on upcoming tax and spending changes.
• Committing to hold a Spending Review every two years, setting departmental budgets for a minimum of three years. According to the IMF, this will ‘improve the credibility of the medium-term fiscal framework’. [footnote 39]
• Confirming the details of the fiscal lock, as already legislated for, [footnote 40] to ensure that no government can announce fiscally significant measures without being subject to an independent assessment by the OBR.
• Accepting all 10 recommendations in the OBR’s review of the March 2024 forecast for Departmental Expenditure Limits, including improving the transparency and consistency of the spending information the Treasury shares with the OBR.
• Requiring the OBR to report on the long-term economic impacts of capital investment and government policies in its forecast.
• Committing to publish an annual report on the government’s contingent liabilities (such as guarantees, insurance contracts, and provisions).
• An escape clause that provides a strengthened role for the OBR when the government assesses there is a need to temporarily suspend the fiscal rules due to economic shocks.

The investment rule is accompanied by guardrails to strengthen controls on public spending on financial assets, such as loans and equity. These are set out in the Financial Transaction Control Framework. [footnote 41] The core principles are that:

• The established spending control framework in Managing Public Money and Consolidated Budgeting Guidance remains in full. [footnote 42] , [footnote 43]
• New financial transactions (FTs) should generate a return at a portfolio level that at least covers their cost of financing, or when they do not, the costs of loss-making investments will be transparently recognised in departmental budgets.
• All large-scale FTs and guarantees should be delivered by expert institutions including the National Wealth Fund, UK Export Finance, and the British Business Bank.
• The government will publish an annual report on its financial assets using asset values audited by the National Audit Office (NAO).
• Standardised risk controls for FTs and guarantees will be introduced.

The government is reforming how it plans, assures, delivers, and evaluates capital spending and will underpin these reforms with new and strengthened institutions. These changes will provide greater certainty and greater assurance that investment is high-quality and well delivered, including by:

• Publishing a 10-year infrastructure strategy alongside Phase 2 of the Spending Review, outlining the government’s long-term approach.
• Setting five-year capital budgets and extending them every two years at regular spending reviews to avoid funding ‘cliff edges’ and give more certainty.
• Increasing the transparency of investment decisions by publishing business cases for major projects and programmes.
• Establishing the National Infrastructure and Service Transformation Authority (NISTA) to drive more effective delivery of infrastructure across the country. Alongside existing assurance mechanisms, NISTA will have an enhanced role in supporting major projects, including validating business cases prior to HM Treasury funding approval.
• Formally launching the Office for Value for Money (OVfM), with the appointment of an independent chair.
• Working with the NAO to benefit from their scrutiny of capital projects and learn lessons which can be applied to future projects.

Investing for growth

Supported by the new fiscal framework, the Budget significantly increases public investment and helps to crowd in private investment in the longer term. Public sector net investment will average 2.6% of GDP over the Parliament, in contrast to the previous government’s plans to reduce PSNI to 1.7% of GDP. This is supported by over £100 billion of additional investment over the next five years. This includes an increase of £13 billion next year, taking total departmental capital spending to £131 billion in 2025-26. This investment will be underpinned by clear guardrails to ensure that the increased capital spending is high quality and well delivered.

Chart 1.4: Public sector net investment

Source: Office for National Statistics and Office for Budget Responsibility.

Public investment is a crucial driver of long-term economic growth. The government will invest in transport to get Britain moving, build 1.5 million homes to unlock growth, support new industries and job creation, and back innovation through protecting record research and development (R&D) investment. The Budget also increases funding for public services, recognising that a well-functioning NHS and education system are critical to the economy. By contributing to the stock of capital in the economy, higher public investment increases levels of capital per worker and productivity. The returns to public capital investment can be high, and it can also crowd in private sector investment. The OBR assumes that in the long run, higher public investment has a positive impact on business investment of around £0.30 for every £1 increase in public investment spending. The economic effect of public investment is outlined further in Box 1.E.

Public investment in the UK has historically been low and inconsistent. The UK’s public capital stock as a share of GDP is the joint lowest in the G7, and more than 10 percentage points below the G7 median. [footnote 44] While most G7 countries’ public capital stock as a share of GDP has fallen since the 1980s, the UK has seen a steeper decline than most (both due to declining investment and privatisation).

Plans set at Spring Budget 2024 were for public sector net investment (PSNI) to fall from 2.6% in 2023-24 to 1.7% of GDP in 2028-29. The planned reduction in public investment would have undermined long-term growth, and the uncertainty over these plans is likely to have dampened the confidence of the private sector to invest alongside government. The IMF have noted that “cuts in public investment have severe effects on growth”. [footnote 45] Under the government’s new spending plans, public sector net investment will now average 2.5% of GDP over the next five years supported by £100 billion additional capital investment.

Box 1.E How public investment affects potential output

The OBR’s discussion paper ‘Public investment and potential output’ (2024) sets out a framework for accounting for the effects of changes in public investment on GDP. [footnote 46] The OBR identified and modelled two key channels affecting short, medium, and long-run potential output from a sustained increase in public investment: a boost to demand in the economy in the near term that dissipates over time, and a permanent increase in the capital stock and productivity leading to higher potential output within and beyond the five-year forecast horizon.

Using this framework, the OBR has estimated that the additional public investment in Autumn Budget 2024 will directly increase potential output by 0.1% after five years and if sustained, three times as much (0.3%) after ten years.

The OBR assumes these potential output effects grow over time, reflecting the time taken to spend, complete, and operationalise public investment. This means much of the growth benefit relating to spend within the five-year forecast continues to build up well beyond this horizon. The OBR estimates GDP would be around 1.1% higher in the long run (50-year horizon) if the increase in public investment announced in Autumn Budget 2024 over and above the previous government’s plans is maintained. [footnote 47]

The OBR notes that higher public investment could additionally raise returns in the private sector and labour market, resulting in crowding-in effects. Commentary from leading economists has emphasised that additional crowding-in effects could be significant. [footnote 48] The OBR expects the crowding-in of private investment from the public investment package to increase potential output by 0.1% after ten years and 0.3% in the long-run. This represents a boost of around a quarter to the already significant direct effect of the additional public investment. Taken together, the additional public investment, if sustained, is expected to increase GDP by 0.4% after ten years and by 1.4% in the long run.

Chart 1.5: Long-term impacts of sustained public investment

Source: ‘Economic and Fiscal Outlook’, OBR, October 2024.

Economic Outlook

The government’s decisions in Autumn Budget 2024 will boost investment and drive a higher level of output in the long run. The measures in the Budget form part of the wider growth mission, underpinned by seven pillars (outlined in Chapter 3).

Summary of the Economy Forecast

The OBR forecasts the economy to grow by 1.1% in 2024, before increasing to 2.0% and 1.8% in 2025 and 2026. Growth then returns to around the OBR’s estimate of its potential rate, at 1.5%, 1.5% and 1.6% over 2027, 2028 and 2029 respectively. The OBR judges that policies announced at Autumn Budget 2024 boost output in the near term and expect the package as a whole to have a net positive effect on potential output beyond the forecast horizon.

The OBR expects annual CPI inflation to remain close to the 2% target throughout the forecast period. The OBR forecasts inflation to average 2.5% in 2024, before increasing to 2.6% in 2025. It is expected to fall towards target across the final three years of the OBR forecast. Reflecting the impact of policy on inflation and demand, the OBR has adjusted its assumed path for Bank Rate, resulting in a slower reduction in interest rates over the forecast.

The OBR forecasts business investment to reach 10% of GDP in 2029, up from 9.7% of GDP in 2023 in the latest GDP statistics. The OBR judges that the Budget package as a whole will both crowd-in private investment (via increased public investment as set out in Box 1.E) and crowd‑out private investment, as higher government spending is offset in the short term by lower private sector activity.

The unemployment rate is forecast to average 4.3% in 2024, a small increase on 2023, before remaining close to 4.0%. The employment rate (for those aged 16 and over) is expected to remain close to 60% over the forecast. The OBR expects part of the additional costs from the employer NICs rise to be passed through to lower real wages, which would reduce the supply of labour, and partly through to lower profits.

Real household disposable income (RHDI) per capita, a measure of living standards, is forecast to grow by 1.4% in 2024-25 and 1.1% in 2025-26 and is no longer set to decline in the near term. RHDI per capita increases by 2.1% over the forecast period as a whole. RHDI captures only household income net of taxes and benefits and therefore does not reflect the benefits to households of investment in public services. GDP per capita, an alternative measure of living standards that captures higher spending on public services, is set to grow more rapidly than RHDI per capita, rising 5.9% between 2024-25 and 2029-30.

Global developments continue to weigh on the outlook for growth and inflation. Putin’s illegal war in Ukraine and ongoing conflict in the Middle East pose risks to the UK and global economies. Any material escalation that further disrupts energy and goods trade could contribute to higher oil prices and increased shipping costs.

Taken together, the measures in Autumn Budget 2024 fix the foundations of the economy and permanently boost economic output in the longer term. Sustainable public finances will contribute to a more stable business environment, supporting businesses and households to make long-term decisions, boosting investment and output. While some of the decisions taken at this event affect inflation and output within the five-year forecast, the government has prioritised investments that will pay off in the long term.

Table 1.1: Overview of the OBR’s economic forecast(1)

Fiscal outlook.

The decisions taken at Autumn Budget 2024 set realistic plans for public spending while putting the public finances on a sustainable path. The current budget deficit increases this year compared to the OBR March 2024 forecast. The government’s tax reforms and other measures then move the public finances to a position where day-to-day spending is matched by current receipts, and both net financial debt and PSND are falling as a share of the economy.

Controlling borrowing and day-to-day spending

The current budget deficit is forecast to be £55.5 billion in 2024-25. As shown in Chart 1.6, from 2027-28 the current budget is in surplus, which means the government is only borrowing for investment. At £10.9 billion in 2027-28 it is almost double the surplus projected in the OBR’s March 2024 forecast for that year. If achieved, it would be the largest since 2001-02. [footnote 49]

PSNB peaks at £127.5 billion, 4.5% of GDP, in 2024-25. PSNB then falls to £105.6 billion, 3.6% of GDP, in 2025-26. Borrowing is forecast to fall as a share of GDP by an average of 0.5 percentage points of GDP per year across the forecast. By 2029-30, PSNB is £70.6 billion, 2.1% of GDP. As set out in Box 1.F, this reduction in borrowing from year to year means that fiscal policy is helping to reduce inflationary pressure, supporting the independent MPC in returning inflation sustainably to target.

Chart 1.6: Public sector net borrowing and current budget deficit

Borrowing and the current budget deficit are higher in 2024-25 than the OBR forecast in March 2024, as shown in Table 1.2. This reflects both the £22 billion of in‑year pressure and forecast changes, including higher debt interest costs.

The central government net cash requirement (CGNCRex), [footnote 50] which affects how much the government will borrow in financial markets, has only increased by around half as much, from £142.8 billion in March to £165.1 billion in 2024-25. The difference between PSNB and CGNCRex is largely due to the accounting treatment on index-linked gilts and the APF. On average, CGNCRex is forecast to be £22.7 billion per year higher than was expected in the spring, a smaller increase than the £28.4 billion average increase to the PSNB forecast.

The Debt Management Office’s (DMO) net financing requirement for 2024-25 is forecast to be £299.9 billion. The remit for the DMO has been updated to reflect this, increasing by £22.2 billion. [footnote 51] This will be financed through £296.9 billion of gilt sales and a £3 billion contribution from sales of Treasury bills. National Savings and Investments will continue to have a net financing target of £9 billion in 2024-25, within a range of plus or minus £4 billion. The government’s financing plans for 2024-25 are summarised in Annex A.

Table 1.2: Changes in borrowing since March 2024

Box 1.f fiscal stance.

Fiscal policy influences growth and inflation by adding or withdrawing demand to and from the economy. The fiscal stance can be assessed using several borrowing metrics.

The primary deficit (PD), which subtracts net interest costs from borrowing, provides a measure of the effect of taxation and government expenditure on the economy. This is because interest costs are not a useful indicator of how fiscal policy affects economic activity and prices. The PD is higher in 2024‑25 than forecast in March 2024. From 2024-25 the PD falls by an average of 0.5 percentage points of GDP per year over the forecast. The PD falls by 2.3 percentage points of GDP in the three years from 2024-25, reflecting a larger consolidation effort than forecast in March 2024 over this period, and reaches a primary surplus of 0.7% of GDP in 2027-28. This helps to reduce inflationary pressure and supports the independent MPC in returning inflation sustainably to target. Higher tax revenues contribute two-thirds to the overall reduction in the primary deficit over the forecast horizon with lower spending accounting for one third.

Another measure is the cyclically adjusted primary deficit – this removes the impact of the economic cycle from the primary deficit. This has been higher than the PD in recent years, reflecting that demand has been greater than supply. It also falls over the forecast, with a consistently downward path.

Chart 1.7: Fiscal Stance

The government is meeting its fiscal rules.

The OBR has confirmed that the government is on track to meet its stability rule and investment rule. The current budget is in surplus by £9.9 billion in the target year, 2029-30, and the rule is met two years early. Net financial debt falls in the final year of the forecast with a £15.7 billion buffer. The rule is also met two years early in 2027-28. Net financial debt is slightly lower at the end of the OBR’s forecast (2029-30) than at the start (2024-25), at 83.4% and 83.5% of GDP respectively, showing the path of debt is stabilised.

Keeping debt on a sustainable path by monitoring a broad range of fiscal metrics

In addition to its fiscal rules, the government has committed to consider a wide range of metrics to inform a full assessment of the sustainability of the public finances, and will seek to improve sustainability over time.

PSND accounts for the public sector’s total stock of debt liabilities (net of liquid assets), including those of the Bank of England. PSND is forecast to be lower by the end of forecast than the start, falling from 98.4% of GDP in 2024-25 to 97.1% of GDP in 2029-30. It also falls in the final year. PSND ex BoE is forecast to be rising slightly by the end of the forecast to 95.8% of GDP in 2029-30.

Public sector net worth (PSNW), the difference between the value of all public sector assets (financial and non-financial) and liabilities, is expected to strengthen from -69.6% of GDP in 2024-25 to -67.9% of GDP in 2029-30.

Chart 1.8: Four measures of the public sector balance sheet

1 Government Finance Statistics Manual.

General government gross debt (GGGD) is the most used metric for international comparisons, allowing the government to compare the UK’s debt to that of its peers. The IMF forecasts that UK general government gross debt will be 101.8% of GDP in 2024, lower than that of all G7 peers other than Germany. [footnote 52] GGGD includes only liabilities held by central and local governments.

Net interest costs are broadly stable as a percentage of GDP over the forecast at 2.9% then 3.0% in the final two years of the forecast. This is a reduction from 3.9% in 2022-23, which was the highest level since the 1980s. [footnote 53] The debt-interest-to-revenue ratio will fall this year to 7.4% and remain broadly stable, reaching 7.2% by the end of the forecast.

The OBR forecasts that there is a 54% probability the current budget will be in balance or surplus in 2029-30. There are risks to any forecast, but the government’s robust fiscal framework is designed to respond to these risks if they materialise and ensure fiscal sustainability.

The OBR projects PSND will grow significantly over the next half a century because of longer-term pressures such as demographic changes, which are increasingly important in a number of major economies. [footnote 54] , [footnote 55] The government’s focus on economic growth is an essential component of mitigating this long-run risk and ensuring the public finances remain sustainable. The OBR estimates that every 0.1% increase in productivity growth reduces the rise in the debt-to-GDP ratio by 25 percentage points over the next 50 years, if it does not result in higher public spending. [footnote 56]

The government will transparently report any new commitments that may result in future costs, known as contingent liabilities. This is in line with best practice fiscal management as these liabilities are not all included in debt metrics. PSND does not include any contingent liabilities, while net financial debt does include the value of standardised guarantees. There have been two new material contingent liabilities taken on since the last update at Spring Budget 2024 with £282 million of total exposure and £86 million of net expected loss. These are the government’s ENABLE build and the Private Rental Sector Guarantee Scheme.

Table 1.3: Newly-approved contingent liabilities since Spring Budget 2024

The OBR has confirmed the government’s use of FTs has remained broadly stable since the March 2024 forecast. The government is committed to using FTs in a fiscally responsible way, as set out in the FT Control Framework published alongside the Budget.

Table 1.4: Changes in financial transactions forecast since March 2024

Fiscal forecast summary, table 1.5: overview of the obr’s fiscal forecast (% gdp), welfare cap.

The government has inherited a welfare cap that was introduced in 2014 to limit the amount spent on certain social security benefits and tax credits (set out in Annex B). The government is reforming this cap and is committed to ensuring that welfare spending is sustainable in the medium term.

Performance against the cap will be formally assessed by the OBR at the first fiscal event of the next Parliament. The government will seek to manage spending internally, based on monitoring between HM Treasury and Department for Work and Pensions (DWP), to ensure progress is being made to meet the cap. To strengthen the welfare cap’s effectiveness, DWP will publish a new annual report on welfare spending, which sets out the department’s plan to ensure welfare spending is on a sustainable path as well as progress against the cap. In relevant years, it will also provide a government response to the OBR’s Welfare Trends Report.

The level of the welfare cap will be reset for 2029-30 using the OBR’s latest forecast for the benefits in scope. The cap will apply to spending in 2029-30 and will feature a margin that rises from 0.5% above the forecast in the first year to 5% in 2029-30, to avoid the government having to take short-term decisions in response to unavoidable fluctuations in spending.

The OBR has assessed spending against the previous government’s welfare cap. In line with recent informal assessments, total relevant spending in 2024-25 is forecast to breach that welfare cap and margin by £8.6 billion.

Table 1.6 New welfare cap (in £ billion, unless otherwise stated)

Public spending.

Phase 1 of the Spending Review (SR) resets UK government departments’ resource and capital DEL budgets and the devolved government block grants for 2024-25 and sets budgets for 2025-26. This includes providing targeted funding to stabilise and support public services and delivering a significant increase in public investment in the economy.

Table 1.7: Total Managed Expenditure (TME)(1)

Chart 1.9: total managed expenditure (% gdp), chart 1.10: total departmental spending (del).

Source: HM Treasury Calculations and Office for Budget Responsibility.

Table 1.8: Total Departmental Expenditure Limits (DEL) excluding depreciation(1)

As Table 1.8 shows, total departmental spending is set to grow by an average of 4.3% per year in real terms between 2023-24 and 2025-26, which will stabilise and support public services, and help to rebuild Britain. Total departmental spending will continue to grow in real terms over the remainder of the forecast period, resulting in an average annual real terms growth rate of 2.2% from 2023-24 to 2029‑30.

The plans set out in the Budget, and detailed in Table 1.9, mean that departments’ day-to-day spending will increase by an average of 2.0% in real terms over the forecast period – a real terms increase of £62 billion between 2023-24 and 2029-30.

Effective public services are vital to supporting the health, wellbeing and prosperity of people across the UK, as well as underpinning economic growth. Under the new spending plans set out in the Budget, key public service delivery departments, such DfE, MOJ and DHSC, will see real terms increases in spending over Phase 1 of the Spending Review (2024-25 and 2025-26). This will enable them to deliver better public services and improve public service performance, including increasing elective activity to reduce the NHS waiting list.

The Budget increases capital spending by over £100 billion over the next five years, with a £13 billion increase next year (a real terms increase of 9.9%), taking total capital DEL spending to £131 billion in 2025-26 as set out in Table 1.10, this equates to an average annual real increase in capital DEL of 3.0% between 2023-24 and 2029-30. This investment will be underpinned by a clear strategy and plan for delivery to ensure that increased public investment is high-quality and delivered effectively.

The government’s capital plans include investment in transport – unlocking growth-enhancing schemes like East West Rail – kickstarting the delivery of 1.5 million homes, supporting new industries and job creation, protecting record government research and development (R&D) funding and increases investment in public services.

Spending Review 2025 now moves to Phase 2, which will build on the progress made in Phase 1, with an approach that is mission-led, reform-focused and technology-enabled. Phase 2 will set out long-term plans for improving public services, achieving value for money for taxpayers, and investing to bring about a decade of national renewal.

Table 1.9: Resource Departmental Expenditure Limits (DEL) excluding depreciation(1)

Table 1.10: capital departmental expenditure limits (del)(1).

The government is achieving this by taking difficult decisions on tax, spending and welfare to repair the public finances and increase investment in public services and the economy, to rebuild Britain and unlock long-term growth.

Delivering value for money in public spending

The government is committed to ensuring that taxpayers’ money is spent effectively. The government took immediate steps as part of the audit of public spending carried out in July to reduce waste and enact structural reforms to drive efficiency. [footnote 57]

The Budget formally launches the Office for Value for Money (OVfM), with the appointment of an independent Chair. As a first step, the Chair will advise the Chancellor and the Chief Secretary to the Treasury on decisions for Phase 2 of the Spending Review. This will include conducting an assessment of where and how to root out waste and inefficiency, undertaking value for money studies in specific high-risk areas of cross-departmental spending, and scrutinising investment proposals to ensure they offer value for money.

The OVfM will also develop recommendations for system reform, informed by lessons learned from the past, international best practice, and the views of external organisations. This will underpin a ruthless focus within government on realising benefits from every pound of public spending.

The government will shortly appoint a Covid Corruption Commissioner. The Commissioner will lead work to recover public funds from companies that took unfair advantage of government schemes during the COVID-19 pandemic.

The Budget also confirms that the government is progressing the savings commitments announced as part of the audit of public spending in July:

• Action has already been taken to stop all non-essential spending on consultancy in 2024-25, with an aim to halve spending in future years. The government expects to deliver the £550 million in-year savings target set in July based on HM Treasury forecast figures and planned Departmental expenditure. The government will continue to bear down on consultancy spending in 2025-26 in line with existing commitments;
• The Government Communications Service is expecting to save £85 million from reducing unnecessary communications spend – exceeding the £50 million target set out in July; and
• The government will continue to dispose of surplus estate and can confirm that it will set a target of at least £1 billion of receipts by 2030.

In Phase 1 of the Spending Review, the government has taken a ruthless approach to prioritising spending and identifying opportunities for savings. Examples of this include:

• Taking additional actions since cancelling the Migration and Economic Development Partnership with Rwanda, which are forecast to deliver £2.2 billion of savings in 2024-25 and 2025-26 by reducing the asylum backlog. Compared to the previous trajectory of spending, this represents a total saving of over £4 billion on asylum across the two years; and
• Delivering significant efficiencies across departments, including £107 million savings in HM Revenue and Customs (HMRC) in 2025-26 through continuous improvement and more than £250 million in the Department for Work and Pensions (DWP) in savings and efficiencies in 2025-26, including through its service modernisation programme.

The government has placed a renewed focus on public sector productivity in Phase 1 of the Spending Review. The government has set departments a 2% productivity, efficiency and savings target for next year. This will ensure that departments are focusing on the delivery of what matters most. The government will monitor the delivery of this target through the Government Efficiency Framework.

To continue to drive value for money, the government will also use the new Procurement Act to create a simpler and more transparent regime for public sector procurement that will deliver better value for money and reduce costs for business and the public sector. The government will implement the Act in February 2025 with further reforms including a new National Procurement Policy Statement.

The government is putting fraud prevention at the heart of public spending decisions, with the Public Sector Fraud Authority (PSFA) assessing Initial Fraud Impact Assessments (IFIAs) submitted by departments on their highest risk priority projects. This will make sure that counter-fraud activity is considered in all major spending decisions.

The government is also developing a strategic plan for a more efficient and effective civil service, including through improving skills and harnessing digital technology to drive better outcomes for public services.

Tackling fraud and error in the welfare system

Fraud and error in the welfare system costs the government nearly £10 billion a year. [footnote 58] The government is committed to tackling this to fix the public finances and invest in public services. That is why the government is announcing the biggest welfare fraud and error budget package in recent history, saving £4.3 billion in 2029-30. [footnote 59]

This package includes programmes that will prevent, detect, and correct fraud and error in the benefit system. This includes 3,180 additional fraud and error staff across DWP and HMRC saving £800 million in 2029-30, new investment to verify changes in Universal Credit (UC) claims saving £250 million in 2029-30 and extending the Targeted Case Review to help spot incorrect UC claims saving £2.5 billion in 2029-30.

DWP also continues to use data from across government and the private sector to tackle fraud and error. The forthcoming Fraud, Error and Debt Bill will introduce new powers to check benefits are being paid correctly using data shared by banks and financial institutions, saving £475 million in 2029-30. The Bill will also strengthen DWP’s powers to recover debt, saving £260 million in 2029-30. DWP will continue to collaborate with other government departments such as HMRC, the Home Office and Department for Science, Innovation and Technology to further strengthen data sharing and explore new data innovations to tackle fraud and error

Table 2.1: Total gross savings from actions confirmed at Autumn Budget 2024 on welfare fraud and error (£ million)(1)

Closing the tax gap.

Before considering any tax changes to repair the public finances, the government is ensuring that everyone is paying the tax that they owe. This is fair, essential for a well-functioning economy and will help to keep taxes on working people as low as possible. To stop people taking unfair advantage of the system, the government is announcing the most ambitious ever package to close the tax gap, raising £6.5 billion in additional tax revenue per year by 2029-30. To deliver this and wider reform, the HMRC Board has been refocused with the Exchequer Secretary to the Treasury as its ministerial chair for the first time.

As part of this package, the government is recruiting an additional 5,000 compliance staff – with the first 200 starting training in November – and providing funding for 1,800 debt management staff. This will ensure more of the tax that is owed is paid and that more taxpayers pay outstanding tax due.

The government is also investing in modernising IT and data systems to improve HMRC’s productivity and improve taxpayers’ experience of dealing with the tax system, delivering the modern and digital service businesses and individuals expect.

The government will legislate to close loopholes in company car tax rules by ending contrived car ownership schemes, and encourage taxpayers to pay tax on time by increasing the interest rate charged on overdue tax debts. The government is also committed to taking stronger action on the most egregious tax fraud, including by expanding HMRC’s criminal investigation work and legislating to prevent abuse in non-compliant umbrella companies.

The Budget also sets out the first steps of the government’s longer-term ambition to design out opportunities for non-compliance and make the tax system easier to deal with, through making better use of data and raising the standards of tax advisers who interact with HMRC.

Fixing the foundations will create the necessary conditions for growth, as well as providing the economic stability working people need. The choices made in the Budget also mean that the government will provide support to the people who need it the most, delivering on its commitments to protect working people, spend taxpayers’ money more sustainably, and provide a welfare system that supports people to work, where they can.

Rewarding work with a fair wage is the best way to improve living standards, while also providing people with the security of knowing they will be able to pay their bills now and in the future.

That is why the government swiftly updated the remit of the Low Pay Commission (LPC) in July to ask them to recommend a National Living Wage (NLW) that, for the first time, takes into account the cost of living.

The government has accepted the recommendations in full and the NLW will increase by 6.7% to £12.21 per hour from April 2025. This represents an increase of £1,400 to the annual earnings of a full-time worker on the NLW and is expected to benefit over 3 million low paid workers across the UK. [footnote 60] , [footnote 61]

Over time, the government intends to create a single adult wage rate, and therefore also asked the LPC to recommend a minimum wage for 18-20 year olds that would begin to close the gap with the main NLW rate, eventually giving them the same wage for the same day’s work. In accepting the recommendation from the LPC, from April 2025, the National Minimum Wage (NMW) for 18-20 year olds will be £10.00 per hour, an increase of 16.3%, the largest ever increase in both cash and percentage terms. This means a boost to annual earnings of over £2,500 for nearly 200,000 young people across the UK. [footnote 62] , [footnote 63]

The government is also giving carers greater flexibility to work and increase their financial security by raising the Carer’s Allowance Weekly Earnings Limit to the equivalent of 16 hours at the NLW. The changes will support those receiving Carer’s Allowance, 70% of which are women, to start work or work more hours. [footnote 64] This is an increase of £45 per week and will allow over 60,000 more carers to access Carer’s Allowance. [footnote 65] This will be the largest increase to the earnings limit since Carer’s Allowance was introduced in 1976.

The government also recently announced an independent review into overpayments of Carer’s Allowance, which will consider how they occurred and what operational changes can be made to minimise the risk of future overpayments. Alongside this, the government will also carry out further work on the earnings limit to explore what more can be done to help support more carers into work.

The government will accelerate the migration of claimants onto UC from Employment and Support Allowance (ESA), bringing the start date forward from 2028 to September 2024. This move will bring more people into a modern benefit regime, continuing to ensure they are supported to look for and move into work. Around half of ESA claimants will receive more financial support on UC, while others will receive transitional protection to ensure nobody is worse off at the point at which they move over to UC.

The government recognises that additional support continues to be needed to improve economic security and resilience for those families who need it most. The government will provide £1 billion, including Barnett impact, to extend both the Household Support Fund in England and Discretionary Housing Payments in England and Wales in 2025-26. This will be used by local authorities to help low-income households facing hardship and financial crisis, including supporting them with the cost of essentials such as food, energy and water.

In addition, the government is helping low-income households on UC by allowing them to pay off their debts over a longer timeframe and keep more of their UC each month. The government is creating a new Fair Repayment Rate which caps debt repayments made through UC at 15% of the standard allowance. This will benefit around 1.2 million households as they will keep more of their UC award each month, with households expected to be better off by £420 a year on average. Around 700,000 of the poorest families with children will benefit as a result of this change, supporting the government’s ambition to tackle child poverty. [footnote 66]

The government will also extend the current Help to Save scheme until April 2027. With effect from April 2025, eligibility will be extended to all UC claimants who are in work. A delivery consultation, including proposals for a reformed and improved scheme, has been published alongside the Budget.

The government is committed to delivering a welfare system that provides a safety net for when people need it and supports living standards for those on the lowest incomes. The government will therefore uprate all working age benefits for 2025-26 in full, by the September 2024 CPI rate of 1.7%. This will provide 5.7 million families on UC with an average annual increase of £150 in 2025-26. [footnote 67]

The government will maintain the State Pension Triple Lock for the duration of this parliament. The basic and new State Pension will increase by 4.1% from April 2025, in line with earnings growth, meaning over 12 million pensioners will gain up to £470 each in 2025-26. [footnote 68] , [footnote 69]

The Pension Credit Standard Minimum Guarantee will also increase by 4.1% from April 2025, meaning an annual increase of £465 in 2025-26 in the single pensioner guarantee and £710 in the couple guarantee. [footnote 70]

Tax and working people

Repairing the public finances and increasing funding for public services requires difficult decisions on tax to raise additional revenue. The government has committed to not increase taxes on working people, which is why it is not increasing the basic, higher or additional rates of income tax, National Insurance contributions or VAT

The cost of living remains high, with potential fuel price volatility amid global uncertainty. Therefore, the government will protect motorists by freezing fuel duty at current levels for one year to support hard-working families and businesses. The 5p cut will be extended for a further 12 months and the planned increase in line with inflation for 2025-26 will be cancelled. This represents a saving of £59 in 2025‑26 for the average car driver. [footnote 71]

The government will also facilitate competition in the road fuels market, improve transparency and empower drivers to find the cheapest fuel prices by accepting the Competition and Markets Authority’s recommendations to implement Fuel Finder, an open data scheme for fuel prices and a market monitoring function by the end of 2025. While fuel price reactions are inevitably uncertain and sensitive to wider global factors, by increasing transparency and encouraging competition between forecourts, scenario modelling by the government suggests pump prices could reduce by 1-6p per litre as a result of these measures, helping to ensure that drivers get a fair deal for fuel across the UK [footnote 72] .

Box 2.A Impact on households

Increases in spending on public services, such as health and education, benefit households on lower incomes the most. The distributional analysis published alongside the Budget shows that on average, households in the lowest income deciles in 2025-26 will benefit most from the policy decisions as a percentage of net income and increases in tax will be concentrated on the highest income households. Overall, on average, all but the richest 10% of households will benefit as a percentage of income from policy decisions in 2025-26.

Chart 2.1: Impact of decisions at Autumn Budget 2024 and Spending Review 2025, Phase 1 on households in 2025-26, as a percentage of net income, by income decile

Source: HM Treasury Distributional Analysis model.

See the ‘Impact on Households’ publication for more details on the impact of the Budget and Phase 1 of the Spending Review on households across the income distribution.

Public service outcomes have been declining and are at historic lows. The previous government had planned for day-to-day departmental spending to fall significantly as a proportion of the economy in the coming years. The government is taking a different approach and taking difficult decisions on tax to raise revenue and deliver the increased investment that public services need.

The government is increasing the rate of employer National Insurance contributions (NICs) from 13.8% to 15% and reducing the per-employee threshold at which employers become liable to pay National Insurance (the Secondary Threshold) from 6 April 2025 to £5,000. After these changes the UK’s total revenue as a share of GDP from employer Social Security Contributions and payroll taxes will remain below the OECD average and third lowest in the G7, below France, Italy, Germany and Japan, based on the latest available OECD data. [footnote 73]

At the same time, the government is increasing the Employment Allowance – raising revenue in a fair way, while protecting the smallest businesses. The current Employment Allowance gives employers with NICs bills of £100,000 or less a discount of £5,000 on their employer NICs bill. The government will protect the smallest businesses by increasing the Employment Allowance to £10,500 next year. [footnote 74] The government will also expand the Employment Allowance by removing the £100,000 eligibility threshold, to simplify and reform employer NICs so that all eligible employers now benefit. Taken together, this means that 865,000 businesses will pay no NICs at all, and more than half of employers with NICs liabilities will either see no change or will gain overall next year. [footnote 75]

Supporting businesses and providing stability

In raising revenue to repair the public finances, the government is committed to creating the conditions for economic growth. The UK is forecast to be in the middle of the pack in the G7. There is mixed evidence linking a country’s tax-to-GDP ratio and growth performance and there is no causal link between the two. [footnote 76] , [footnote 77] The government recognises that a stable and predictable tax system is essential for long-term growth and is taking steps to restore stability whilst supporting the high street and small businesses.

The government is committed to supporting small businesses and the high street, by taking the following action:

• Transforming business rates in England over this Parliament to deliver a fairer system that protects the high street, better incentivises investment, and is fit for the 21st century. To meet the first of these objectives, the government intends to introduce permanently lower business rates multipliers for high-street retail, hospitality and leisure properties (RHL) from 2026-27. To make sure this tax cut is fiscally sustainable, the government intends to fund it through a higher multiplier for the most valuable properties. This measure will provide certainty and support for the high street.
• Supporting the high street and small businesses in England during the interim period – for 2025-26, the small business multiplier will be frozen. Together with Small Business Rates Relief this will protect over a million small properties from inflationary bill increases, and RHL businesses will receive 40% relief (up to £110,000 per business). English local authorities will be fully compensated for the loss of income and administration costs resulting from these business rates measures.
• Consulting with businesses – alongside the Budget, a business rates Discussion Paper has been published, setting out the government’s priority areas for these reforms, and inviting industry to help co-design a fairer business rates system.

The government recognises the economic and cultural importance of British pubs, and is committed to supporting smaller brewers. The Budget is therefore reducing duty on qualifying draught products, which represent approximately 60% of alcoholic drinks sold in pubs. [footnote 78] This measure reduces duty bills by over £85 million a year, cutting duty on an average strength pint by a penny. To support small producers, the government will make the Small Producer Relief more valuable. The government will also consult on ways to encourage small brewers to retain and expand their access to UK pubs, maximising drinkers’ choice and local economies, including through provisions to enable more ‘guest beers’.

The government will always support the UK’s high-quality food and drink producers and is therefore announcing the end of mandatory duty stamps for spirits, removing an outdated regulatory burden which provided minimal tax assurance. The government will also consult with industry to establish how the government can better support the delivery of the Spirit Drinks Verification Scheme, which allows spirit producers to verify the geographic origin of their products. This will include the government making an investment of up to 5 million to support and look to reduce bureaucracy for existing and prospective producers who may wish to join.

To provide stability and predictability for business, the government is publishing the Corporate Tax Roadmap. Central to the Roadmap is a competitive and sustainable main rate of Corporation Tax capped at 25%, which is the lowest in the G7, as well as a commitment to maintain the UK’s generous R&D tax reliefs and world-leading capital allowance offer.

Box 2.B Tax policy making and simplification

A stable and predictable tax system is vital to create the conditions for sustained economic growth: it provides businesses with the stability and certainty needed to make long-term investment decisions, it ensures that taxpayers pay the right amount of tax the first time round, and it reduces the administrative burden on taxpayers allowing businesses and workers to focus on adding value to the economy.

The government will engage with stakeholders over the coming months to understand their views on where the tax policy making process works well, and what could be improved. The government is committed to a single major fiscal event per year.

The government will simplify the tax system and will take this forward as part of its three strategic priorities for HMRC: closing the tax gap, modernisation and reform, and improving customer service.

The government will announce a package of measures to simplify tax administration and improve the customer experience in spring 2025 with a focus on reducing burdens on small businesses. The government will meet stakeholders to understand the priorities for administration and simplification, ensuring that this work is driven by the views of taxpayers.

Moving to a fairer and more sustainable tax system

Repairing the public finances and increasing funding for public services means raising more revenue, but the government is doing this in a way that protects working people and makes the tax system fairer and more sustainable.

The government is raising revenue by increasing Capital Gains Tax (CGT), while ensuring that the UK tax system remains internationally competitive, with headline rates below France, Germany and Italy. CGT, which is paid on the increase in value of an asset when it is disposed of, is paid by fewer than 1% of adults each year. The main rates of CGT are currently charged at a lower rate of 10% and a higher rate of 20%, and these will be increased to 18% and 24% respectively from 30 October 2024. These new rates will match the residential property rates, which are not changing.

There are two reliefs which offer access to a lower rate of CGT: Business Asset Disposal Relief (BADR), and Investors’ Relief (IR). The rate for both BADR and IR will increase gradually, to give business owners time to adjust to the changes. The BADR and IR rates will rise to 14% from 6 April 2025, and will match the main lower rate of 18% from 6 April 2026. Phasing in the BADR and IR rate increases demonstrates the government’s commitment to a predictable tax system. The government is committed to creating a positive environment for entrepreneurship and will work with leading entrepreneurs and venture capital firms on how policy supports that, including the role of the existing tax schemes.

The vast majority of estates currently pay no inheritance tax, and that will continue to be the case after the reforms announced at Budget. [footnote 79] The government recognises that people want to pass on their assets to their families, but the government is making the inheritance tax system fairer by ensuring that wealthy estates contribute more to the public finances. The current inheritance tax thresholds are due to be frozen until April 2028, and the government is extending these threshold freezes for a further two years to April 2030.

The government will reform agricultural property relief and business property relief from April 2026. In addition to existing nil-rate bands and exemptions, the 100% rate of relief will continue for the first £1 million of combined agricultural and business assets to help protect family farms and businesses, and will be 50% thereafter. The government will also reduce the rate of business property relief to 50% in all circumstances for shares designated as “not listed” on the markets of a recognised stock exchange, such as AIM. This will affect around 0.3% of estates each year. [footnote 80] The government is also removing the opportunity for individuals to use pensions as a vehicle for inheritance tax planning by bringing unspent pots into the scope of inheritance tax from April 2027, which will affect around 8% of estates each year. [footnote 81]

The government is committed to fixing the NHS, which means focusing on prevention, including disincentivising activities that cause ill health. The government will renew the Tobacco Duty escalator of RPI+2% for the remainder of this Parliament and will increase duty by a further 10% on hand-rolling tobacco this year. A new Vaping Products Duty will be introduced from 1 October 2026 at a flat rate of £2.20 per 10ml vaping liquid, accompanied by an equivalent further one-off increase in Tobacco Duty to maintain the financial incentive to switch from tobacco to vaping.

To help tackle obesity and other harms caused by high sugar intake, the government will ensure that the Soft Drinks Industry Levy increases to maintain incentives for soft drinks manufacturers to reduce their sugar content. The government will also review the current sugar thresholds and the exemption for milk-based drinks.

While the government is cutting duty on draught products, it has also heard representations to increase alcohol duty by more than inflation to tackle increasing alcohol-related deaths, as well as economic inactivity. The government is also mindful of the cost of living pressures on people who drink moderately and responsibly. Balancing these pressures, the government will uprate alcohol duty in line with RPI, except for most drinks in pubs. Increasing the non-draught rates of alcohol duty while reducing draught rates will encourage responsible drinking in social, controlled settings.

Air Passenger Duty rates have fallen behind inflation, and private jets are relatively undertaxed. For 2026-27, the government will adjust all APD rates to help correct for below-inflation uprating in recent years. This will equate to £2 more for those flying to short‑haul destinations in economy class. The higher rate for larger private jets will rise by a further 50%, and the government will consult on extending this rate to all private jets within the APD regime.

Delivering tax commitments

Everyone who makes their home in the UK should pay their taxes here. The government is removing the outdated concept of domicile status from the tax system and replacing it with a new internationally competitive residence-based regime from 6 April 2025. This includes ending the use of offshore trusts to shelter assets from Inheritance Tax and scrapping the planned 50% tax reduction for foreign income in the first year of the new regime.

Carried interest is a performance-related reward received by a small population of fund management executives. Unlike other forms of compensation, carried interest can be subject to Capital Gains Tax (CGT), where certain conditions are met. The government believes there is a compelling case for reform in this area. From April 2026, carried interest will be taxed fully within the Income Tax framework, with bespoke rules to reflect its unique characteristics – providing for fairer and more sustainable outcomes, while safeguarding the strength of the UK as a fund management hub. Ahead of this, the CGT rates currently applied to carried interest will be increased to 32% from April 2025.

The government is supporting first-time and main home buyers by increasing the Higher Rates for Additional Dwellings of Stamp Duty Land Tax from 3% to 5% from 31 October 2024. These higher rates apply to purchases of second homes, buy-to-let residential properties and companies purchasing residential property and the increase will provide those looking to move home or purchase their first property with a comparative advantage over those purchasing additional property. This is expected to result in 130,000 additional transactions over the next five years by first-time buyers and other people buying a primary residence. [footnote 82] Those who exchanged contracts prior to 31 October 2024 are not affected by this rate increase.

One of the government’s key missions is to make the UK a clean energy superpower. To achieve that, it is essential that oil and gas companies contribute more to the energy transition: this is why the government is making changes to the Energy Profits Levy (EPL) including increasing its rate by three percentage points to 38%, removing the 29% investment allowance, and extending the time the levy applies until 31 March 2030.

The government is committed to managing the energy transition in a way that supports jobs in existing and future industries and so will retain the availability of 100% first year capital allowances within the EPL. As announced in July, the decarbonisation allowance will also remain in order to incentivise the sector to invest in cleaner, lower-emission technologies and will be set at 66% to maintain its cash value.

After a period of change, the government also recognises the importance of providing the oil and gas industry with long-term certainty on taxation. The government will publish a consultation in early 2025 on how the taxation of offshore oil and gas will respond to price shocks once EPL ends in 2030. In addition, the government is today publishing a consultation on new environmental guidance for assessing end use emissions related to oil and gas projects. This consultation seeks to provide stability for the oil and gas industry, support investment, protect jobs and ensure a fair, orderly and prosperous transition in the North Sea in line with our climate and legal obligations.

The government is committed to ensuring that every child has access to high-quality education. To secure additional funding to help deliver commitments relating to education and young people, the government will introduce 20% VAT on education and boarding services provided for a charge by private schools from 1 January 2025. The government will also remove business rates charitable rate relief from private schools in England from April 2025. Together, these policies are expected to raise £1.8 billion per year by 2029‑30. The impact on the state education system as a whole is expected to be very small.

To support pupils with special educational needs that can only be met in a private school, local authorities and devolved governments that fund these places will be compensated for the VAT they are charged on those pupils’ fees. Private schools which are “wholly or mainly” concerned with providing full time education to pupils with an Education, Health and Care Plan will remain eligible for business rates charitable relief.

Phase 1 of Spending Review 2025, which concludes alongside Autumn Budget 2024, provides significant additional investment to reset departmental budgets, and support public services. Improving the performance of public services forms a core part of the government’s plan for driving growth.

At Autumn Budget 2024, the government is committing to one major fiscal event a year. The government has fixed the envelope for Phase 2 of the Spending Review consistent with the fiscal rules. It will conclude in late spring 2025.

Supporting public services

Phase 1 of the Spending Review focuses on delivery of the government’s first steps for change, including:

• Reducing waiting times by supporting the NHS to deliver 40,000 extra elective appointments a week and make progress towards the commitment that patients should expect to wait no longer than 18 weeks from referral to consultant-led treatment.
• Securing the UK’s borders by establishing a new Border Security Command to tackle criminal gangs, reducing both irregular migration and the flow of illicit commodities towards the UK, and safeguarding victims of trafficking and smuggling.
• Increasing powers to address anti-social behaviour, strengthening neighbourhood policing and establishing the first trailblazer Young Futures Hubs in England.
• Further supporting recruitment of 6,500 new teachers in England, through increases to the core schools budget of £2.3 billion.
• Establishing Great British Energy with £125 million in 2025‑26.

Beyond these first steps, Phase 1 of the Spending Review confirms 2024‑25 and 2025‑26 budgets for all departments, providing the targeted funding necessary to stabilise and support public services.

Fixing the NHS

The NHS is a source of immense national pride, and this government wants to ensure that the healthcare system is there for people when they need it. That is why in his first week, the Secretary of State for Health and Social Care commissioned Lord Darzi to conduct an immediate and independent investigation of NHS performance and the challenges facing the healthcare system.

Lord Darzi’s report clearly set out the scale of the challenge – he found the NHS was in “critical condition”. [footnote 83] The waiting list for elective treatment currently stands at 7.6 million, people are waiting too long to get the GP or NHS dentist appointments they need, and 10% of patients are now waiting for 12 hours or more in A&E. [footnote 84] , [footnote 85] This is in part due to a wider set of challenges: the health of the nation has deteriorated and there are significant inequalities in health and care. Restoring the health service will therefore take time and will require the drivers of performance that Lord Darzi identified to be addressed.

The government is prioritising the NHS in Phase 1 of the Spending Review. The settlement means resource spending for the Department of Health and Social Care (DHSC) will increase by £22.6 billion from 2023‑24 to 2025‑26. This provides a two year average real terms NHS growth rate of 4.0%, the highest since before 2010 excluding COVID-19 pandemic years. [footnote 86] The settlement will reduce waiting times by supporting the NHS to deliver 40,000 extra elective appointments a week and make progress towards the commitment that patients should expect to wait no longer than 18 weeks from referral to consultant-led treatment. This includes an additional £1.8 billion to support elective activity since July. In tandem, patient care pathways will be reformed to ensure patients are seen in settings which can deliver better patient experience for lower cost, enhancing patient choice and embedding best practice right across the country.

Lord Darzi found the NHS had been “starved of capital” funding during the 2010s – a £37 billion shortfall – and that this has prevented hospitals being productive. The government will take significant steps to address this. Phase 1 of the Spending Review provides record levels of capital investment for health with an increase of £3.1 billion in 2025‑26 compared to 2023-24 outturn, rising to £13.6 billion, a two-year average real terms growth rate of 10.9%. This will:

• Support NHS performance across secondary care with around £1.5 billion capital funding in total for new surgical hubs and diagnostic scanners to build capacity for over 30,000 additional procedures, and over 1.25 million diagnostic tests as they come online; new beds to create more treatment space in emergency departments, reduce waiting times and help shift more care into the community; and £70 million to invest in new radiotherapy machines to improve cancer treatment.
• Begin to reverse the trend of capital underfunding of the last 15 years identified by Lord Darzi, with over £1 billion to tackle dangerous reinforced autoclaved aerated concrete (RAAC) and make inroads into the existing backlog of critical maintenance, repairs and upgrades across the NHS estate – protecting staff and patients and boosting NHS productivity.
• Invest more than £2 billion in NHS technology and digital to run essential services and drive NHS productivity improvements, to free up staff time, ensure all Trusts have Electronic Patient Records, improve cyber security and enhance patient access through the NHS App. In implementing the settlement, DHSC (including the NHS) will deliver 2% productivity next year.
• Establish a dedicated fund to deliver around 200 upgrades to GP surgeries across England, supporting improved use of existing buildings and space, boosting productivity and enabling practices to deliver more patient appointments.
• Continue delivery of the New Hospital Programme on a more sustainable and deliverable footing, moving swiftly to rebuild hospitals wholly or primarily built with RAAC or which are in build. Remaining schemes will be delivered through a rolling programme of major investment as part of the government’s commitment to providing hospital infrastructure investment. Further details regarding the Programme review and next steps will be set out by DHSC in due course.
• Strengthen the UK’s pandemic preparedness and health protection with £460 million of investment to address the risk posed by future health emergencies and implement the lessons learnt from the pandemic by replenishing personal protection equipment (PPE), vaccine and medicines stockpiles, and investing in critical health protection infrastructure, such as high-containment laboratories.
• Provide £26 million to open new mental health crisis centres, reducing pressure on A&E services. The government is committed to tackling the root causes of mental health problems and supporting people to remain in, return to or find work.
• Protect core R&D budgets with a real terms increase in funding for the National Institute for Health and Care Research to support the NHS and wider health and care system in driving a revolution in research, life sciences, med tech and data. This will strengthen the UK clinical trial network, supporting better patient outcomes, and bolster the life sciences investment environment.

The government will support local authority services through a real terms increase in core local government spending power of around 3.2%, including at least £600 million of new grant funding to support social care. [footnote 87] This is alongside an £86 million increase to the Disabled Facilities Grant to support 7,800 more adaptations to homes for those with social care needs to reduce hospitalisations and prolong independence.

Investment alone will not fix the current state of the NHS. The government’s 10 Year Health Plan will focus on the hard work of reform, increasing productivity and ensuring every pound of taxpayers’ money is spent wisely through three shifts in how healthcare is delivered:

• In shifting care from hospital to community the government wants to see more care delivered through Neighbourhood Health Services. These will provide more proactive and personalised care that will be better for patients and deliver better value for taxpayers. The government will also reform delivery of elective activity and patient care pathways, including a shift to lower cost settings wherever appropriate.
• In transforming the NHS from analogue to digital, the government is investing to deliver NHS productivity improvements, by harnessing technological opportunities that will transform the patient experience, free up staff time and improve the quality of care.
• In moving from a model of sickness to prevention, the government is taking action against childhood and adult obesity and creating the first smoke-free generation. The government will restrict junk food advertising on TV and online to reduce the number of children living with obesity; and gradually end the sale of tobacco products across the country, ban vapes from being deliberately branded and advertised to children, and deliver an ambitious package of support to help current smokers to quit.

The Department for Education’s (DfE) settlement means resource spending on the education system in England will increase by £11.2 billion from 2023‑24 levels by 2025‑26, a 3.5% real terms increase. This funding demonstrates the government’s commitment to schools, giving every child the best start in life, supporting disadvantaged children, and investing in further education (FE), through:

• Increasing funding for the core schools budget by £2.3 billion, increasing per pupil funding in real terms. £1 billion of this funding will go towards supporting the special educational needs and disabilities (SEND) system.
• Allocating an additional £1.8 billion to continue the expansion of government funded childcare, providing young children with high-quality early education. Along with £30 million being provided for the rollout of free breakfast clubs in thousands of primary schools, this will also help parents, and particularly mothers, to stay in and return to work.
• Providing an additional £300 million for FE to ensure young people are developing the skills they need to succeed and taking steps to transform the Apprenticeship Levy into a Growth and Skills Levy through £40 million investment. This will help to deliver on the commitment to launch shorter and foundation apprenticeships in key sectors.

The government is also providing £6.7 billion of capital funding in 2025‑26 for education in England, a real terms increase of 19% from 2024‑25. This includes £1.4 billion for the school rebuilding programme, an increase of £550 million on this year. The settlement also invests over £2 billion into maintenance for schools and £950 million for skills capital.

Crime and justice

The government will begin to repair the justice system by providing an additional £1.9 billion total departmental spending to the Ministry of Justice (MoJ) in 2025‑26 – an average real terms increase of 5.6% each year from 2023‑24 to 2025‑26. Total Home Office (HO) funding will increase from £20.3 billion in 2023‑24 to £22.1 billion in 2025‑26.

• Continued investment to support frontline policing levels across the country and put us on track to start to deliver more neighbourhood police officers and Police Community Support Officers (PCSO).
• £2.3 billion of investment in prison expansion over 2024‑25 and 2025‑26, ensuring thousands of new prison places open over the next two years.
• A minimum £500 million additional investment across prisons and probation in 2025‑26 to recruit thousands of new prison and probation staff, keeping prisons safe and managing offenders in the community.
• £220 million investment in prison and probation service maintenance in 2024‑25 and up to £300 million in 2025‑26, keeping prisons safe and secure.
• 106,500 Crown Court sitting days in 2024‑25 to bring offenders to justice. MoJ will work closely with the senior judiciary to set court capacity in 2025‑26 to continue bringing access to justice for victims.

Defence and intelligence

The settlement provides £2.9 billion of additional total funding to the Ministry of Defence (MoD) compared to 2024‑25, growing the defence budget by 2.3% per year on average in real terms compared to 2023‑24. This underlines the government’s commitment to strengthening the Armed Forces and protecting national security during a period of geopolitical instability.

This means the defence budget will grow in line with the economy in 2025‑26, ensuring the UK comfortably exceeds the NATO spending target of 2% of GDP. The government will set a path to spending 2.5% of GDP on defence at a future fiscal event. This funding will:

• Enable the UK to modernise the Armed Forces and to continue to play a leading role in NATO, including through the nuclear deterrent, combat and surveillance aircraft, surface and submarine fleets, forward land forces, Special Forces and cyber and space capabilities.
• Guarantee continued support to Ukraine, committing £3 billion per year in support for Ukraine for as long as it takes.

The government will also provide funding to DCMS to commemorate the 80th anniversary of VE and VJ day, to remember those who gave their lives and honour those who served at home and abroad.

In addition to growing the defence budget, the settlement will increase spending on the Single Intelligence Account (SIA) by around £340 million between 2023‑24 and 2025‑26. This funding increase will boost the UK’s national security, ensuring that the UK intelligence community maintains its world-leading capabilities – protecting the UK and advancing the country’s interests at home and overseas.

Local government

Local government is essential to the running of the country and delivers a wide range of vital services. The government is committed to returning the sector to sustainability through a comprehensive set of measures to support local authorities in England, including:

• Increasing core spending power by around 3.2% in real terms in 2025‑26, with £1.3 billion of new grant funding including at least £600 million new grant funding for social care. [footnote 88]
• Reforming the approach to funding allocations within the Local Government Finance Settlement by redistributing funding to ensure that it reflects an up- to-date assessment of need and local revenues.
• Investing in children’s services to put them on a sustainable trajectory, with a £1 billion uplift for SEND and alternative provision funding as an important step in realising the government’s ambition to reform the system, and new funding for kinship and fostering measures ahead of more fundamental children’s social care reform in Phase 2.
• Continuing the UK Shared Prosperity Fund at a reduced level for a further year, providing £900 million; this transitional arrangement will allow local authorities to invest in local growth, in advance of wider funding reforms.
• Providing £233 million of additional spending in 2025‑26 to prevent homelessness, taking total spending to £1 billion in 2025‑26. This will help to prevent rises in the number of families in temporary accommodation and help to prevent rough sleeping.

Devolved governments

The devolved governments will receive an additional £6.6 billion through the operation of the Barnett formula in 2025‑26. This includes £3.4 billion for the Scottish Government, £1.7 billion for the Welsh Government and £1.5 billion for the Northern Ireland Executive. This will enable substantial investment into schools, housing, health and social care, and transport across Scotland, Wales and Northern Ireland.

In Wales, the government is providing the Welsh Government with £25 million to support essential work to keep disused coal tips maintained and safe. In Northern Ireland, the government is also providing £730,000 to support schools as they work towards integrated status, and a further £45.8 million for the Police Service of Northern Ireland’s Additional Security Fund and the Executive Programme on Paramilitarism and Organised Crime. In Scotland, the government is providing funding to deliver ‘Brand Scotland’ to champion Scottish culture, products and services across the world.

Compensation

The government is addressing the historic wrongs of the past and compensating the victims of the Post Office Horizon IT and Infected Blood scandals: [footnote 89]

• The government is committed to providing full and fair financial redress to the victims of the Horizon IT Scandal as quickly as possible. Around £1.8 billion has been set aside for costs from 2024‑25, with around £200 million already paid to victims in previous years. [footnote 90]
• The government has set out plans to compensate the victims of the infected blood scandal, following recommendations from the Infected Blood Inquiry and Sir Robert Francis KC. [footnote 91] , [footnote 92] , [footnote 93] The Budget includes £11.8 billion of funding committed to the end of the Parliament to make compensation payments. This is based on estimates of the number of people who are eligible and will apply, with the Infected Blood Compensation Authority aiming to process and make payments as soon as possible. The government expects the Authority to begin processing a small number of payments this year, scaling up in 2025.

Public Sector Pay

The government launched the 2025‑26 Pay Review Body (PRB) process in September. This meant the 2025‑26 PRB process started three months earlier in the year than for 2024‑25. This is a step towards restoring confidence in the PRB process and ensuring public sector workers receive more timely pay awards. The PRBs are expected to deliver their recommendations for 2025‑26 pay awards in the spring.

Accepting the independent PRBs’ recommendations for 2024‑25 – and providing the first meaningful real terms pay increases for years – was not a decision the government took lightly. [footnote 94] While it was the right decision, it required difficult trade-offs. The government has taken further difficult decisions across tax, spending and welfare through the Budget and Phase 1 of the Spending Review in order to repair the public finances.

The government remains committed to delivering fair and timely pay awards for public sector workforces in 2025‑26. However, it will need to carefully consider the trade-offs required to afford pay awards. Over the medium-term, above inflation pay awards are only affordable if they can be funded from improved productivity.

Departmental settlements for 2025‑26 will need to fund the next round of public sector pay awards, and departments will set out their affordability evidence to the PRBs in the usual way, taking account of expected inflation over the next financial year, forecast by the OBR to be 2.6%. [footnote 95] If the PRBs recommend pay awards above the level departments have budgeted for, the government will have to consider the justification – for example where there are especially acute recruitment and retention demands, or where productivity improvements can unlock further funding.

Spending Review 2025 Phase 2

At the Budget, the government has fixed the envelope for Phase 2 of the Spending Review, which will conclude in the late spring. It will deliver a new settlement for public services, marking a fundamental change in how the government approaches public spending, supports growth, and delivers public services.

Phase 2 will be mission led, technology enabled and reform driven. It will take a long-term approach, supporting delivery of the government’s plans for a decade of national renewal. It will also embed greater spending discipline by implementing a zero-based approach, ensuring that every pound of taxpayers’ money is targeted towards the government’s priorities.

Phase 2 will also embed greater spending discipline by implementing a zero- based approach to spending, ensuring that every pound of taxpayers’ money is targeted towards the government’s priorities.

Mission-led

To fundamentally change the way public services are delivered, departments must work together to deliver key priorities in a more effective and efficient way, breaking out of siloes and focusing on driving forward the government’s core objectives.

The government will take a mission-led approach to Phase 2. Departments will work together to develop a shared strategy for delivering the government’s missions.

The government will support missions to drive collaboration across government and its partners and to target spending on the priorities that will deliver the biggest impact for citizens.

Technology-enabled

Phase 2 will focus on ensuring the public sector makes the best use of technology, in order to digitise public service delivery, enhance productivity and improve outcomes.

The Chancellor of the Duchy of Lancaster, Secretary of State for Science, Innovation and Technology and Chief Secretary to the Treasury lead the Digital Centre of Government. The Department for Science, Innovation and Technology will continue to drive towards a renewed strategy for digital transformation across the public sector to ensure that fundamental reforms in public services are prioritised and digital-led. This will inform a centralised and coherent approach to digital investment at Phase 2 of the Spending Review.

Reform-driven

Phase 2 of Spending Review will focus on reforming the public sector, in order to improve outcomes whilst keeping public spending at sustainable levels. The government will take a more preventative approach to public service delivery, alongside devolving more power to communities to deliver more efficiently and effectively for citizens.

The government has therefore identified a number of priority areas for reform, which it will build on in Phase 2:

• Health: The government will publish a 10 Year Health Plan for the NHS in Spring 2025, investing in and transforming the existing model of health care, and delivering the government’s mission to build an NHS fit for the future. This plan will be shaped by the experiences, views and ideas of the public, clinicians, and experts. The plan will set out reforms transform the NHS from analogue to digital and more from model of sickness to prevention shift care from hospital to community.
• Local government and devolution: The government is introducing the first integrated settlements for Greater Manchester and the West Midlands Combined Authorities from 2025‑26, and announcing the next Mayoral Combined Authorities eligible to receive them from 2026‑27, giving mayors meaningful local control over funding in a single flexible pot. The government will also simplify the wider local funding landscape, reducing the number of grants and consolidating them into the Local Government Finance Settlement, as well as moving towards a multi-year settlement for local government so local authorities can plan more effectively.. The upcoming English Devolution White Paper will set out more detail on the government’s devolution plans, including on working with councils to move to simpler structures that make sense for their local areas, with efficiency savings from council reorganisation helping to meet the needs of local people.
• Children’s social care: Building on existing reform pathfinders, and the new investment in kinship and fostering announced in Phase 1 of the Spending Review, the government will set out plans for fundamental reform of the children’s social care system in Phase 2. This will include promoting early intervention to help children to stay with their families where possible and fixing the broken care market.
• SEND: Phase 1 of the Spending Review provides a £1 billion uplift for SEND and alternative provision funding, equivalent to 6% real growth. This is an important step towards realising the government’s vision to reform England’s SEND provision to improve outcomes and return the system to financial sustainability, which will be built on through Phase 2.
• Homelessness: Phase 1 commits to additional funding for homelessness to help to prevent rises in the number of families in temporary accommodation and help to prevent rough sleeping. In Phase 2 the Treasury will work with MHCLG and others in the cross-government taskforce to address homelessness and rough sleeping.
• Police: HM Treasury will work with the Home Office through Phase 2 to drive police efficiencies and improve overall police productivity in England, ending wasteful contracts and enabling officers to spend more time on the frontline tackling crime. This will form part of a wider police reform package to rebuild confidence in policing.
• Prisons: To bring an end to the crisis in prisons, the government will examine tough alternatives to custody to make sure these sentences cut crime while making the best use of taxpayers’ money. Along with the prison building programme, the government will bring the criminal justice system onto a sustainable and affordable footing and ensure there is always the space in prison for the most dangerous offenders.
• Asylum: The government has already ended the Rwanda Migration and Economic Development Partnership and is reforming the asylum system by streamlining capacity to process asylum seekers and returning those that do not have the right to stay in the UK. This will start the process of ending the use of hotels for asylum seekers.
• Defence: In Phase 2, the government will transform the defence operating model, establishing a new Strategic Military Headquarters and National Armaments Director role to create clearer accountability, faster delivery, less waste and deliver greater value for money.
• Transport: The government will improve the performance and reliability of rail services, ensuring the rail sector can operate effectively and become financially sustainable. The Secretary of State for Transport’s plans for reform, will look at changes to fares, services and workforce practices to deliver a modern railway that meets how people now want to travel. These will increase efficiency and reduce costs, while boosting ridership and revenue and improving performance, laying the groundwork for the transition to Great British Railways.
• Civil Service: The civil service is a key enabler to support improved productivity across the UK’s public services. This government is therefore taking forward work to deliver a civil service workforce plan and underpinning reform proposals for a more efficient and effective civil service, including bold options to improve skills, harness digital technology and drive better outcomes for public services.

The Budget also announces a new Public Sector Reform and Innovation Fund, to support the development of a new approach to improving public services. The Budget allocates £165 million of this to a range of projects in 2025‑26, including to support foster carer recruitment and planning reform. In addition the Budget allocates £100 million of this over the next three years to deliver innovative projects, partnering with Mayors and local leaders, and developing new approaches to public service reform with a focus on experimentation and learning. This will complement and inform ongoing reform programmes and activities being delivered by departments.

Further detail of specific reforms and investments announced at the Budget are set out in the Departmental Settlements chapter of this document.

The government is committed to delivering a decade of national renewal by fixing the foundations of the economy and rebuilding Britain, making every part of the country better off.

The growth mission is the central mission of the government. Through the growth mission, the government is restoring stability, increasing investment, and reforming the economy to drive up prosperity and living standards across the UK.

Stability: Autumn Budget 2024 supports economic and fiscal stability and puts the public finances on a sustainable path. These are essential foundations for growth and for increasing public and private investment in the UK.

Investment:  Investment will be a vital part of addressing the growth challenge. The Budget begins rebuilding Britain by increasing public investment and unlocking private investment. Public sector net investment will average 2.6% of GDP over the Parliament, with over £100 billion of additional capital investment over the next five years. This will strengthen the UK economy over the long term.

The Budget shows that the government is prioritising the investment that matters most. This includes investment in transport – unlocking growth‑enhancing schemes like East West Rail – kickstarting the delivery of 1.5 million homes, supporting new industries and job creation, and protecting record government research and development (R&D) funding. In addition, the Budget increases investment in public services, recognising that a well‑functioning NHS and education system are critical to the economy.

The government is ensuring an even greater focus on high‑quality investment and delivering value for money for the taxpayer. With the guardrails that will govern the approach to capital spending and new and strengthened institutions, the government is reforming the way it plans, assures, delivers and evaluates capital spending. These changes will provide greater certainty for departments, investors and supply chains, and greater assurance that investment is high quality and well delivered.

The government will work in partnership with the private sector to further increase investment. The government has created the National Wealth Fund to catalyse over £70 billion of private investment, set out plans for a modern Industrial Strategy to support investment in growth‑driving sectors, and launched a pensions review to unlock greater investment in UK growth assets. The international business community has already put its confidence in the UK’s growth potential, committing £63 billion across 22 projects around the International Investment Summit and supporting the creation of close to 38,000 additional jobs. [footnote 96]

Reform: The government is making the reforms needed to deliver sustained growth in the long‑term. These include ambitious planning reforms to remove blockages to growth, the development of a 10‑year infrastructure strategy to be published alongside Phase 2 of the Spending Review, the publication of the Get Britain Working White Paper shortly, and the establishment of Skills England to ensure there is the highly‑trained workforce needed to deliver economic growth.

While the impacts of many of these measures are not captured in the OBR forecast, the government expects them to have a positive impact on growth. This reflects the feedback received from businesses, economists, and other stakeholders on the impact of the measures themselves and the challenges they are tackling. The OBR notes that the proposed changes to the National Planning Policy Framework, which are not captured in the forecast, “may enable greater delivery of new housing and infrastructure projects, which would boost the associated investment flows, as well as increasing productivity over the longer term”. [footnote 97]

The OBR has set out the positive economic impact that the Budget could have over the long term. The OBR’s projections for the economy are covered in more detail in Chapter 1.

The government’s growth policy priorities, under the framework of stability, investment and reform, can be structured into seven pillars, as illustrated below. These priorities will be developed in partnership with business, and backed by a continuous focus on delivery, supported by a new Growth Delivery Unit established in HM Treasury. The remainder of this chapter sets out the government’s plans within each pillar.

Economic and Fiscal Stability

Economic, fiscal, and financial stability are pre‑requisites for the economy to grow, as they give UK businesses and households the confidence to make decisions on future investments and consumption. This encourages innovation and growth over the long term. As set out in Box 1.B in Chapter 1, measures of uncertainty have been elevated in recent years, reflecting global and UK specific factors. This instability has weighed on economic activity, as firms postponed investment decisions and households reduced consumption in favour of precautionary saving.

At the Budget, the government is: announcing robust fiscal rules; taking difficult decisions on tax, welfare, and spending to put the public finances on a sustainable path; and implementing the most significant strengthening of the fiscal framework since the inception of the OBR. Details of these actions are set out in Chapter 1.

In addition, the government is ensuring it fosters stability across all the pillars of the growth mission by providing long‑term certainty in its plans for businesses and the wider economy. As set out below, this includes a commitment to a modern Industrial Strategy and a long‑term plan for infrastructure.

Investment, Infrastructure and Planning

Investment today drives future productivity growth and higher living standards. In the last 14 years, however, the UK has fallen further behind its peers, with productivity 16% below Germany and 14% below France in 2023. [footnote 98]

Since July, the government has taken decisive action to increase investment in the UK economy and drive growth, including:

• Launching the National Wealth Fund, the UK’s new impact investor, which will mobilise billions of pounds of investment into the UK’s world leading clean energy and growth industries and support the delivery of the Industrial Strategy.
• Committing to update relevant National Policy Statements within 12 months to provide certainty to industry on the objectives for nationally significant infrastructure.
• Acting to progress infrastructure projects through the planning system. Since the election, the government has approved six Nationally Significant Infrastructure Projects, including: construction consent for four solar farms, which will provide almost two gigawatts of electricity generating capacity; consent to reinforce the electricity transmission network between Bramford substation in Suffolk and Twinstead Tee in Essex; and development consent for a new roll-on/roll-off facility in Immingham Eastern Ro‑Ro Port Terminal.
• The Deputy Prime Minister has also used powers to take decision‑making responsibility for a number of appeals below the threshold for Nationally Significant Infrastructure Projects, including three data centres, two solar sites, and two film studios. Seven cases have been sent to ministers for a decision on whether to grant planning permission, and all decisions have been made inside the 13‑week target, giving developers and other stakeholders certainty within the right timescales. This includes approving the expansion of London City Airport, in line with the government’s position to support airport expansions where they contribute to economic growth, whilst balancing environmental objectives, and three large housing development sites in Cambridgeshire, West Sussex and Durham, leading the way for thousands of new homes.
• Reforming and expanding the Office for Investment, which will sit under the joint HMT‑DBT Minister for Investment, improving the government’s ability to land transformational investments by originating deals, clearing barriers and working with local leaders to develop investable propositions.
• £63 billion of private sector investment across 22 projects was announced around the October International Investment Summit, demonstrating the increased confidence of international investors in the UK and supporting the creation of close to 38,000 additional jobs. [footnote 99]

The Budget builds on this progress and decisively shifts the UK’s course on public investment. Instead of cutting investment, the government is increasing investment in real terms. The government will spend 2.6% of GDP on public sector net investment on average over the Parliament, with an increase of over £100 billion in capital investment over the next five years.

Capital investment will increase by £13 billion next year, taking total departmental capital spending to £131 billion in 2025‑26. Taken together, the government will invest over £35 billion in economic infrastructure in 2025‑26. The OBR judges that if sustained beyond the forecast horizon, the combination of higher capital investment and crowding in increases potential output by 0.4% after 10 years and 1.4% in the long run.

This public investment will get Britain moving and spur regional growth and innovation, through:

• Securing the delivery of priority transport schemes, which will transform rail connectivity across the country.
• The Transpennine Route Upgrade between York and Manchester, via Leeds and Huddersfield, will transform northern rail connectivity and lay the ground for Northern Powerhouse Rail.
• East West Rail will connect Oxford, Milton Keynes, and Cambridge and unlock land for housing and laboratories, supporting the wider Cambridge life sciences cluster. The first East West Rail services will begin operations next year, running between Oxford, Bletchley, and Milton Keynes. The acceleration of the Marston Vale Line will ensure these services extend to Bedford from 2030. To deliver the next stages of East West Rail the government is launching a consultation.
• Progressing HS2 Phase One to improve connectivity between London and Birmingham, and increase capacity on the West Coast Mainline, while delivering the Secretary of State for Transport’s commitments to control costs and bring the project back on track.
• HS2 trains will run to Euston, with funding provided for tunnelling to the central London terminus, catalysing private investment into the station and local area. Investment at Euston will be further supported through the appointment of Bek Seeley to chair the Euston Housing Delivery Group, to drive forward an ambitious housing and regeneration initiative for the local area.
• Providing a nearly 50% increase, on 2024‑25, in funding for local roads maintenance. This will go further than the government’s commitment to fix an additional one million potholes across England each year, investing almost £1.6 billion to maintain and renew the nation’s roads, an increase of £500 million on 2024‑25. [footnote 100]
• Building more homes to unlock growth. The government is adding £500 million to the Affordable Homes Programme to kickstart the biggest increase to social and affordable housebuilding in a generation, putting us on the path to building 1.5 million homes over this Parliament.
• Delivering and protecting record levels of government R&D investment, with £20.4 billion allocated in 2025‑26.
• Investing over £500 million in 2025‑26 to deliver Project Gigabit and Shared Rural Network to drive the rollout of digital infrastructure to underserved parts of the UK, including delivering full gigabit broadband coverage by 2030.
• Leveraging £8 billion of private investment in Carbon Capture, Usage and Storage infrastructure, continuing funding for the development of Sizewell C, and providing funding to kickstart Great British Energy. The Net Zero section below provides further details of the government’s investments in the Net Zero transition.
• Providing record levels of capital investment for health, which will start to address some of the key findings of the Darzi review and includes £1 billion in additional capital for the NHS to address critical maintenance, repairs, and upgrades across the estate, £1.5 billion for NHS beds and diagnostic and surgical capacity in England to help bring down waiting lists and support people back into work, £1 billion for technology to boost NHS productivity, and over £2 billion for health R&D to drive innovation and support the UK’s leading life sciences sector. [footnote 101]
• Investing in schools to support learning, which is the bedrock of future growth and opportunity. The government is providing £1.4 billion for the school rebuilding programme, representing an increase of £550 million on this year to support the current programme, including plans for 100 projects to begin delivery across England next year.
• Confirming long‑term funding for growth‑driving sectors as part of the Industrial Strategy, including £975 million for the aerospace sector over 5 years, over £2 billion over 5 years to support the automotive sector, and up to £520 million for a new Life Sciences Innovative Manufacturing Fund.

The government is taking steps to ensure an even greater focus on high‑quality investment and delivering value for money for the taxpayer. As part of the guardrails set out in Chapter 1, the government is reforming the way it plans, assures, delivers and evaluates capital spending. These changes will provide greater certainty for departments, investors and supply chains, and greater assurance that the investment is high quality and well delivered. These reforms include:

• Publishing the 10‑year infrastructure strategy alongside Phase 2 of the Spending Review, outlining the government’s long‑term approach.
• Setting five‑year capital budgets, to be extended every two years at regular spending reviews. This will eliminate damaging ‘cliff edges’ in budgets, giving departments and supply chains more certainty.

The government will underpin these reforms with new and strengthened institutions, including:

• Establishing the National Infrastructure and Service Transformation Authority (NISTA) to drive more effective delivery of infrastructure across the country. NISTA will combine the functions of the National Infrastructure Commission and the Infrastructure and Projects Authority. NISTA will be operational by spring 2025 and will implement the government’s infrastructure strategy in conjunction with industry and, alongside existing assurance mechanisms, will have an enhanced role in supporting major projects, including validating business cases prior to HMT funding approval.
• Formally launching the Office for Value for Money (OVfM), with the appointment of an independent chair. As a first step, the chair will advise the Chancellor and Chief Secretary to the Treasury on decisions for the multi‑year Spending Review. This will include an assessment of where and how to root out waste and inefficiency, value for money studies in high‑risk areas of cross‑departmental spending, and scrutiny of investment proposals to ensure they offer value for money.
• Working with the National Audit Office (NAO) to benefit from their scrutiny of capital projects and learn lessons which can be applied to future projects.

The government will continue to take action to ensure that the planning system supports public and private investment. This includes:

• Responding to the National Planning Policy Framework consultation before the end of the year to confirm pro‑growth reforms to the planning system.
• Implementing legislative changes to ensure a simplified and streamlined planning system, through the Planning and Infrastructure Bill to be introduced in Parliament early next year.
• Providing an additional £5 million to deliver improvements to the planning regime for Nationally Significant Infrastructure Projects, as well as £46 million to boost capacity and capability in local planning authorities.
• Allocating £70 million in 2025‑26 to support infrastructure and housing development while boosting nature’s recovery.

In addition to these ambitious planning reforms, the government will take further measures to catalyse private investment in the economy. This includes creating the National Wealth Fund to catalyse over £70 billion of private investment in the UK’s clean energy and growth industries, and using the Pensions Investment Review, along with the British Growth Partnership, to unlock more pension fund investment into UK growth assets.

The government will also mobilise private investment to deliver positive social impacts through the development of a social impact investment vehicle. Industry will be engaged on the design of this vehicle, with further details to be announced at Phase 2 of the Spending Review.

The UK has historically made less use of government‑issued financial instruments (e.g. loans, equity, and guarantees) than many advanced economies. These are tools that can be used to support growth while also generating a positive return for the taxpayer. The government’s new debt rule will recognise the value created by these investments, thereby supporting growth policies in a fiscally sustainable way.

To provide stability and predictability for business, the government is publishing the Corporate Tax Roadmap. Central to the Roadmap is a competitive and sustainable main rate of Corporation Tax, capped at 25%, which is the lowest in the G7, as well as a commitment to maintain the UK’s generous R&D tax reliefs and competitive capital allowance offer. The government will also consult on a mechanism for providing investors in major projects with greater tax certainty in advance, and consult on the tax treatment of pre-development costs.

The growth mission is based on creating good jobs and spreading prosperity across the United Kingdom, working closely with local leaders and the devolved governments. The UK economy is an estimated £77 billion – or 3.4% – smaller because of the underperformance of city regions outside the Greater South East. [footnote 102] The government’s strategy for regional growth will address this, supporting local leaders to drive growth in city regions and make the most of the opportunities in each part of the country. The government will work in partnership with devolved governments to drive economic growth across the country as part of the growth mission.

The government has established the Council of Nations and Regions and Council of the Mayors; is working with local areas in England on the upcoming English Devolution White Paper and as they develop Local Growth Plans; and is putting ‘place’ at the heart of Invest 2035: A Modern Industrial Strategy. [footnote 103]

The devolved governments will receive an additional £6.6 billion through the operation of the Barnett formula in 2025‑26. This includes £3.4 billion for the Scottish Government, £1.7 billion for the Welsh Government and £1.5 billion for the Northern Ireland Executive.

The Budget delivers the next steps in the government’s approach to regional growth, through investment, devolution and reform. On investment, this includes:

• Shifting the dial on growth in our great northern cities, including confirming investment in the Liverpool Central Docks to deliver up to 2,000 homes and transform the waterfront. The government is also increasing the City Region Sustainable Transport Settlements, which are funding projects such as Liverpool’s Baltic Railway Station, the renewal of Sheffield’s Supertram system and the continued development of West Yorkshire Mass Transit.
• Securing delivery of the Transpennine Route Upgrade and maintaining momentum on Northern Powerhouse Rail by progressing planning and design works to support future delivery. The government will set out further details in due course.
• Unlocking transformational growth in the Oxford, Milton Keynes and Cambridge corridor through £10 million of funding to enable the Cambridge Growth Company to develop an ambitious plan for the housing, transport, water, and wider infrastructure Cambridge needs to realise its full potential, and by taking the next steps to deliver East West Rail. This will support life sciences companies and unlock private investment, cementing Cambridge’s status as a globally renowned centre of excellence and its important role within the Industrial Strategy.
• Investing in growth and regeneration projects across the UK. The Budget confirms funding for the Investment Zones and Freeports programmes UK‑wide, including approval of the East Midlands Investment Zone to support advanced manufacturing and green industries, and the designation of five new customs sites in existing Freeports. The UK Shared Prosperity Fund will continue at a reduced level for a further year with £900 million of funding; this transitional arrangement will provide as much stability as possible in advance of wider local growth funding reforms. The Long‑Term Plan for Towns will be retained and reformed into a new regeneration programme.
• Proceeding with the Mid South West and Causeway Coast and Glens City and Growth Deals. The Budget confirms £162 million of investment over 15 years, subject to value for money assessments of business cases, supporting economic growth in Northern Ireland’s rural regions. The government also confirms £25 million for the 10‑year investment in the Argyll and Bute City and Growth Deal to drive inclusive and sustainable economic growth, subject to a value for money assessment on business cases. The government will work with the devolved governments to agree an appropriate level for this. The government also confirms £80 million of funding for the Port Talbot Transition Board, with work already underway to support workers and businesses affected by decarbonisation at Tata Steel.
• Confirming £125 million for Great British Energy, which will be headquartered in Aberdeen. The government has also confirmed support for two electrolytic hydrogen projects in Scotland, in Cromarthy and Whitellee, and two in Wales, in Milford Haven and Bridgend, to support low carbon hydrogen production and directly create good quality, local jobs.
• Supporting Scottish trade by providing £0.75 million to establish Brand Scotland, a programme run by the Scotland Office to promote Scottish investment opportunities and exports across the globe.
• Designating tax sites in Celtic Freeport in South Wales, meaning businesses will be able to start to benefit from tax reliefs on new investment and employment in those sites in November, supporting the Freeport to create good, highly skilled jobs in an area that needs them.

On devolution, the government is working closely with local leaders on the upcoming English Devolution White Paper, and the Budget introduces the first integrated settlements for the West Midlands and Greater Manchester from 2025‑26. The integrated settlements will deliver a single flexible pot of funding with a single outcomes framework to support MCAs to deliver growth. The government wants more regions to benefit from integrated settlements and is confirming the MCAs that are eligible to receive integrated settlements from 2026‑27: the North East, South Yorkshire, West Yorkshire Mayoral Combined Authorities, and Liverpool City Region Combined Authority. The government will also explore how an integrated settlement could apply to the Greater London Authority from 2026‑27.

The government will reform the local growth funding landscape at Phase 2 of the Spending Review: rationalising the number of funds, moving away from competitions, and better supporting local leaders to drive growth. The government will also set out more detail on its strategy for regional growth alongside, and integrated with, plans for infrastructure, investment, and the Industrial Strategy.

Affordability of housing has fallen drastically, particularly in major cities, as too few houses have been built, especially in low‑affordability areas. Building houses in the right places is vital to long‑term economic growth, allowing our towns and cities to grow, and providing the homes people want near good jobs. The government has already taken swift action to kickstart the delivery of 1.5 million homes, including: launching the National Planning Policy Framework consultation, the New Homes Accelerator, and New Towns Taskforce. The government is also seeking views on a ‘brownfield passport’ to ensure that suitable projects get a swift and straightforward approval for development.

The Budget sets out a series of new investments to promote housing market stability and to kickstart the biggest increase to social and affordable housebuilding in a generation. This is an important step to providing the conditions needed for the market to deliver 1.5 million homes:

• A £500 million boost to the Affordable Homes Programme to build up to 5,000 additional affordable homes.
• The government will set out details of future grant investment beyond the current Affordable Homes Programme at Phase 2 of the Spending Review, to support greater investment in new affordable housing from social housing providers. Investment will run for at least the duration of this Parliament, and will support a mix of tenures, with a focus on delivering homes for social rent.
• A consultation on a new long‑term social housing rent settlement of CPI+1% for 5 years will offer long‑term certainty for social housing providers, giving the sector the confidence to build tens of thousands of new social homes. The government will consult on whether further potential measures, such as a 10‑year settlement, could provide more certainty.
• Reducing discounts on the Right to Buy scheme and enabling councils in England to keep all the receipts generated by sales will deliver on the government’s manifesto commitment to protect existing council housing stock and boost council capacity to ensure that vital social housing is available to those who need it most.
• £3 billion of additional support for SMEs and the Build to Rent sector, in the form of housing guarantee schemes, to support the private housing market.

The Budget also supports delivery of tens of thousands of new homes:

• Planning: Housing delivery cannot be achieved at the scale the country requires without reforms to the planning system and ensuring sufficient capacity exists to support wider economic growth. The government will provide £46 million of additional funding to support recruitment and training of 300 graduates and apprentices into local planning authorities, accelerate large sites that are stuck in the system, and boost and upskill local planning authority capacity to deliver the government’s wider reform agenda.
• Unblocking delivery of homes: The government is already taking decisive action to get more homes built in order to support growth, including confirming £56 million to unlock over 2,000 new homes at Liverpool Central Docks, along with a £25 million investment in a new joint venture to deliver 3,000 energy‑efficient new homes across the country, with a target of 100% of these being affordable. The Budget also confirms £47 million of funding to support the delivery of up to 28,000 homes that would otherwise be stalled due to nutrient neutrality in affected catchments.

The government will be engaging with industry over the autumn on the mortgage guarantee scheme and plans to make it permanently available to support lending at 95%, ending the stop-start availability of the scheme and giving lenders confidence throughout the cycle, while making it easier for first‑time buyers to realise the dream of home ownership. The government will bring forward further details in Phase 2 of the Spending Review.

The government is committed to improving building safety and accelerating remediation of unsafe housing in response to the Grenfell Tower fire. Investment in remediation will rise to over £1 billion in 2025‑26. This includes new investment to speed up remediation of social housing. The government will set out further steps on remediation later this autumn.

People: skills and workforce

Increasing the number of people in good jobs is central to the government’s ambition to drive growth. Since the pandemic, economic inactivity has increased and ill‑health related inactivity has increased to a record high of 2.8 million. Reducing these levels of inactivity will be important in reaching the bold, long‑term ambition of an 80% employment rate, which would mean over 2 million more people in work today, boosting the economy and public finances. [footnote 104]

To support this long‑term ambition, the government introduced the Employment Rights Bill on 10 October 2024, the first phase of delivering the Plan to Make Work Pay. This legislation will modernise the UK’s employment rights framework in response to the changing world of work, including by making flexible working the default, establishing a new right to bereavement leave, and making paternity and parental leave available from day 1 of starting a new job.

Through the Budget, the government is providing record levels of capital investment in health to deliver capacity for more diagnostic and surgical procedures and to help reduce the elective waiting list in England, thereby supporting people into work.

The Budget also provides an additional £1.8 billion to continue the expansion of government‑funded childcare support for working parents in England, bringing total spending on childcare to over £8 billion in 2025‑26. This will support parents, and particularly mothers, to stay in and return to work, with the OBR forecasting that an additional 60,000 will enter work by 2028.

As part of the Get Britain Working White Paper, which will be published shortly, the government is investing £240 million to trial new ways of getting people back into work. The government will test new approaches and collect robust evidence on how to tackle the root causes of ill‑health related inactivity, support young people who are ‘not in education, employment or training’ (NEET), and help people to develop their careers.

The Get Britain Working White Paper will:

• Establish eight trailblazer areas across England and Wales that bring together health, employment, and skills services to improve the support available to those who are inactive due to ill health and help them return to work. This will include NHS England Health and Growth Accelerators in at least three Integrated Care Systems to develop evidence of the impact of targeted action on the top health conditions driving economic inactivity.
• Establish eight Youth Guarantee Trailblazers areas to test new ways of supporting young people into employment or training, by bringing together and enhancing existing programmes in partnership with local areas.

The government will invest £115 million in 2025‑26 to deliver Connect to Work, a new supported employment programme matching people with disabilities or health conditions into vacancies and supporting them to succeed in their roles. From 2026‑27, this will support nearly 100,000 people a year. Local authorities will be able to tailor their delivery of Connect to Work in ways that meet their local needs. Greater Manchester and West Midlands Combined Authorities will receive even greater flexibilities, with funding included in their Integrated Settlement.

The government will set out reforms to the health and disability benefits system early in 2025 to ensure the system supports people who can work to remain in or start work, in a way that is fair and sustainable.

The government is committed to addressing skills challenges, which are holding back growth across the country, alongside supporting people into work. The government has already established Skills England to begin addressing these challenges. In the Budget, the government is going further by providing an additional £300 million for further education in England, while increasing the core schools budget by £2.3 billion, which increases per pupil funding in real terms.

The government will also take steps to transform the Apprenticeship Levy into a more flexible Growth and Skills Levy by investing £40 million, which will help to deliver new foundation and shorter apprenticeships in key sectors. The reformed levy will be developed in partnership with employers, providers, and learners. Skills England will take the time to consult with a wide range of partners to ensure that levy‑funded training meets the needs of employers, providers, and learners, and secures good value for money.

Box 3.A Women in the economy

The government is committed to increasing women’s labour market participation, addressing pay inequalities, and ensuring women can realise their full potential and progress in the workplace. Equalising women’s participation rates with those of men would add 1.3 million people of working age to the workforce. [footnote 105]

The measures the government is taking will ensure that work pays:

• Women, who represent around 60% of minimum wage jobs, will especially benefit from the 6.7% increase in the National Living Wage. [footnote 106]
• Women’s employment rights will be strengthened, including enhanced dismissal protections for pregnant women and new mothers, and through the Employment Rights Bill, the government will make it easier for parents to share childcare responsibilities, making flexible working the default and providing guaranteed day‑one parental leave.
• Large employers will also be required to take proactive steps to address their gender pay gaps and support employees through the menopause.
• Carers, who are predominantly women, will have greater flexibility to manage both employment and caregiving responsibilities through reforming Carer’s Allowance to increase the weekly earnings limit to the equivalent of 16 hours at the National Living Wage.

In addition, reforms to childcare will better support working families and help more mothers participate in the workforce:

• 60,000 parents, and particularly mothers, in England are expected to re‑enter the workforce and 1.5 million mothers are expected to increase their working hours by 2028 as a result of the expansion of government‑funded childcare. [footnote 107]
• 3,000 new school‑based nurseries will improve the accessibility and affordability of childcare for parents.
• Breakfast clubs in thousands of schools in England will further assist working parents, while ensuring that more children start their school day ready to learn.
• Reviews of the parental and carer’s leave systems offer further opportunities to better support women and working families.

The government is partnering with business to maximise women’s contribution to the economy. For example, in line with the ambition of the Invest in Women Taskforce to expand access to funding for female entrepreneurs, the British Business Bank is investing £50 million in women‑led funds. HMT’s Women in Finance Charter is supporting financial services firms to make the most of their female talent.

Industrial Strategy and Trade

As a central part of the growth mission, the Industrial Strategy will deliver the certainty and stability businesses need to invest in the UK’s growth‑driving sectors. Its primary objective is to drive growth. It will also look to shape the type of growth being pursued: to support Net Zero, regional growth, and secure and resilient growth.

The government launched a green paper on its modern Industrial Strategy earlier this month. [footnote 108] It set out the eight growth‑driving sectors (advanced manufacturing, creative industries, clean energy industries, defence, digital and technologies, financial services, life sciences, and professional and business services) and announced that the government will produce plans for each sector as part of its commitment to help them thrive.

To help ensure the Industrial Strategy is long term in nature, the government is establishing an Industrial Strategy Advisory Council chaired by Clare Barclay. The Council will monitor and advise the government on the delivery of the Strategy, working closely with business, trade unions, devolved governments, local leaders, academia, and other stakeholders.

The Budget confirms the Industrial Strategy’s commitment to target interventions to drive growth where the UK has, or could develop, a comparative advantage. It prioritises long‑term funding for growth‑driving sectors ahead of the full modern Industrial Strategy’s publication next year, including:

• £975 million for the aerospace sector over 5 years to fund vital research and development for the latest aerospace technology.
• Over £2 billion over 5 years to support the automotive sector including the zero emissions vehicle manufacturing sector and supply chain, providing the long‑term certainty that industry need to invest in advanced, greener technologies.
• Up to £520 million for a new Life Sciences Innovative Manufacturing Fund to drive growth and build resilience for future health emergencies.
• Tax reliefs for world‑leading creative industries, which will provide £15 billion of support over the next 5 years.
• The government will continue to broaden and diversify the talent pipeline in the creative industries by providing £3 million to expand the Creative Careers Programme, giving school children the opportunity to learn more about career routes and directly engage with the workplace.
• £25 million funding for the North East Mayoral Combined Authority (NEMCA) has been confirmed. NEMCA plans to use the funding to remediate the Crown Works Studio site. This will support the North East’s creative industries and is expected to lead to around 8,000 new jobs in the region.

Further growth‑driving sectors are benefitting from decisions made by the government:

• Of the £56.9 billion defence budget in 2024‑25, around £25 billion will be spent on UK industry, supporting advanced manufacturing in aircraft, radars, submarines, and other key industrial capabilities.
• The UK’s clean energy sector will benefit from £3.9 billion of funding in 2025‑26 for Carbon Capture, Usage and Storage Track-1 projects to decarbonise industry and contracts with 11 green hydrogen producers.
• The Chancellor will shortly set out her vision for the financial services sector in her Mansion House speech, building on new remit letters to the financial services regulators which support the growth and competitiveness of the sector, and ensuring we make the most of the talent in the sector through the Women in Finance Charter.
• Further detail on support for the digital and technologies sector is provided in the Innovation section below.

The Budget also ensures support for these sectors is distributed across the UK. As noted above, the Investment Zones and Freeports programmes will continue. The government is announcing the approval of the East Midlands Investment Zone, which will use its funding envelope to drive growth in green industries and advanced manufacturing. Funding was also released earlier this month for Investment Zones supporting advanced manufacturing in the West Midlands and life sciences in West Yorkshire, supporting major clusters in the Industrial Strategy’s growth‑driving sectors. In addition, the Cambridge life sciences cluster is being supported by taking the next steps in delivering East West Rail, to connect the laboratories, industrial parks, and housing needed.

The Industrial Strategy and sector plans will be published alongside Phase 2 of the Spending Review. To inform them, the government will engage widely throughout the development of the Strategy and is asking stakeholders to respond to the green paper published earlier this month.

Closely aligned with this work, the government will task the Government Chief Scientific Adviser (GCSA), Professor Dame Angela McLean, with the National Technology Adviser (NTA), Dr Dave Smith, to lead a review on barriers to the adoption of transformative technologies that could enhance innovation and productivity, with a focus on the growth‑driving sectors identified by the Industrial Strategy Green Paper. Reinforcing the government’s growth mission, the review’s recommendations will directly inform the development of the Industrial Strategy and sector plans.

Small business and entrepreneurship

Thriving small businesses are essential for the growth mission and for communities across the UK. The government is committed to supporting businesses of all sizes to help them realise their ambitions.

The government is committed to making it easier for start‑ups and scale‑ups to access external sources of financial support. This includes extending the Enterprise Investment Scheme and Venture Capital Trust schemes to 2035; committing over £250 million in funding in 2025‑26 for the British Business Bank’s small business loans programmes; ensuring small businesses can access UK Export Finance’s support and exploring the need for new products to support small exporters to access the insurance and finance they need; and publishing post-implementation reviews of the Bank Referral Scheme and Commercial Credit Data Sharing Scheme. The government now intends to consult on enhancing both policies to better support SME access to finance.

To support more small businesses’ digitisation efforts, the government will extend the SME Digital Adoption Taskforce and it will produce an interim report early in 2025. The Department for Business and Trade will soon announce details of a £4 million pilots package to encourage tech adoption for SMEs.

The government will also extend the Made Smarter Innovation programme with up to £37 million funding in 2025‑26. Funding for the Made Smarter Adoption programme will double to £16 million in 2025‑26, supporting more small manufacturing businesses to adopt advanced digital technologies and enabling the programme to be expanded to all nine English regions.

Late payments can bring cash‑flow challenges for small businesses, so from 1 October 2025, companies bidding for government contracts over £5 million per annum will be excluded from the procurement process if they do not pay their own suppliers within an average of 45 days. The government also views increasing its procurement spend with small businesses as an important economic growth lever, with further details on implementing this to be set out in the National Procurement Policy Statement next year.

The government will maintain the Corporation Tax Small Profits Rate and marginal relief at their current rate and thresholds. This means 9 in 10 actively trading companies, including a majority of SMEs, will have a Corporation Tax rate lower than 25%. The £1 million Annual Investment Allowance will also be kept in place to provide the certainty businesses need to invest.

The government will also commit to funding for two key growth‑driving programmes in 2025‑26: Growth Hubs in England and Help to Grow: Management across the UK, which help businesses and entrepreneurs unlock their potential through bespoke support and resources.

Looking ahead, the government will bring forward a Small Business Strategy Command Paper next year, setting out the government’s vision for support for small businesses. This will complement the forthcoming Industrial Strategy and Trade Strategy.

Trade Strategy

The government will publish a Trade Strategy in 2025. This will renew the UK’s commitment to free and open trade, support the government’s Industrial Strategy and Net Zero ambitions, and enhance economic security. To support this strategy, the government will work with the European Union to identify areas where we can strengthen cooperation for mutual benefit, including the economy, energy, security, and resilience. The government is committed to engaging businesses and stakeholders to support the development of this strategy.

In developing the Trade Strategy, the government is committed to making use of every lever available to drive economic growth. Free Trade Agreements (FTAs) are one important lever, and the government has already progressed its FTA negotiations programme by recommencing talks with the Gulf Co operation Council.

UK Export Finance (UKEF) will now be able to provide financial support to UK companies supplying critical minerals to UK exporters in high‑growth sectors such as EV battery production, clean growth, aerospace, and defence, furthering the government’s Net Zero ambitions and building supply chain resilience.

Supporting scientific breakthroughs and spurring innovation are central to progressing the government’s missions to rebuild Britain and to delivering the Industrial Strategy. The UK has extraordinary strengths in science and innovation, however we are not doing enough to capitalise on these strengths. The government will support R&D and the adoption and diffusion of innovation across the country to drive a sustained increase in productivity and improve citizens’ lives.

The UK’s science base is a crucial national asset. To fully harness its potential and foster a dynamic investment economy, the Budget protects record levels of government R&D investment with £20.4 billion allocated in 2025‑26. This includes at least £6.1 billion of support for core research. [footnote 109] The government’s R&D investment also fully funds Horizon association, meaning that UK researchers and businesses can participate confidently in the world’s largest programme of research cooperation, worth more than £80 billion.

The government will also provide stability and long‑term certainty for key R&D activities through 10‑year budgets, which will create an environment for productive long‑term partnerships with industry. These will be set out as part of Phase 2 of the Spending Review.

The government will ensure these benefits are felt across the country, including through Innovation Accelerators, which the government will extend into 2025‑26 to continue to bolster high‑potential innovation clusters in the Glasgow City Region, Greater Manchester, and the West Midlands.

Reflecting the importance of R&D to the delivery of the government’s missions, through the Budget the government is announcing:

• At least £25 million in 2025‑26 to launch a new multi‑year R&D Missions Programme to solve targeted problems that will crowd in private and third sector investment to accelerate delivery of each mission.
• A real terms uplift to the budget of the National Institute for Health and Care Research (NIHR) as part of over £2 billion of R&D funding, supporting life sciences innovation and accelerating the delivery of the health and growth missions.
• Significant support in 2025‑26 for UK fusion energy research, to build on the UK’s position as a global leader in sustainable nuclear energy.

It is critical to the growth mission that our most innovative companies are supported to start, scale, and grow in the UK. The government is supporting commercialisation of our world‑class university research by providing at least £40 million over 5 years for proof‑of‑concept funding and improvements to support for researchers spinning out the UK’s cutting‑edge research into firms of the future. Through the establishment of the British Growth Partnership and the undertaking of the pensions review, the government is seeking to encourage more investment from pension funds into UK growth assets.

Science and innovation are critical to the delivery of the government’s modern Industrial Strategy. This includes maximising the growth benefits of the UK’s thriving digital and technology sectors. The government:

• Will shortly publish the Artificial Intelligence Opportunities Action Plan setting out a roadmap to capture the opportunities of AI to enhance growth and productivity and better deliver services for the public.
• Is creating a National Data Library to unlock the full value of our public data assets. This will provide simple, ethical, and secure access to public data assets, giving researchers and businesses powerful insights that will drive growth and transform people’s quality of life through better public services and cutting‑edge innovation, including AI.

Net Zero and Clean Energy

Transitioning to Net Zero and delivering on the government’s clean energy superpower mission is central to ensuring sustainable and resilient long‑term growth. The government will deliver this transition in a way that captures economic opportunities, securing investment and growth in clean energy industries across the UK.

The government has already taken steps to unblock and drive investment into the UK’s clean energy industries.

• Reversed the de facto ban on onshore wind in England, which will help deliver cheap, reliable, and clean energy across the UK.
• Approved four major solar projects of nearly 2GW, enabling the creation of thousands of jobs.
• Significantly increased the budget for the sixth Contracts for Difference allocation round, resulting in a record number of contracts. [footnote 110]
• Secured £34.8 billion of private investment into the UK’s clean energy industries around the International Investment Summit. [footnote 111]

The Budget builds on these first steps and seeks to maximise the growth opportunities of the Net Zero transition and grow UK clean energy industries by:

• Providing £3.9 billion of funding in 2025‑26 for Carbon Capture, Usage and Storage Track-1 projects to decarbonise industry, support flexible power generation, and capitalise on the UK’s geographic and technical strengths.
• Delivering on the first steps of the clean energy superpower mission, with £125 million in 2025‑26 for Great British Energy, which will be headquartered in Aberdeen.
• New nuclear will play an important role in helping the UK achieve energy security and clean power, while securing thousands of good, skilled jobs. This settlement provides £2.7 billion of funding to continue Sizewell C’s development through 2025-26. The equity and debt raise process for this project will shortly move to its final stages and will conclude in the spring. As with other major multi-year commitments, a Final Investment Decision on whether to proceed with the project will be taken at Phase 2 of the Spending Review.
• The government will provide support for the first round of electrolytic hydrogen production contracts, harnessing renewable energy to decarbonise industry across the length and breadth of the UK.

Accelerating grid connections and building new network infrastructure is central to unblocking private investment, delivering growth in clean energy industries and other growth sectors like AI, data centres, and manufacturing. The government is working with the new National Energy System Operator (NESO) and Ofgem to develop a robust grid connection process, to ensure viable projects are connected in a timely manner.

Making buildings and homes cleaner and cheaper to run is essential for meeting Net Zero and supporting energy security and resilience. Through the Budget, the government is providing support to both the public sector and households by:

• Delivering hundreds of local energy schemes to help decarbonise the public estate through the Public Sector Decarbonisation Scheme, with over £1 billion of funding over three years.
• Taking the first step towards a Warm Homes Plan, committing an initial £3.4 billion towards heat decarbonisation and household energy efficiency over the next three years. This includes £1.8 billion to support fuel poverty schemes, helping over 225,000 households reduce their energy bills by over £200. The government will increase funding for the Boiler Upgrade Scheme in England and Wales this year and next, following the high demand for the scheme. The government is also providing funding to grow the heat pump manufacturing supply chains in the UK to support the plan.

To support existing firms to decarbonise and grow, the government has also confirmed £163 million to continue the Industrial Energy Transformation Fund over 2025‑26 to 2027‑28.

The transition to electric vehicles (EVs) is crucial to decarbonising transport and will support growth and productivity across the UK. There are now more than 1 million electric cars on our roads. [footnote 112] The government has committed to phasing out new cars that rely solely on internal combustion engines by 2030 and that from 2035 all new cars and vans sold in the UK will be zero emission. The government is building on this by:

• Investing over £200 million in 2025‑26 to accelerate EV chargepoint rollout, including funding to support local authorities to install on‑street chargepoints across England. This will build on the UK’s existing charging network, which continues to grow at pace with over 70,000 public chargepoints. [footnote 113]
• Providing £120 million in 2025‑26 to support the purchase of new electric vans via the plug‑in vehicle grant and to support the manufacture of wheelchair accessible EVs.
• Maintaining tax incentives to purchase electric cars through Vehicle Excise Duty First Year Rates and the Company Car Tax regimes, as well as by extending 100% First Year Allowances for electric cars and chargepoints for a further year.

The government is also committed to realising the benefits that aviation decarbonisation offers for Net Zero and growth. To support the development and production of innovative advanced fuels to decarbonize aviation, the government will extend the Advanced Fuels Fund for a further year.

The government will also invest in the natural environment and in climate mitigation and adaptation to protect the economy from the impacts of climate change. The Budget confirms £5 billion over two years to support the transition towards a more productive and environmentally sustainable agricultural sector in England and over £400 million of support for tree planting and peatland restoration. The government will invest £2.4 billion over two years in flood resilience to support the building of new flood defences alongside the maintenance of existing assets to protect communities.

The government is committed to securing the UK’s place as a global leader in clean energy, protecting consumers and driving economic growth. The government has commissioned advice from NESO on 2030 delivery and, using this, will publish its own more detailed Clean Power 2030 Action Plan. The government will also respond to the Climate Change Committee’s Progress Report, publish an updated Carbon Budget Delivery Plan, and capitalise on UK clean energy strengths through the new Industrial Strategy.

Departmental settlements

Department of health and social care, table 4.1 department of health and social care.

The Department of Health and Social Care (DHSC) settlement provides total DEL funding of £214.1 billion in 2025‑26. This is equivalent to an annual average real‑terms growth rate of 3.8% from 2023‑24 to 2025‑26. Resource spending is set to increase by £22.6 billion in 2025‑26 compared to 2023‑24 outturn. This provides a two‑year average real‑terms growth rate for NHS England of 4.0%, the highest since before 2010 excluding COVID‑19 years. [footnote 114]

In July, the government accepted the Pay Review Body (PRB) recommendations for all NHS staff, in addition to separate agreements with consultants, resident doctors and specialty and associate specialist (SAS) doctors. Alongside this, the government funded £1.5 billion of other in‑year pressures, including additional elective activity.

The government is prioritising the NHS in Phase 1 of the Spending Review through extra investment and plans for reform to help put it on a sustainable footing and ensure it is fit for the future. The settlement will reduce waiting times by supporting the NHS to deliver 40,000 extra elective appointments a week and make progress towards the commitment that patients should expect to wait no longer than 18 weeks from referral to consultant‑led treatment. This includes an additional £1.8 billion to support elective activity since July. The settlement will also support reform to patient care pathways to deliver better patient experience for lower cost, enhancing patient choice and embedding best practice right across the country.

The settlement also supports social care through at least £600 million of new grant funding, as part of the broader estimated real terms increase to core local government spending power of around 3.2%. [footnote 115] This is alongside an £86 million increase to the Disabled Facilities Grant to support around 7,800 more adaptations to homes for those with social care needs to reduce hospitalisations and prolong independence. To support unpaid carers, from April 2025 the government will increase the Carer’s Allowance weekly earnings limit from £151 a week to the equivalent of 16 hours at the National Living Wage.

The settlement also confirms capital spending for DHSC will increase by £3.1 billion in 2025‑26 compared to 2023-24 outturn, rising to £13.6 billion, representing record levels of capital investment into health and a two-year average real terms growth rate of 10.9%. This includes:

• £1.5 billion for new surgical hubs and diagnostic scanners to build capacity for over 30,000 additional procedures and over 1.25 million diagnostic tests as they come online; new beds across the estate to create more treatment space in emergency departments, reduce waiting times, and help shift more care into the community; and £70 million to invest in new radiotherapy machines to improve cancer treatment.
• Over £1 billion will be invested to tackle dangerous reinforced autoclaved aerated concrete (RAAC) and make inroads into the existing backlog of critical maintenance, repairs and upgrades across the NHS estate – protecting staff and patients and boosting NHS productivity.
• Over £2 billion will be invested in NHS technology and digital to run essential services and drive NHS productivity improvements, to free up staff time, ensure all Trusts have Electronic Patient Records, improve cyber security and enhance patient access through the NHS App. In implementing the settlement, DHSC (including the NHS) will deliver 2% productivity next year.
• A dedicated capital fund to deliver around 200 upgrades to GP surgeries across England, supporting improved use of existing buildings and space, boosting productivity and enabling delivery of more appointments.
• Continued delivery of the New Hospital Programme on a more sustainable and deliverable footing, moving swiftly to rebuild hospitals wholly or primarily built with RAAC or which are in build. Remaining schemes will be delivered through a rolling programme of major investment, as part of the government’s commitment to providing hospital infrastructure investment. Further details regarding the Programme review and next steps will be set out by DHSC in due course.
• £460 million will be invested in strengthening the UK’s pandemic preparedness and health protection to address the risk posed by future health emergencies and implement the lessons learnt from COVID‑19. This includes replenishing personal protective equipment, vaccine and medicines stockpiles, and investing in critical health protection infrastructure such as high‑containment laboratories.
• £26 million to open new mental health crisis centres, reducing pressure on A&E services. The government is committed to tackling the root causes of mental health problems and supporting people to remain in, return to and find work.
• Support of the government’s growth mission by protecting core R&D budgets with a real terms increase in funding for the National Institute for Health and Care Research to support the NHS and wider health and care system in driving a revolution in research, life sciences, med tech and data. This will strengthen the UK’s clinical trial network, supporting better patient outcomes, and bolster the life sciences investment environment.

Department for Education

Table 4.2 department for education.

The Department for Education (DfE) settlement provides total DEL funding of £99.7 billion in 2025-26. This is equivalent to an annual average real-terms growth rate of 3.4% from 2023-24 to 2025-26.

Before this Spending Review at the Spending Audit in July, DfE received an additional £2.1 billion in 2024-25, including to fully fund the 5.5% teacher pay award at a national level, as recommended by the independent pay review body.

To raise school standards for every child, the core schools budget will increase by an additional £2.3 billion next year, increasing per pupil funding in real terms. This further supports delivery of the government’s pledge to recruit 6,500 teachers. As part of this, the government is providing a £1 billion increase to Special Educational Needs and Disabilities (SEND) and Alternative Provision funding, equivalent to 6% real growth. This is an important step in realising the government’s vision to reform England’s SEND provision to improve outcomes and return the system to financial sustainability. The government will work closely with parents, teachers and local authorities to take forward this work.

To support the government’s commitment to ensure that the Holocaust is never forgotten and that its lessons are learnt by current and future generations, an additional £2 million will be spent next year on Holocaust remembrance and education.

The settlement reaffirms and expands the government’s commitment to skills by providing an additional £300 million for further education to ensure young people are developing the skills they need to succeed. In addition, the government is:

• investing £40 million to help deliver new foundation and shorter apprenticeships in key sectors, as part of initial steps towards a reformed Growth and Skills Levy.
• committing to delivering the Lifelong Learning Entitlement (LLE), with a revised launch date of January 2027. The LLE will expand access to high-quality, flexible education and training for adults throughout their working lives.

The settlement delivers on the government’s ambition to give all children the best start in life by increasing spending on early years and family services to over £8 billion in 2025-26. This includes:

• an additional £1.8 billion to continue the expansion of government-funded childcare and help more parents, particularly women, stay in and return to work.
• investing over £30 million in the rollout of free breakfast clubs next year, to fund breakfasts in thousands of schools and help working parents.
• £69 million to continue delivery of a network of Family Hubs.

The settlement will improve the support provided to our most vulnerable children and young people by continuing to reform the children’s social care system. The government will provide over £250 million in 2025-26 to continue to test innovative measures to support children and reduce costs for local authorities. This includes £44 million of new funding to pilot a Kinship Allowance as well as to create hundreds of new foster placements, enabling more children to stay in family environments. The government will set out plans for fundamental reform of the children’s social care system in Phase 2 of the Spending Review, including promoting early intervention to help children stay with their families where possible, and fixing the broken care market.

The settlement provides £6.7 billion of capital investment, a 19% real-terms increase from 2024-25. This includes:

• £1.4 billion for the school rebuilding programme, representing an increase of £550 million on this year to support the current programme. This includes plans for 100 projects to start delivery across England next year, reaffirming the government’s commitment to improve the school estate by rebuilding 518 schools in total through the programme.
• £2.1 billion to improve the condition of the school estate. This is an increase of £300 million compared to 2024-25.
• £90 million to renovate and expand the children’s home estate.
• £950 million for skills capital, including £300 million of new funding to support colleges to maintain, improve and ensure suitability of their estate.
• £15 million to begin delivery of the pledge to create 3,000 new or expanded nurseries through upgrading space in primary schools.

The settlement will support the opportunity mission by providing an additional £1.8 billion to continue the expansion of government-funded childcare, provide further funding for further education, and increase investment in children’s social care reform.

The settlement will also support the growth mission by investing in our schools to support learning, which is the bedrock of future growth, and funding further education to ensure learners develop the skills they need to thrive in the modern labour market, alongside initial investment to support the future Growth and Skills Levy.

Home Office

Table 4.3: home office.

The Home Office settlement provides total DEL funding of £22.1 billion in 2025‑26. This is equivalent to an annual average real‑terms growth rate of –2.7% from 2023‑24 to 2025‑26.

At the start of the financial year, the Home Office faced significant pressures of £6.4 billion, caused by the cost of asylum support and the Migration and Economic Development Partnership (MEDP) with Rwanda, which has now been cancelled.

The settlement will stop the cost of the asylum system spiralling, and instead set it on a downwards trajectory, with £200 million of additional in year savings in 2024‑25 and a further £700 million of savings in 2025‑26. Compared to the previous trajectory of spending, this represents a total saving of over £4 billion across the two years.

The Home Office is reinvesting £281 million in 2024‑25 and £536 million in 2025‑26 of the savings from cancelling the MEDP to make the asylum system more efficient by reducing the asylum backlog, increasing appeals capacity, increasing returns and ending hotel usage. Additionally, the Home Office will deliver the new Border Security Command with new specialist investigators and new powers to tackle the organised criminal gangs.

The settlement will increase the core government grant for police forces and help support frontline policing levels across the country, putting the government on track to start to deliver the manifesto pledge to boost visible neighbourhood policing with 13,000 more neighbourhood officers and Police Community Support Officers (PCSOs). This will be paid for by tackling waste through police efficiencies, enabling officers to spend more time on the frontline tackling crime.

The settlement will support the government’s priorities to tackle violence against women and girls and knife crime. This includes implementing Raneem’s Law to put domestic abuse specialists in control rooms and establishing trailblazer Young Futures Hubs to prevent young people being drawn into crime.

Against a backdrop of rising national security risks in recent years, the government will invest at least an additional £150 million in tackling national security threats and serious organised crime in 2025‑26, supporting essential work to protect our economy, our democracy and our society.

The settlement enables the Home Office to make progress on two of the first steps, by:

• Launching a new Border Security Command with hundreds of specialist investigators and using counter‑terror powers to tackle the organised criminal gangs.
• Tackling antisocial behaviour putting the government on track to start to deliver the commitment to deliver 13,000 neighbourhood police and PCSOs, and establish trailblazer Young Futures Hubs.

Ministry of Justice

Table 4.4: ministry of justice.

The Ministry of Justice (MoJ) settlement provides total DEL funding of £13.8 billion in 2025‑26. This is equivalent to an annual real‑terms growth rate of 5.6% from 2023‑24 to 2025‑26.

Between 2010 and 2024, fewer than 500 prison places were added to our overall capacity, with the prison system running at over 99% capacity.

This settlement begins to repair the justice system by investing up to £2.3 billion in prison expansion across 2024‑25 and 2025‑26. This investment means thousands of new prison places will open over the next two years, including a new prison at HMP Millsike. It provides £220 million for prison and probation service maintenance in 2024‑25 and up to £300 million in 2025‑26, keeping our prisons safe and secure.

The settlement provides at least an additional £500 million investment across prisons and the probation system in 2025‑26 to recruit thousands of new prison and probation staff, and at least 1,000 new trainee probation officers by March 2025. This will enable us to keep prisons safe and manage offenders in the community. The settlement will deliver thousands of new electronic tags to monitor more offenders in the community, helping keep the public safe.

The settlement funds 106,500 Crown Court sitting days in 2024‑25, bringing offenders to justice. MoJ will work closely with the senior judiciary to set court capacity in 2025‑26 to continue bringing access to justice for victims. The MoJ and Home Office settlements will invest up to £74 million in 2025‑26 to speed up processing of asylum appeals in immigration tribunals.

MoJ’s settlement will improve confidence by beginning to repair the criminal justice system. The government will also complete the Sentencing Review, helping to create a sustainable criminal justice system while modernising community punishment. This will ensure there is never again a situation where there are more prisoners than prison places.

Law Officers’ Departments (LODs)

Table 4.5: law officers’ departments.

The Law Officers’ Departments (LODs) settlement provides total DEL funding of £1.1 billion in 2025-26. This is equivalent to a real-terms growth rate of 7.5% from 2023-24 to 2025-26.

The 2024-25 Resource DEL funding settlement provides an additional £49 million to address prosecution demand pressures for the Crown Prosecution Service (CPS) driven by increased demand from the police and Crown Court. The increased funding also enabled the CPS to deliver justice at scale and pace in August 2024 in response to the violent disorder. The settlement resources the Serious Fraud Office’s investigations of the largest cases of complex fraud, bribery, and corruption (£24 million).

The settlement provides a further £80 million increase for 2025-26 for the LODs to cover pay, inflation and demand pressures, ensuring the stability of the LODs in the upcoming financial year.

The settlement reaffirms the government’s commitments to protecting the public through independent and fair prosecutions and stabilising the criminal justice system. It also reaffirms the government’s commitment to the investigation and prosecution of the most serious and complex fraud, bribery and corruption cases.

The settlement also demonstrates the LODs’ commitment to productivity and efficiency improvements aimed at lowering costs and improving performance. It includes funding for Digital Jury Bundles to transform paper-based jury packs into more efficient and productive tools for criminal trials.

The settlement will support the safer streets mission to halve violence against women and girls in a decade and improve public safety and confidence in the criminal justice system. It will provide legal services across government to enable other missions to make policy and legislate, and to support the work of the Attorney General to strengthen the rule of law.

Official Development Assistance (ODA)

The settlement provides departments with £13.3 billion of ODA in 2024-25 and £13.7 billion in 2025-26, enabling the UK to spend 0.5% of Gross National Income (GNI) on ODA in 2024 and 2025. This ensures that the UK remains one of the most generous global donors of development assistance, using ODA resources to save lives and support the most vulnerable, whilst tackling key global challenges such as climate change, conflict and epidemics. The UK is well placed to offer leadership on international development, getting the Sustainable Development Goals back on track. The government will focus ODA on the poorest, promote reforms of the International Financial Institutions to mobilise billions of pounds more from their balance sheets and partner with the private sector, unlocking investment to address global challenges.

Over the last spending review period the government spent an increasing proportion of the ODA budget on the costs of refugees and asylum seekers here in the UK. This is in line with international guidance but has had significant implications for ODA spending overseas. The government is committed to ensuring that asylum costs fall, has taken measures to reduce the asylum backlog and is ending the use of expensive hotel accommodation. These plans should create more space in the ODA budget to spend on our international development priorities overseas.

The government remains committed to restoring ODA spending to 0.7% of GNI as soon as the fiscal circumstances allow. The OBR’s latest forecast shows that the ODA fiscal tests are not due to be met within the Parliament. The government will continue to monitor future forecasts closely, and each year will review and confirm, in accordance with the International Development (Official Development Assistance Target) Act 2015, whether a return to spending 0.7% of GNI on ODA is possible against the latest fiscal forecast. The UK will remain one of the most generous donors amongst the G7, and our ODA offer will continue to grow in line with GNI.

Foreign, Commonwealth and Development Office

Table 4.6: foreign, commonwealth and development office.

The Foreign, Commonwealth and Development Office (FCDO) settlement provides total DEL funding of £12.2 billion in 2025-26. This is equivalent to an annual average real-terms growth rate of 1.8% from 2023-24 to 2025-26.

The settlement will safeguard the FCDO’s international delivery, leading the government’s diplomatic, development and consular work, providing representation in 281 posts across 179 countries for at least 30 government departments, and ensuring the UK has a coherent international voice across our economic, security and development objectives.

The settlement increases FCDO’s 2025-26 ODA allocation to support a strong bilateral and multilateral portfolio, delivering against core international development priorities, helping to reduce extreme poverty, fostering climate-compatible growth and responding to humanitarian crises. Some support for refugees from developing countries qualifies as ODA, leading to reductions in FCDO’s ODA budget. Asylum forecasts will continue to be closely monitored and the government is committed to ensuring that asylum costs fall, which should mean more ODA to spend on our development priorities overseas.

The FCDO’s non-ODA budget is used primarily to fund departmental operating costs, including the UK’s diplomatic capability, 24/7 consular services and rapid crisis response to support British nationals worldwide. In addition, FCDO’s non‑ODA settlement funds institutions like the British Council, which is present on the ground in 100 countries. The settlement will ensure the department has flexibility to invest income from asset sales to modernise the department’s diplomatic and digital estate.

The settlement funds the Integrated Security Fund (ISF) to deliver programme interventions across the National Security Council’s national security priorities, while streamlining its portfolio structure. The ISF continues to focus on challenges from an increasingly uncertain world, whether threats from Russia, conflict resolution in the Middle East or transnational issues like counterterrorism.

In 2025-26, the settlement provides an increase in funding to the BBC World Service, protecting existing foreign language service provision and its mission to deliver globally trusted media, in support of the UK’s global presence and soft power.

FCDO’s spending helps reconnect Britain and supports the missions, actively contributing to growth and jobs, safer streets, cleaner energy, health security, and stemming irregular migration. In 2024-25, FCDO is forecast to spend over £1 billion on economic security, investment, and cross-departmental programs closely aligned with the growth mission, alongside £1.3 billion to health-related aid in developing countries and over £2 billion to support the climate mission internationally.

Ministry of Defence

Table 4.7: ministry of defence.

The Ministry of Defence (MOD) settlement provides total DEL funding of £59.8 billion in 2025-26. This is equivalent to an annual average real-terms growth rate of 2.3% from 2023-24 to 2025-26.

This settlement underlines the government’s commitment to strengthen the UK’s Armed Forces and protect national security. It means the defence budget will grow in line with the economy in 2025-26 and ensures the UK continues to comfortably exceed our NATO spending target of 2% of GDP.

This comes at a time when threats to the UK’s national security are intensifying and diversifying, with hostile state actors being increasingly assertive and acting together in an attempt to reshape the world order.

Beyond this settlement, the government has also commissioned a Strategic Defence Review which will determine the role, capabilities and reforms required of UK defence to meet the challenges, threats and opportunities of the twenty-first century. The review will ensure that defence is central to the security, economic growth and prosperity of the United Kingdom. The review will conclude in the first half of 2025. The government will set out the path to spending 2.5% of GDP on defence at a future fiscal event.

This settlement strengthens our armed forces and protects our national security. It will:

• Maintain the UK’s unshakeable commitment to the NATO alliance. Enable the UK to continue to play a leading role in NATO, including through the nuclear deterrent, combat and surveillance aircraft, surface and submarine fleets, forward land forces, Special Forces and cyber and space capabilities, as well as currently leading the Allied Rapid Reaction Corps.
• Ensure that the commitment to the UK’s nuclear deterrent is absolute, with it being the cornerstone of defence for the UK and our NATO allies.
• Guarantee continued support to Ukraine. The government is committed to spending £3 billion per year in military assistance for Ukraine to counter Russia for as long as it takes.
• Provide Ukraine with a further £2.3 billion ($3 billion) as part of the G7 Extraordinary Revenue Acceleration (ERA) Loans for Ukraine scheme, to be used for Ukraine to procure military equipment via the MOD.
• Ensure delivery of the UK’s wider defence and security commitments with partners and allies across the globe, including in the Middle East.
• Support meaningful reform in the MOD to create clearer accountability, faster delivery, less waste and greater value for money.

The settlement supports delivery of the growth mission:

• Defence has been identified as one of the growth-driving sectors under the government’s forthcoming Industrial Strategy.
• We expect MOD to spend over £20 billion with UK industry next year – a substantial contribution to the UK economy.
• Local economies benefit from defence industries in their area, especially in deprived parts of the UK. Defence also supports over 400,000 direct and indirect jobs across the Union. Defence has a strong regional impact with 67% of MoD spend on UK industry going to areas outside London and the South East.
• The defence sector’s key role in driving research and development produces positive economic spillover effects to other parts of the economy.

Single Intelligence Account

Table 4.8: single intelligence account.

The Single Intelligence Account (SIA) settlement provides total DEL funding of £4.4 billion in 2024-25, and £4.5 billion in 2025-26. This is equivalent to a real-terms growth rate of 2.4% from 2023-24 to 2025-26. [footnote 116] The SIA receives annual budget cover transfers from other departments. Taking these expected transfers into account, the 2025-26 settlement provides £499 million of additional core funding for the SIA above 2024-25 levels.

In addition to the £2.9 billion increase provided to the MoD for 2025-26, the additional funding for the SIA represents a major investment in the UK’s key national security capabilities.

The settlement underpins the UK intelligence community’s ability to keep pace with technological advances and continue its world-class work in a challenging global environment.

This includes funding investment in core infrastructure and an ongoing programme of digital transformation, while continuing to invest in R&D to ensure that the UK intelligence community stays at the cutting edge of technology.

Ministry of Housing, Communities and Local Government (MHCLG)

Table 4.9: ministry of housing, communities and local government.

The Ministry of Housing, Communities, and Local Government (MHCLG) settlement provides total DEL funding of £12.6 billion in 2025‑26. This is equivalent to an annual average real‑terms growth rate of 9.7 per cent from 2023‑24 to 2025‑26.

MHCLG’s responsibilities have grown in recent years, with the department delivering additional priorities to those funded at SR21: in particular the resettlement of Ukrainian refugees under the Homes for Ukraine scheme and the Investment Zones Programme. In addition, since budgets were set at SR21, homelessness levels have risen year on year, with the number of families living in temporary accommodation reaching record levels in spring 2024, placing additional pressure on MHCLG budgets as the department has supported local authorities to meet these needs.

With this settlement, the government is prioritising growth and putting public services back on track, with a significant boost for housing investment and additional funding for homelessness.

The government is providing £233 million of additional spending in 2025‑26 on homelessness, taking total spending to £1.0 billion in 2025‑26. This will help to prevent increases in the number of families in temporary accommodation and help to prevent rough sleeping.

To deliver on the commitment to get Britain building, the government is adding £500 million to the Affordable Homes Programme in 2025‑26, increasing the annual budget to £3.1 billion, the biggest annual budget for affordable housing in over a decade. The government will set out details of future grant investment beyond the current Affordable Homes Programme at Phase 2 of the Spending Review, to support greater investment in new affordable housing from social housing providers. Investment will run for at least the duration of this parliament, and will support a mix of tenures, with a focus on delivering homes for social rent. Alongside other measures in the Budget, this will kickstart the biggest increase in social and affordable housebuilding in a generation, putting the government on the path to building 1.5 million homes over this Parliament. In addition, the government is:

• Confirming a settlement of over £5 billion for housing investment in 2025‑26.
• Taking decisive action to get more homes built now, including confirming £56 million to deliver over 2,000 homes at Liverpool Central Docks and allocating £47 million to support the delivery of up to 28,000 homes that would otherwise be stalled due to nutrient neutrality requirements.
• Providing an additional £3 billion of support for SMEs and the Build to Rent sector, in the form of housing guarantee schemes, allowing developers to access lower‑cost loans and support the delivery of tens of thousands of new homes.
• Recognising that reform of the planning system is central to any plans to deliver 1.5 million new homes, providing over £50 million of new spending to expedite the planning process, including for Nationally Significant Infrastructure Projects. Funding will foster a pipeline of planners of the future by recruiting an additional 300 planners; and boost and upskill local planning authority capacity to deliver the government’s wider planning reform agenda, including changes to the National Planning Policy Framework. It will also accelerate large sites that are stuck in the system.
• Reaffirming the government’s commitment to improving building safety and accelerating remediation of unsafe housing in response to the Grenfell Tower fire. Investment in remediation will rise to over £1.0 billion in 2025‑26. This includes new investment to speed up remediation of social housing. The government will set out further steps on remediation later this autumn.

To spread growth across the country, this settlement provides the stability that local leaders and investors need by:

• Confirming funding for Investment Zones and Freeports – continuing the UK‑wide programmes to create additional jobs and drive economic growth in areas that have economically underperformed in the past. MHCLG will also work with partners to ensure the Freeports policy model aligns with the national Industrial Strategy.
• Unlocking future economic growth through £10 million of funding to enable the Cambridge Growth Company to develop an ambitious plan for the housing, transport, water and wider infrastructure Cambridge needs to realise its full potential and taking the next steps to deliver East West Rail.
• Continuing the UK Shared Prosperity Fund at a reduced level for a transition year by providing £900 million for local authorities to invest in local growth, in advance of wider funding reforms.
• Confirming £80 million of funding for the Port Talbot Transition Board, with work already underway to support workers and businesses affected by decarbonisation at Tata Steel.
• Confirming funding for MHCLG’s core Levelling Up Fund projects – providing £1.0 billion in 2025‑26 to revitalise high streets, town centres and communities. To ensure investment is focussed on the growth mission, the government is minded to cancel unfunded Levelling Up Culture and Capital Projects, and the West Midlands culture and inward investment funding, that were announced at Spring Budget 2024, but will consult with potential funding recipients before making a final decision.
• Extending and deepening English devolution by building mayoral capacity and continuing to work with Mayors and local leaders to deliver the growth mission. In light of this approach, the government is minded to cease funding for the functions previously delivered by Local Enterprise Partnerships and the Business Board Network, and will consult on ending funding for pan‑regional partnerships. The government will roll out new Local Growth Plans working with places to take advantage of their economic potential and foster clusters of well‑paid jobs.
• Delivering integrated settlements in Greater Manchester and the West Midlands, giving Mayors meaningful control over funding and improving the fragmented funding landscape for Mayoral Combined Authorities with a flexible single pot.

Local Government

Table 4.10: local government.

The Local Government (LG) settlement provides total DEL funding of £11.4 billion in 2024-25, and £14.3 billion in 2025-26. This is equivalent to an annual real-terms growth rate of 10.2% from 2023-24 to 2025-26. This will support local authorities to continue delivering the essential services they provide.

The LG DEL budget for 2025-26 will increase to £14.3 billion, which includes an additional £1.3 billion of new grant funding for local authority services including at least £600 million in new grant funding for social care. Together with council tax flexibilities and locally-retained business rates, this will provide a real-terms increase in total core spending power in 2025-26 of around 3.2%. [footnote 117] In addition, local authorities are expected to receive around £1.1 billion of new funding in 2025-26 through the implementation of the Extended Producer Responsibility scheme to improve recycling outcomes from January 2025, equivalent to a further c.1.6% real-terms increase in local government resources. Exceptionally for 2025-26 only, and recognising the importance of local authorities being able to effectively plan their budgets, the Treasury will guarantee that if local authorities do not receive Extended Producer Responsibility income in line with the central estimate there will be an in-year top up, with the detail on this to be set out through the Local Government Finance Settlement (LGFS) process. This guarantee will provide significant additional financial certainty for local authorities. The government will also work to ensure that, as far as practicably possible, local government income is unaffected by business rates tax policy changes and that local government is compensated for administration costs.

The government recognises the pressures that local authorities are facing and will have a framework in place to support those in most difficulty. The government is also committed to pursuing a comprehensive set of reforms to return the sector to a sustainable position. This will include reform of the approach to allocating funding through the LGFS, starting with a targeted approach to allocating additional funding in 2025-26, ahead of a broader redistribution of funding through a multi-year settlement from 2026-27. The government will set out further details through an upcoming local government finance policy statement.

The government is also committed to improving outcomes and reducing costs in local government services. The government will provide over £250 million to continue testing children’s social care reforms, including new funding to pilot a Kinship Allowance and to create thousands of new foster placements. The government will set out plans for fundamental reform of the children’s social care market in Phase 2, including promoting early intervention to help children stay with their families where possible and fixing the broken care market. The government has also provided a £1 billion increase to SEND and Alternative Provision funding, the second biggest ever year-on-year increase. This is an important step in realising the government’s vision to transform England’s SEND system to improve outcomes and return local authorities to financial sustainability. The government will continue to work with key partners and bring forward further plans to deliver this. Furthermore, the government is providing £233 million of additional spending in 2025-26 to prevent homelessness, taking total spending to £1 billion in 2025-26. This will help to prevent rises in the number of families in temporary accommodation and help to prevent rough sleeping.

Department for Transport

Table 4.11: department for transport.

The Department for Transport’s (DfT) settlement provides total DEL funding of £30.0 billion in 2025-26. This delivers a £1.2 billion year-on-year cash increase in 2025-26.

The audit of public spending in July, identified £3.5 billion of unfunded pressures related to transport in 2024-25, and over £800 million unfunded capital commitments in 2025-26. In response to this, the government cancelled several low value and unaffordable programmes, including the A303 Stonehenge tunnel, the A27 schemes, and the Restoring Your Railway programme.

Well-targeted transport investment is a key contributor to the government’s economic growth mission and drives productivity growth by increasing access to labour markets and unlocking areas for wider development including housing.

The settlement provides increased investment in local roads maintenance and local transport, supporting everyday journeys and addressing poor connectivity within our towns and cities across the country, which is currently a key drag on growth. It does this by:

• Going beyond the government’s promise to fix an additional 1 million potholes per year and providing a £500 million cash increase on 2024-25 local roads maintenance baseline funding.
• Providing an additional £200 million for City Region Sustainable Transport Settlements, bringing local transport spending for Metro Mayors in 2025-26 to £1.3 billion. The government will also work with Mayoral Combined Authorities to increase the ambition on housing investment that accompanies expansion of transport links.
• Providing over £650 million of funding for local transport beyond City Region Sustainable Transport Settlements in 2025-26 to ensure that transport connections improve in our towns, villages and rural areas as well as in our major cities. This includes funding to progress transport-related Levelling Up Fund projects from Rounds 1, 2 and 3. The Transport Secretary will set out further detail on how this funding will be allocated in due course.
• Providing over £1 billion funding to support local areas and bus operators, in 2025-26, providing high quality bus services across the country. The government is extending the bus fare cap, which was due to end in December 2024. A new cap will run from January 2025 to December 2025 at the higher rate of £3. This will allow the government to develop a more sustainable model of government support for the bus sector that is better value for taxpayers and bus passengers.
• £485 million for Transport for London (TFL)’s capital renewals programme in 2025-26. This includes funding for rolling stock on the Piccadilly and Elizabeth Lines.
• Providing an additional £100 million investment in cycling and walking infrastructure in 2025-26, to support Local Authorities to install cycling infrastructure and upgrade pavements and paths.

The settlement secures delivery and development of growth enhancing major transport projects, providing critical connectivity between our biggest economic centres and supporting the development and delivery of new housing, by:

• Committing to East West Rail between Oxford, Milton Keynes and Cambridge, including funding to accelerate delivery of the Marston Vale Line ensuring services will run between Oxford and Bedford from 2030. This scheme will unlock land for housing and laboratories across the region, particularly around Cambridge, supporting the world-leading life sciences sector. The government is also launching the consultation for the next stage of East West Rail.
• Delivering the Transpennine Route Upgrade between York and Manchester, via Leeds and Huddersfield, and maintaining momentum on Northern Powerhouse Rail by progressing further planning and design works to support future delivery.
• Progressing HS2 Phase One to improve connectivity between London and Birmingham and increase capacity on the West Coast Mainline, while delivering the Transport Secretary’s commitments to control costs and bring the project back on track.
• Confirming funding to tunnel from Old Oak Common to Euston to ensure HS2 trains terminate in central London, catalysing private investment into the station and local area.
• Progressing key strategic road schemes, such as dualling sections of the A47, where work has begun to improve connectivity between East Anglia and the North, and on the A57, where work will start in the coming weeks to improve journey times between Sheffield and Greater Manchester. Roads investment in 2025-26 will be funded through an interim roads settlement, and the third Road Investment Strategy will be set out in the next phase of the Spending Review. The government will also move toward feasibility work on improvements to the A75 by providing up to £5 million in 2025‑26.

Transport is key to the government’s clean energy mission. The settlement provides further support to decarbonise the transport sector by:

• Investing over £200 million in 2025-26 to accelerate the rollout of electric vehicle charging infrastructure, including funding to support local authorities to install on-street charge points across England.
• Providing £120 million in 2025-26 to support the purchase of new electric vans through the plug-in vehicle grant and to support the manufacture of wheelchair-accessible electric vehicles.
• Extending the Advanced Fuels Fund for a further year to support the producers of sustainable aviation fuel.

The settlement will also support the government’s ambition to improve the performance and reliability of rail services, ensuring the rail sector can operate effectively and become financially sustainable. Since the pandemic, the government subsidy for passenger services has increased to meet a shortfall in revenue as travel patterns have changed, in addition to the funding it provides to operate and maintain the rail network. The government will look to recover this shortfall to support services and ensure the railway is able to operate effectively. The government confirms that the annual regulated rail fares cap will rise by 4.6% on 2 March 2025, one percentage point above RPI. This will be the lowest absolute increase in three years. Subject to an industry proposal, the government will also agree a £5 increase to the price of most rail cards (except the disabled person’s rail card). On average rail card holders save up to £158 per year. These policies will support the Secretary of State for Transport’s plans for reform, which will increase efficiency and reduce costs, while boosting ridership and revenue and improving performance, laying the groundwork for the transition to Great British Railways. The government also recognises the value that rail manufacturing brings to the UK and is in the early stages of agreeing a rolling stock strategy that will bring stability to the sector.

As part of the government’s commitment to growth, it will take difficult decisions where there is not a clear value for money case to invest. After a review the Transport Secretary has decided not to progress with the following unfunded and unaffordable road schemes on the strategic road network: A5036 Princess Way, A358 Taunton to Southfields, M27 J8 Southampton, the A47 Great Yarmouth Vauxhall Roundabout and A1 Morpeth to Ellingham.

Department for Energy Security and Net Zero

Table 4.12: department for energy security and net zero.

The Department for Energy Security and Net Zero (DESNZ) settlement provides total DEL funding of £14.1 billion in 2025-26. This is equivalent to an annual average real-terms growth rate of 22.0% from 2023-24 to 2025-26, excluding balance sheet impacts.

Making Britain a clean energy superpower is one of the five missions of this government. Great British Energy (GBE) will be at the heart of the mission, and to kick-start GBE’s work, the settlement provides £100 million capital funding in 2025‑26 for clean energy project development. The settlement also provides £25 million to establish GBE as a company, headquartered in Aberdeen. As GBE is established, the investment activity will be undertaken by the National Wealth Fund, helping it to make initial investments as quickly as possible and draw on the National Wealth Fund’s resources, experience and pipeline of projects.

The settlement provides £3.9 billion in 2025-26 for the first carbon capture and storage (CCUS) clusters in the UK. In supporting these projects, the government is equipping industry with the tools they need to kick-start the CCUS and hydrogen industries, delivering clean energy investment and jobs.

The Warm Homes Plan will transform homes across the country by making them cleaner and cheaper to run, from installing new insulation to rolling out solar and heat pumps. As the first step towards the Warm Homes Plan, the settlement provides over £1 billion next year, and to provide supply chain certainty now, a guarantee of investment of an initial £3.4 billion towards heat decarbonisation and household energy efficiency between 2025-26 and 2027-28. Further funding over this period will be considered as part of Phase 2 of the Spending Review. This includes an increase in funding for the Boiler Upgrade Scheme, following the high demand for the scheme this year. The government is also providing funding to grow the heat pump manufacturing supply chain in the UK to support the plan.

The settlement also provides over £1 billion of funding over three years to fund hundreds of local energy schemes to help decarbonise the public estate through the Public Sector Decarbonisation Scheme.

Clean energy industries will be supported to create green jobs across the UK. The government will provide support for the first round of electrolytic hydrogen production contracts, harnessing renewable energy to decarbonise industry across the length and breadth of the UK. The settlement will provide £134 million to support the delivery of port infrastructure to facilitate floating offshore wind. To support existing firms to decarbonise and grow, the settlement confirms £163 million to continue the Industrial Energy Transformation Fund over 2025-26 to 2027-28.

New nuclear will play an important role in helping the UK achieve energy security and clean power while securing thousands of good, skilled jobs. The settlement provides £2.7 billion of funding to continue Sizewell C’s development through 2025-26. The process to raise equity and debt for the project will shortly move to its final stages and will conclude in the Spring. As with other major multiyear commitments, a Final Investment Decision on whether to proceed with the project will be taken in Phase 2 of the Spending Review.

Great British Nuclear’s Small Modular Reactor competition is ongoing and has entered the negotiation phase with shortlisted vendors. Final decisions will be taken in the spring.

Department for Business and Trade

Table 4.13: department for business and trade.

The Department for Business and Trade (DBT) settlement provides total DEL funding of £3.3 billion in 2025-26. This is equivalent to a real-terms growth rate of 10.0% from 2023-24 to 2025-26.

Most of the department’s funding for 2024-25 and 2025-26 will focus resources on delivering the government’s growth mission. This includes activity covering industrial strategy, small business support, market frameworks and trade and investment.

DBT’s settlement supports the development and delivery of the government’s modern Industrial Strategy, which will provide stability for investors and give them confidence to plan over the next 10 years and beyond. For areas of the Industrial Strategy led by DBT, Autumn Budget 2024 confirms:

• Advanced manufacturing sector support to unlock investment across the UK, including £975 million dedicated to the aerospace sector and over £2 billion for the automotive sector up to 2030. This funding will support research and development in aerospace technology and the zero-emissions vehicle manufacturing sector and supply chain. This represents significant investment in one of the government’s eight growth-driving sectors in its Industrial Strategy.
• Funding to establish an Industrial Strategy Advisory Council that will provide expert advice to government on industrial strategy, developed in partnership with business, unions, and stakeholders from across the UK.

DBT’s settlement also provides funding to support steel and other energy intensive industries:

• To support the transformation of UK steel production the government has agreed an improved deal with Tata Steel, including £500 million in grant support. The Budget confirms the funding required in 2024-25 and 2025-26. This will unlock investment in an electric arc furnace, deliver a 1.5% reduction in the UK’s total greenhouse gas emissions and secure around 5,000 steel jobs across the UK, alongside ensuring workers have enhanced support during the transition period.
• Continued support for Energy Intensive Industries through around £350 million of funding across 2024-25 and 2025-26 to support energy efficiency, decarbonisation, and technological innovation.

DBT’s settlement provides small businesses with the support they need to start up and grow in the UK, creating jobs and prosperity for people all over the country. The Budget confirms:

• Over £1 billion across 2024-25 and 2025-26 for the British Business Bank to enhance access to finance for small businesses, including over £250 million each year for small business loans programmes, including Start Up Loans and the Growth Guarantee Scheme.
• Over £200 million for wider small business support including continued funding for practical support through Growth Hubs and Help to Grow Management.
• Funding for the Made Smarter Adoption programme will double to £16 million in 2025-26, supporting more small manufacturing businesses to adopt advanced digital technologies and enabling the programme to be expanded to all nine English regions.

DBT’s settlement will help to establish clear rules, regulations, and standards that promote stability, fairness, and transparency to deliver economic confidence. This includes delivering the Make Work Pay plan to help more people to stay in work, improve job security and boost living standards. The Budget includes over £150 million in 2024-25 and 2025-26 for: National Minimum Wage enforcement to ensure workers are treated fairly.

• The Advisory Conciliation and Arbitration Service (ACAS) to help employers and employees get free, impartial advice on workplace rights, rules and best practice.

DBT’s settlement provides over £400 million across 2024-25 and 2025-26 to ensure markets work effectively, consumers are protected and that regulation is effective without being excessively burdensome. This includes funding for:

• The Office for Product Safety and Standards (OPSS) to protect people and places from product-related harm, ensuring consumers and businesses can buy and sell products with confidence.
• The Insolvency Service to support those in financial distress, tackling financial wrongdoing and maximising returns to creditors.
• Companies House to continue driving confidence in the economy by creating a transparent and accountable business environment and acting to reduce economic crime.

DBT’s settlement supports international trade, attracting foreign direct investment and helping UK businesses in expanding their global reach. The Budget includes support of over £500 million in 2024-25 and 2025-26 for:

• Supporting inward investment, including through the expanded Office for Investment rolling out a new, bespoke service to ensure that investors receive the strongest possible government support.
• DBT’s overseas network, to promote UK trade and investment all over the world.
• Trade policy capacity to support trade negotiations, deliver the Trade Strategy as part of the growth mission, and support wider international trade policy engagement.

The government is committed to providing full and fair financial redress to the victims of the Horizon IT Scandal as quickly as possible. The Treasury has reclassified these costs from Departmental Expenditure Limits to become Annually Managed Expenditure. The government expects total redress costs for this scandal to reach around £2 billion, an increase from the £1 billion previously committed. Around £1.8 billion has been set aside for costs from 2024-25, in addition to around £200 million already paid to victims in previous years. This is not a target or a limit. The final amount will depend on how many victims come forward and their specific circumstances.

The Budget also provides over £600 million over 2024-25 and 2025-26 to administer the compensation schemes, ensuring the provision of financial redress as quickly as possible; and to enable the ongoing public inquiry to learn lessons from the scandal, to ensure it can never be repeated.

In addition, the settlement also provides over £70 million of additional investment towards the costs for the replacement of the Post Office Horizon IT system that is still in use.

Department for Science, Innovation and Technology

Table 4.14: department for science, innovation and technology.

The Department for Science, Innovation and Technology (DSIT) settlement provides total DEL funding of £15.1 billion in 2025‑26. This is equivalent to an annual average real‑terms growth rate of 6.5% from 2023‑24 to 2025‑26.

The UK has extraordinary strengths in science and innovation; however, we are not doing enough to capitalise on these strengths. This settlement reflects the importance of R&D in supporting delivery of all of the government’s missions, by providing:

• £13.9 billion for DSIT to invest in R&D in 2025‑26. This includes at least £6.1 billion of support for core research, [footnote 118] growing allocations at least in line with inflation to help our world‑leading universities and researchers continue to deliver the cutting‑edge ideas that drive growth.
• £2.7 billion for association to EU research programmes and partnerships and the costs of the Horizon Europe guarantee scheme.
• An extension of the Innovation Accelerators programme to continue to bolster high‑potential innovation clusters in the Glasgow City Region, Greater Manchester and the West Midlands.
• Support for the commercialisation of university research with at least £40 million over 5 years for spin‑outs proof‑of‑concept funding, and improvements to the support for researchers spinning out the UK’s cutting‑edge research.
• Up to £37 million in 2025‑26 for the Made Smarter Innovation programme to help firms integrate digital technologies into the manufacturing process, complementing the Made Smarter Adoption programme.

To create a stable environment for productive long‑term partnerships with industry, the government will set 10‑year budgets for key R&D activities. These will be set out as part of Phase 2 of the Spending Review.

The digital and technologies sector is one of the growth sectors identified in the government’s Industrial Strategy green paper. To drive growth and maximise benefits across the country, the government will:

• Invest over £500 million in Project Gigabit and the Shared Rural Network, rolling out of digital infrastructure to under‑served parts of the UK.
• Create a new National Data Library to unlock the full value of our public data assets. This will provide simple, ethical and secure access to public data assets, giving researchers and businesses powerful insights that will drive growth and transform people’s quality of life through better public services and cutting‑edge innovation, including AI.

To build resilience for future health emergencies and capitalise on UK life sciences R&D strengths, the government will provide £70 million in 2025‑26 for the new Life Sciences Innovative Manufacturing Fund, as part of a longer‑term funding commitment of up to £520 million.

The government will deliver at least £25 million in 2025‑26 to launch a new multi‑year R&D Missions Programme to solve targeted problems that will crowd in private and third sector investment to accelerate delivery of each mission.

DSIT’s role as the digital centre of government will bring together work on the digital transformation of public services under one department:

• DSIT will drive forward the digital changes needed to maximise the potential of digital, data and technology to deliver for the British public.
• DSIT will invest £80 million to support the transformation of corporate functions across government, to deliver more efficient, cost‑effective and modern systems as part of government’s Shared Services Strategy.

DSIT is also establishing the new Regulatory Innovation Office which will reduce the burden of red tape, speeding up access to new technologies that improve people’s daily lives and unlock growth opportunities.

Department for Culture, Media and Sport

Table 4.15: department for culture, media and sport.

The Department for Culture, Media and Sport (DCMS) settlement provides total DEL funding of £2.3 billion in 2025-26. This is equivalent to an average annual real-terms growth rate of 2.6% from 2023-24 to 2025-26.

This settlement prioritises support for the creative industries and funds cultural institutions and sports facilities so that they continue to be world leading. This includes:

• Funding for the creative industries, one of the government’s eight growth-driving sectors in the Industrial Strategy green paper. DCMS will continue to fund important programmes such as Create Growth and the UK Games Fund. This settlement also funds an expansion of the Creative Careers Programme, worth £3 million, to build on its success in raising awareness of career routes and tackling skills gaps in this key sector.
• Increasing support for arts and culture by raising Grant-in-Aid for the National Museums and Galleries to help support their long-term sustainability, and providing a package of cultural infrastructure funding that will build on existing capital schemes – with additional capital investment to support cultural organisations across the country.
• Delivering major events and ceremonials by funding a programme of ceremonial activities for the commemoration of VE and VJ day and the government’s response to the recommendations from the UK Commission on Covid Commemoration. The government will launch a programme of activities to commemorate the lives lost in the COVID-19 pandemic, build a positive legacy and support future resilience.
• Supporting elite and grassroots sport by investing in multi-use facilities across the UK and scaling up work so DCMS can deliver on plans for the UK and Ireland to host the 2028 UEFA European Football Championship. DCMS will also provide UK Sport’s Olympic and Paralympic programme with an increase in funding of over 10% , providing £9 million a year extra to support hundreds of talented athletes across the country as they go for gold at the 2028 Olympic and Paralympic Games in Los Angeles. This multi-year investment will mean a total of £344 million is invested over the next cycle.

Department for Environment, Food and Rural Affairs

Table 4.16: department for environment, food & rural affairs.

The Department for Environment, Food and Rural Affairs (Defra) settlement provides total DEL funding of £7.5 billion in 2025-26. This is equivalent to an annual average real-terms growth rate of 2.7% from 2023-24 to 2025-26.

The government is facing significant funding pressures on flood defences and farm schemes of almost £600 million in 2024-25. While the government is meeting those commitments this year, it is necessary to review these plans from 2025-26 to ensure they are affordable.

This settlement is prioritising progress on our climate adaptation, food security, net zero and environmental goals by:

• Providing £5 billion over 2024-25 and 2025-26 to support the transition towards a more productive and environmentally sustainable agricultural sector in England, ensuring food security. This includes £60 million this year for the Farming Recovery Fund.
• Pledging at least £400 million in capital across 2024-25 and 2025-26 for tree planting and peatland restoration to protect soils, rivers, and biodiversity, and contribute to climate mitigation and resilience.
• Committing £2.4 billion over 2024-25 and 2025-26 to support flood resilience: protecting communities across the country and our economy from the impacts of flooding.
• Reaffirming the government’s commitment to move towards a zero-waste economy and implement the Collection and Packaging Reforms Programme. Extended Producer Responsibility for packaging will bring in over £1 billion per annum in revenue to improve recycling outcomes.

Defra will play a key role in growing our economy through innovation and increasing our security and resilience, including by:

• Providing £208 million across 2024-25 and 2025-26 to support the transformation of the government’s biosecurity facilities at Weybridge. This will enhance our ability to respond to the threat disease outbreaks pose to health, farming, food security, trade, and the economy.
• Allocating at least £58 million across 2024-25 and 2025-26 for research and innovation in support of our climate resilience and net zero goals.

The Budget will support the government’s growth mission by allocating £70 million in 2025-26 to support infrastructure and housing development while boosting nature recovery. This includes £14 million for the Nature Restoration Fund to offset the environmental impact of development, with a developer contribution, and £13 million to expand Protected Sites Strategies in priority areas.

Department for Work and Pensions

Table 4.17: department for work and pensions.

The Department for Work and Pensions (DWP) settlement provides total DEL funding of £10.8 billion in 2025-26. This is equivalent to an annual average real-terms growth rate of 6.3% from 2023-24 to 2025-26.

The settlement provides investment to deliver the biggest package of measures in recent history to reduce welfare fraud and error. The government will increase counter fraud and error funding by £110 million in 2025-26, hire an additional 3,000 DWP fraud and error staff and introduce new legislative powers for DWP to recover debt alongside requiring banks and financial institutions to undertake checks to identify incorrect benefit payments. These initiatives, along with further investment across DWP and HMRC administered benefits, will deliver savings of £4.3 billion in 2029-30 (see Table 2.1).

Excluding DEL investment in counter fraud and error, DWP’s resource DEL has an annual average real-terms growth rate of 4.8% from 2023-24 to 2025-26.

The settlement provides £1 billion in 2025-26, including Barnett consequentials, to extend the Household Support Fund in England and Discretionary Housing Payments in England and Wales. Local authorities will use this funding to support households facing the greatest hardship. The government is also helping low-income households on Universal Credit (UC) by creating a new Fair Repayment Rate. This will cap UC repayments at 15% of the standard allowance, benefiting 1.2 million households by allowing them to keep more of their UC award each month. The settlement also allocates additional funding to increase the take up of Pension Credit and support work to allow the administration of Pension Credit and Housing Benefit to be brought together for new claimants from 2026.

The settlement includes more than £2.7 billion in 2025-26 for DWP to deliver individualised employment support programmes and reduce health related inactivity, helping the government meet its ambition to support more people into work. This includes more than £800 million for disability employment support and £240 million to tackle the root causes of inactivity through the Get Britain Working White Paper.

An additional £90 million is allocated to accelerate the move of Employment and Support Allowance claimants onto Universal Credit, which will now start from September 2024 instead of 2028. This will allow DWP to complete the rollout of Universal Credit in 2026, with all working age benefit claimants brought onto one system, enabling the decommissioning of the remaining legacy benefits.

Table 4.18: HM Revenue and Customs

The HM Revenue and Customs (HMRC) settlement provides total DEL funding of £6.7 billion in 2025‑26. This is equivalent to an annual average real‑terms growth rate of 4.5% from 2023‑24 [footnote 119] to 2025‑26.

This extra funding helps to deliver the most ambitious ever package of measures to close the tax gap, raising £6.5 billion in extra revenue in 2029‑30.

The tax gap has been broadly stable since 2017‑18 [footnote 120] and the tax debt balance is twice pre‑pandemic levels. [footnote 121] Only two‑thirds of phone calls where customers wanted to speak to an advisor were answered last year. [footnote 122] HMRC’s increased funding, together with the Exchequer Secretary to the Treasury becoming Chair of HMRC’s Board, marks a step change in the government’s efforts to close the tax gap, improve customer service, and modernise and reform HMRC.

The settlement prioritises funding to close the tax gap and deliver the most extensive ever package of compliance measures, including by investing £1.4 billion over the next five years for HMRC to recruit an additional 5,000 compliance staff, the first 200 of which are set to join in November.

The government is investing in improving HMRC’s customer services, providing the resource needed to meet performance targets, including answering 85% of phone calls where customers want to speak to an advisor. The government will transform HMRC into a digital‑first organisation, with a Digital Transformation Roadmap to be published in spring 2025.

The government is also investing to enable the modernisation and reform of HMRC, improving the productivity and resilience of HMRC’s internal systems and improvements to the way customers engage HMRC, including through the HMRC App.

This is a settlement that properly funds HMRC, fixing the foundations and enabling the UK’s tax administration to generate the revenues necessary to support delivery of all five of the government’s missions and fund vital public services.

Table 4.19: HM Treasury

The HM Treasury settlement provides total DEL funding of £0.5 billion in 2025‑26. This is equivalent to an annual average real-terms growth rate of 1.3% from 2023‑24 to 2025‑26.

HM Treasury has led by example by stopping programmes that are no longer priorities, such as the retail sale of NatWest shares. The department has re-examined activity to deliver on the government’s priorities whilst continuing to meet its core objectives to drive economic growth and protect the public finances.

From within its settlement, HM Treasury will establish a new Office for Value for Money as well as the National Wealth Fund (NWF), building on what was the UK Infrastructure Bank.

The UK, alongside our international partners, has introduced the largest and most severe package of sanctions ever imposed on Russia. This settlement ensures that work will continue to be supported through the Office of Financial Sanctions Implementation (OFSI).

HM Treasury’s capital settlement reflects improved security facilities to support OFSI’s ongoing work, as well as the UK’s participation in the paid-in capital increase to the European Bank for Reconstruction and Development (EBRD). This would improve the EBRD’s financial capacity to increase lending to support Ukraine’s resilience and reconstruction while maintaining activity in all its countries of operation.

The NWF, the UK’s new impact investor, will support the growth mission by mobilising billions of pounds of investment in the UK’s world-leading clean energy and growth industries, and supporting the delivery of our new Industrial Strategy.

Cabinet Office

Table 4.20: cabinet office.

The Cabinet Office (CO) settlement provides total DEL funding of £1.3 billion in 2025-26. This is equivalent to an annual average real-terms growth rate of -5.4% from 2023-24 to 2025-26.

This budget places CO on a sustainable footing, ensuring the department can continue to meet its core objectives of supporting the Prime Minister and ensuring the effective running of government, while taking the lead in certain priority areas. The settlement provides for:

• The CO has established an Arms-Length Body to deliver the Infected Blood Compensation Scheme. This will provide support and compensation for victims of the Infected Blood scandal.
• The CO to progress plans for civil service Hubs in Bristol (Temple Quay House), Manchester (First Street), the Darlington Economic Campus (DEC), and the refurbishment of 22-26 Whitehall. It also provides funding to support further consolidation of the Whitehall estate, to reduce running costs.
• The CO to lead work across government to drive out waste and inefficiency in key areas of public spending, including consultancy, communications and public procurement.

CO sits at the centre of government and plays a central role in coordinating missions. The settlement allows CO to drive mission delivery across government, in partnership with the mission leads.

Table 4.21: Devolved Governments

All devolved government total DEL settlements are growing in real terms in 2025-26. The devolved governments’ settlements for 2025-26 are the largest in real terms of any settlements since devolution.

In 2025-26, the devolved governments are receiving over £86 billion. This includes an additional £6.6 billion through the operation of the Barnett formula, with £5.5 billion resource and £1.1 billion capital, and £1 billion of targeted funding, with £685 million resource and £365 million capital.

The Scottish Government is receiving £47.7 billion in 2025-26, including an additional:

• £3.4 billion through the operation of the Barnett formula, with £2.8 billion resource and £610 million capital.
• £130 million targeted funding, with £10 million resource and £120 million capital, including for City and Growth Deals.

The Welsh Government is receiving £21 billion in 2025-26, including an additional:

• £1.7 billion through the operation of the Barnett formula, with £1.5 billion resource and £250 million capital.
• £160 million targeted funding, with £10 million resource and £150 million capital, including for City and Growth Deals, coal tips safety, Holyhead Breakwater and border facilities.

The Northern Ireland Executive is receiving £18.2 billion in 2025-26, including an additional:

• £1.5 billion through the operation of the Barnett formula, with £1.2 billion resource and £270 million capital.
• £760 million targeted funding, with £670 million resource and £90 million capital, including for the 2024 restoration financial package, historic funding packages, and additional security funding.

Total targeted funding in 2025-26 for the devolved governments includes:

• £253 million for the continuation of all planned City and Growth Deals in Scotland, Wales and Northern Ireland.
• £662 million to the Northern Ireland Executive from the 2024 restoration financial package.
• £38 million for the Police Service of Northern Ireland’s Additional Security Fund and £8 million for the Executive Programme on Paramilitarism and Organised Crime.
• £25 million for essential work to keep coal tips maintained and safe in Wales.

A needs-based factor of 5% for the Welsh Government and 24% for the Northern Ireland Executive has been applied to the Barnett formula for 2025-26. All devolved governments receive over 20% more funding per person than equivalent UK Government funding in the rest of the UK, and the Welsh Government and the Northern Ireland Executive (including the 2024 restoration financial package) are both funded above their independently assessed relative need.

It is for the devolved governments to allocate their Barnett-based funding as they see fit in devolved areas, and additional funding will enable further investment in areas such as schools, housing, health and social care, and transport.

The devolved governments’ settlements have been determined in accordance with the latest edition of the Statement of Funding Policy, an addendum to which has been published today.

Alongside the publication of the OBR’s updated forecasts today, which inform block grant adjustments for tax and welfare devolution, this means the devolved governments have the funding and the certainty they need to set their own budgets in 2025-26.

Small departments and independent bodies

Table 4.22: small departments and independent bodies (resource del excluding depreciation).

The settlement for small departments and independent bodies includes:

• Funding for the Northern Ireland Office (NIO) to ensure that Northern Ireland’s interests are represented in Westminster and that the government’s responsibilities are represented and progressed in Northern Ireland. The settlement for NIO includes funding for a number of important priorities related to Northern Ireland’s legacy of the Troubles, including funding for the Omagh Bombing Inquiry, the Inquiry into the death of Patrick Finucane, and continuing with the £250 million Legacy funding commitment. £1.0 million has also been provided to support Northern Ireland Community Projects. 
• Funding for the Scotland Office to maximise Scotland’s influence by ensuring that the voice of Scotland is heard across Westminster. The settlement also allocates £0.75 million in 2025-26 to champion ‘Brand Scotland’.
• Funding for the Wales Office to promote and advocate for Wales at home and abroad and enabling closer collaboration with the Welsh Government.
• Funding for National Savings & Investments to deliver its transformation programme and become and a more cost-effective source of finance and a self-service digital business that can respond more nimbly to government, customer and wider market needs.
• An increase to HM Land Registry’s (HMLR) resource budgets in 2025-26, to maintain service quality for customers alongside investment into digital transformation of land ownership records. This is fully funded through an increase in HMLR fees.
• £139.4 million in 2024-25 and £141.4 million in 2025-26 for the Competition and Markets Authority to enable it to continue to promote competition for the benefit of consumers. This includes funding for the Digital Markets Unit, which has been established to oversee a new regulatory regime for the most powerful digital firms, promoting greater competition and innovation in these markets and protecting consumers and businesses from unfair practices.
• £116.0 million in 2025-26 for the Food Standards Agency to continue delivering an effective food regulatory scheme, thereby safeguarding public health and protecting the interests of consumers.
• £365.4 million for the UK Statistics Authority (UKSA) in 2025-26. This will fund the ongoing production and improvement of national statistics, with priority given to GDP, prices, employment, and population data, and additional work to recover the quality of critical national labour market statistics. This funding will allow the UKSA to continue supporting the government’s objectives, including on data to inform the government’s missions, building on the existing Integrated Data Service, and the continuation of the Future of Population and Migration Statistics Programme.

Policy decisions

This chapter sets out all Autumn Budget 2024 policy decisions. Unless stated otherwise, the decisions set out are ones which are announced at the Budget. Table 5.1 shows the cost or yield of all government decisions accounted for at Autumn Budget 2024 which have a direct effect on public sector net borrowing (PSNB) in the years up to 2029-30. This includes tax measures, changes to aggregate departmental expenditure limits (DEL) and measures affecting annually managed expenditure (AME). The government is also publishing the methodology underpinning the calculation of the fiscal impact of each policy decision. This is included in ‘Autumn Budget 2024: policy costings’ published alongside the Budget.

Arrangements for funding the devolved governments have been applied in the usual way as set out in the Statement of Funding Policy. This includes funding through the Barnett formula in relation to changes in funding for UK Government departments and adjustments to reflect tax and welfare devolution, as set out in their respective fiscal frameworks.

Table 5.1 Autumn Budget 2024 policy decisions (£ million)(1)

Public spending, achieving value for money and making compensation payments.

Spending Review envelope – Phase 1 of the Spending Review – which concludes alongside the Budget – resets departmental spending for 2024-25 and settles budgets for 2025-26. The government has set the resource and capital spending envelopes for Phase 2 of the Spending Review, which will conclude in late spring 2025.

Barnett – The devolved governments will receive an additional £6.6 billion through the operation of the Barnett formula in 2025-26. This includes £3.4 billion for the Scottish Government, £1.7 billion for the Welsh Government and £1.5 billion for the Northern Ireland Executive. This will enable substantial investment into schools, housing, health and social care, and transport across Scotland, Wales and Northern Ireland.

Office for Value for Money – The government is formally launching the Office for Value for Money, with the appointment of an independent Chair. The Office will support Phase 2 of the Spending Review conducting an assessment of where and how to root out waste and inefficiency, undertaking value for money studies in specific high-risk areas of cross-departmental spending and scrutinising investment proposals to ensure they offer value for money.

Appointment of Covid Corruption Commissioner – The government will shortly appoint a Covid Corruption Commissioner. They will lead work to recover public funds from companies that took unfair advantage of the COVID-19 pandemic.

Making compensation payments to victims of the Post Office Horizon IT Scandal – The government is providing around £1.8 billion in funding for compensation payments to victims of the Horizon IT Scandal, between 2024-25 and 2027-28. This is in addition to £0.2 billion in previous years provided by the government and the Post Office.

Making compensation payments to victims of the Infected Blood scandal – The government has set out plans to compensate victims of the infected blood scandal. The Budget provides £11.8 billion of funding for compensation.

Financial Assistance to Ukraine (Extraordinary Revenue Acceleration) – The government will provide Ukraine with £2.26 billion ($3 billion) of budgetary support earmarked for military procurement as part of the G7’s $50 billion ‘Extraordinary Revenue Acceleration (ERA)’ Loans for Ukraine scheme, intended to support Ukraine in the war against Russia’s illegal invasion.

NatWest shareholding – The government has made significant progress against its commitment to fully exit the NatWest shareholding and intends to do so by 2025-26 utilising a range of disposal methods, subject to market conditions and achieving value for money for taxpayers. The ongoing trading plan continues to support this objective, having now generated over £8.6 billion of proceeds since launch and reduced the government’s shareholding to below 16% on 7 October 2024. In total, the government has raised over £19.1 billion of proceeds from sales of the NatWest shareholding to date.

Investing in additional HMRC compliance staff – As announced in July, the government will invest £1.4 billion over the next five years to recruit an additional 5,000 HMRC compliance staff, raising £2.7 billion per year in additional revenue by 2029-30.

Investing in additional HMRC debt management staff – The government will invest £262 million over the next five years to fund 1,800 HMRC debt management staff, raising £2 billion per year in additional revenue by 2029-30.

Modernising HMRC debt management IT systems – The government will invest £154 million to modernise HMRC’s debt management case system.

Investing to acquire credit reference agency data for HMRC – The government will invest £12 million to acquire further credit reference agency data to enable HMRC to better target their debt collection activities.

Modernising voluntary Self Assessment pre-payment via the HMRC app – The government will invest £16 million to modernise HMRC’s app to allow income tax Self Assessment taxpayers to make voluntary advance payments in instalments.

Inheritance Tax digitalisation – The government will invest £52 million to digitalise the inheritance tax service from 2027-28 to provide a modern, easy-to-use system, making returns and paying tax simpler and quicker.

Digitalisation of Individual Savings Accounts – Digital reporting for Individual Savings Account (ISA) managers will be mandatory from 6 April 2027. Draft legislation will be published for a technical consultation in 2025.

Pre-populating Self Assessment tax returns with Child Benefit data (for the purposes of the High Income Child Benefit Charge) – The government will invest £4 million to enable HMRC to pre-populate Self Assessment tax returns with Child Benefit data to ensure the High Income Child Benefit Charge (HIBC) is accurately calculated and reported.

Confirming plans to mandate the reporting of benefits in kind via payroll software from April 2026 – The government confirms that the use of payroll software to report and pay tax on benefits in kind will become mandatory, in phases, from April 2026. This will apply to income tax and Class 1A National Insurance contributions (NICs).

E-invoicing – The government will publish a consultation in early 2025 to establish standards and increase the adoption of electronic invoicing.

Making Tax Digital for income tax Self Assessment – The government is committed to delivering Making Tax Digital (MTD) for income tax Self Assessment. The government will expand the rollout of MTD to those with incomes over £20,000 by the end of this Parliament, and will set out the precise timing for this at a future fiscal event.

Modernising and mandating tax adviser registration – The government will invest £36 million to modernise HMRC’s tax adviser registration services and will mandate registration of tax advisers who interact with HMRC on behalf of clients from April 2026. The government will legislate for this in a future Finance Bill.

Advanced Electronic Signatures for specific income tax repayments – The government will require tax advisers to provide an Advanced Electronic Signature when making specified income tax repayment claims from 6 April 2025.

Strengthening the regulatory framework in the tax advice market – The government is publishing a summary of responses to the ‘Raising standards in the tax advice market: strengthening the regulatory framework and improving registration’ consultation and is considering options to strengthen the regulatory framework of the tax advice market.

Enhancing HMRC’s powers and sanctions against tax adviser facilitated non-compliance – The government will publish a consultation in early 2025 on options to enhance HMRC’s powers and sanctions to take swifter and stronger action against tax advisers who facilitate non-compliance.

Tackling tax non-compliance in the umbrella company market – To tackle the significant levels of tax avoidance and fraud in the umbrella company market, the government will make recruitment agencies responsible for accounting for PAYE on payments made to workers that are supplied via umbrella companies. Where there is no agency, this responsibility will fall to the end client business. This will take effect from April 2026. The measure will protect workers from large, unexpected tax bills caused by unscrupulous behaviour from non-compliant umbrella companies. The government is publishing a policy paper alongside the Budget that provides further information on this measure.

Changing late payment interest rates on unpaid tax liabilities – The government will increase the late payment interest rate charged by HMRC on unpaid tax liabilities by 1.5 percentage points. This measure will take effect from 6 April 2025.

Ending contrived car ownership schemes – The government will publish draft legislation relating to loopholes in car ownership arrangements, through which an employer or a third party sells a car to an employee, often via a loan with no repayment terms and negligible interest, then buys it back after a short period. This arrangement means those benefiting don’t pay company car tax which other employees pay, and so this measure will seek to level the playing field. The changes will take effect from 6 April 2026.

Charity Compliance measures – The government will support charitable giving by legislating to prevent abuse of the charity tax rules, ensuring that only the intended tax relief is given to charities. These changes will take effect from April 2026 to give charities time to adjust to the new rules.

Changes to tax rules on liquidations of Limited Liability Partnerships – The government will change the way capital gains are taxed when a Limited Liability Partnership is liquidated, and assets are disposed of to a contributing member or person connected to them, to close a route used for avoidance of tax. Changes will come into effect from 30 October 2024 and will be legislated for through Finance Bill 2024-25.

Close Company Loans to shareholders – The government will ensure shareholders cannot extract funds untaxed from close companies by legislating to remove opportunities to side-step the anti-avoidance rules attached to the loans to participators regime. This change will apply from 30 October 2024.

Reducing tax-free overseas transfers of tax relieved UK pensions – The government will remove the exclusion from the Overseas Transfer Charge for transfers to Qualifying Recognised Overseas Pension Schemes in the European Economic Area (EEA) or Gibraltar from 30 October 2024 to address the risk of individuals receiving double tax-free allowances.

Tackling rogue company Directors – The government will increase collaboration between HMRC, Companies House, and the Insolvency Service to tackle those using contrived corporate insolvencies and dissolutions, often referred to as “phoenixism”, to evade tax.

Deterring tax fraud – The government will expand HMRC’s counter-fraud capability to address high value and high harm tax fraud.

Rewards for informants – The government will strengthen HMRC’s scheme for rewarding informants, to encourage reporting of high value tax fraud and avoidance.

Tackling promoters of marketed tax avoidance – The government will publish a consultation in early 2025 on a package of measures to tackle promoters of marketed tax avoidance.

Offshore tax compliance – The government is committed to tackling offshore non-compliance as part of the ambition to close the tax gap and is committing additional resources, including the scaling up of compliance activity to tackle serious offshore non-compliance including fraud by wealthy customers and intermediaries, corporates they control and other connected entities.

Simplification of taxation of Offshore Interest – The government is publishing a consultation document to tackle challenges arising from the mismatch of information on offshore interest being provided on a calendar year basis rather than a UK tax year basis. The consultation is seeking views on options to address this mismatch, including changes to the rules so that individuals are taxed on the non-UK interest arising in the year ended 31 December that ends in the tax year.

UK Reporting for the Cryptoasset Reporting Framework and amendments to the Common Reporting Standard – The government is publishing a summary of responses to the consultation on the implementation of the Cryptoasset Reporting Framework (CARF) and amendments to Common Reporting Standard. This includes a decision to extend the CARF’s reporting requirements to UK users. The government will legislate in Finance Bill 2024-25 and has published draft regulations to implement the revised rules.

Taxation of Employee Ownership Trusts and Employee Benefit Trusts – The government is introducing a package of reforms to the taxation of Employee Ownership Trusts and Employee Benefit Trusts. These reforms will prevent opportunities for abuse, ensuring that the regimes remain focused on encouraging employee ownership and rewarding employees. The changes will take effect from 30 October 2024.

Hidden Economy: expanding tax conditionality to new sectors – The government is publishing a consultation on whether to make the renewal of further public sector licences conditional on applicants demonstrating they are appropriately registered for tax.

Consultation on new ways to tackle tax non-compliance – The government is publishing a consultation on reforming HMRC’s correction powers, exploring changes to HMRC’s existing powers and processes, and a potential new power to require taxpayers to correct mistakes themselves.

Response to the call for evidence on HMRC powers, penalties, and safeguards – The government is publishing a summary of responses to the call for evidence ‘The Tax Administration Framework Review: enquiry and assessment powers, penalties, safeguards’.

Simplifying and Improving Tax Administration – The government will engage with stakeholders before introducing a set of measures to simplify tax administration and improve customer experience in the spring.

Making better use of third-party data – The government will publish a consultation in early 2025 on modernising how HMRC acquire and use third-party data to make it easier for taxpayers to get tax right first time.

Requirements for European Economic Area Overseas Pension Schemes – The government will bring in line the conditions of Overseas Pension Schemes (OPS) and Recognised Overseas Pension Schemes (ROPS) established in the EEA with OPS and ROPS established in the rest of the world from 6 April 2025.

UK resident pension scheme administrators – The government will require scheme administrators of registered pension schemes to be UK resident from 6 April 2026.

Personal tax & savings

Secondary Class 1 NICs (Employer NICs) – The government will increase the rate of employer NICs from 13.8% to 15% from 6 April 2025.

The Secondary Threshold is the point at which employers become liable to pay NICs on employees’ earnings, and is currently set at £9,100 a year. The government will reduce the Secondary Threshold to £5,000 a year from 6 April 2025 until 6 April 2028, and then increase it by Consumer Price Index (CPI) thereafter.

The Employment Allowance currently allows businesses with employer NICs bills of £100,000 or less in the previous tax year to deduct £5,000 from their employer NICs bill. The government will increase the Employment Allowance from £5,000 to £10,500, and remove the £100,000 threshold for eligibility, expanding this to all eligible employers with employer NICs bills from 6 April 2025.

Employer NICs relief for veterans – The government is extending the employer NICs relief for employers hiring qualifying veterans for a further year from 6 April 2025 until 5 April 2026. This means that businesses will continue to pay no employer NICs up to annual earnings of the Veterans Upper Secondary Threshold of £50,270 for the first year of a veteran’s employment in a civilian role.

NICs re-rating 2025-26 – The government will increase the Lower Earnings Limit (LEL) and the Small Profits Threshold (SPT) by the September 2024 CPI rate of 1.7% from 2025-26. For those paying voluntarily, the government will also increase Class 2 and Class 3 NICs rates by September CPI of 1.7% in 2025-26. The LEL will be £6,500 per annum (£125 per week) and the SPT will be £6,845 per annum. The main Class 2 rate will be £3.50 per week, and the Class 3 rate will be £17.75 per week.

Changes to the taxation of non-UK domiciled individuals – The government will legislate to abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler and internationally competitive residence-based regime, which will take effect from 6 April 2025. Individuals who opt-in to the regime will not pay UK tax on foreign income and gains (FIG) for the first four years of tax residence. From 6 April 2025 the government will introduce a new residence-based system for Inheritance Tax (IHT), ending the use of offshore trusts to shelter assets from IHT, and scrap the planned 50% reduction in foreign income subject to tax in the first year of the new regime.

For Capital Gains Tax purposes, current and past remittance basis users will be able to rebase personally held foreign assets to 5 April 2017 on a disposal where certain conditions are met.

Overseas Workday Relief will be retained and reformed, with the relief extended to a four-year period and the need to keep the income offshore removed.

The amount claimed annually will be limited to the lower of £300,000 or 30% of the employee’s net employment income.

The government is extending the Temporary Repatriation Facility to three years, expanding the scope to offshore structures, and simplifying the mixed fund rules to encourage individuals to spend and invest their FIG in the UK.

A technical note has been published alongside the Budget.

Inheritance tax: unused pension funds and death benefits – The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes from 6 April 2027. This will restore the principle that pensions should not be a vehicle for the accumulation of capital sums for the purposes of inheritance, as was the case prior to the 2015 pensions reforms.

Inheritance tax: extension of agricultural property relief to environmental land management – The government confirms it will extend the existing scope of agricultural property relief from 6 April 2025 to land managed under an environmental agreement with, or on behalf of, the UK government, devolved governments, public bodies, local authorities, or approved responsible bodies.

Inheritance tax: agricultural property relief and business property relief – The government will reform these inheritance tax reliefs from 6 April 2026. In addition to existing nil-rate bands and exemptions, the current 100% rates of relief will continue for the first £1 million of combined agricultural and business property to help protect family businesses and farms. The rate of relief will be 50% thereafter, and in all circumstances for quoted shares designated as “not listed” on the markets of recognised stock exchanges, such as AIM.

Inheritance tax: nil-rate band and residence nil-rate band – The inheritance tax nil-rate bands are already set at current levels until 5 April 2028 and will stay fixed at these levels for a further two years until 5 April 2030. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million. Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax liability.

Uprating Qualifying Care Relief 2025-26 – The government will uprate Qualifying Care Relief, the amount of income tax relief available to foster carers and shared lives carers, by the September 2024 CPI rate of 1.7% from 6 April 2025.

Uprating Married Couples Allowance and Blind Persons Allowance 2025-26 – The government will uprate Married Couple’s Allowance and the Blind Person’s Allowance by the September 2024 CPI rate of 1.7% from 6 April 2025.

Individual Savings Accounts, Lifetime ISA, Junior ISA and Child Trust Fund Allowance – Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2030.

Freeze the Starting Rate for Savings – The Starting Rate for Savings will be retained at £5,000 for 2025-26, allowing individuals with less than £17,570 in employment or pensions income to receive up to £5,000 of savings income tax-free.

Help to Save Extension and Reform – The government will extend the current Help to Save scheme until 5 April 2027. With effect from 6 April 2025, eligibility will be extended to all Universal Credit claimants who are in work. A delivery consultation, including details of a reformed and improved scheme, has been published alongside the Budget.

British ISA – The government will not proceed with the British ISA due to mixed responses to the consultation launched in March 2024.

Clarification of taxable status of Statutory Neonatal Care Pay – The government will legislate in Finance Bill 2024-25 to clarify the income tax treatment of Statutory Neonatal Care Pay. This will ensure the payment is liable to income tax and ensures consistency with the tax treatment of other statutory maternity and paternity pay schemes.

Employment Related Securities Changes – Consequential to the Neonatal Care (Leave and Pay) Act – From 6 April 2025, the notice an employer must provide to an employee under a Share Incentive Plan regarding the possible effect of deductions from salary on entitlement to social security benefits and statutory payments must refer to statutory neonatal care pay. This will be legislated for in Finance Bill 2024-25.

Loan Charge review – The government will commission an independent review of the Loan Charge to help bring the matter to a close for those affected whilst ensuring fairness for all taxpayers. Further details about the review will be set out by the Exchequer Secretary in due course.

Business & international tax

Capital Gains Tax Rates – The lower and higher main rates of Capital Gains Tax will increase to 18% and 24% respectively for disposals made on or after 30 October 2024. The rate for Business Asset Disposal Relief and Investors’ Relief will increase to 14% from 6 April 2025, and will increase again to match the lower main rate at 18% from 6 April 2026. The new rates will be legislated in Finance Bill 2024-25.

Capital Gains Tax: Investors’ Relief lifetime limit – The lifetime limit for Investors’ Relief will be reduced to £1 million for all qualifying disposals made on or after 30 October 2024, matching the lifetime limit for Business Asset Disposal Relief. This will be legislated in Finance Bill 2024-25.

Carried interest taxation reform – The government will reform the way carried interest is taxed, ensuring that this is in line with the economic characteristics of the reward. From April 2026, all carried interest will be taxed within the income tax framework, with a 72.5% multiplier applied to qualifying carried interest that is brought within charge. As an interim step, the two Capital Gains Tax rates for carried interest will both increase to 32% from 6 April 2025. The government will also consult on introducing further conditions of access into the regime.

VAT on private school fees – From 1 January 2025, to secure additional funding to help deliver the government’s commitments relating to education and young people, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20%. This will also apply to boarding services provided by private schools. The government has published a response to its technical consultation on this policy.

To protect pupils with special educational needs that can only be met in a private school, local authorities and devolved governments that fund these places will be compensated for the VAT they are charged on those pupils’ fees.

The government greatly values the contribution of our diplomatic staff and serving military personnel. The Continuity of Education Allowance (CEA) provides clearly defined financial support to ensure that the need for frequent mobility, which often involves an overseas posting, does not interfere with the education of their children.

Ahead of the VAT changes on 1 January, the MOD and the FCDO will increase the funding allocated to the CEA to account for the impact of any private school fee increases on the proportion of fees covered by the CEA in line with how the allowance normally operates. The MOD and FCDO will set out further details shortly.

Business rates: removing charitable rate relief from private schools – As announced on 29 July 2024, private schools in England will no longer be eligible for charitable rate relief. The Ministry of Housing, Communities and Local Government (MHCLG) will bring forward primary legislation to amend the Local Government Finance Act 1988 to end relief eligibility for private schools. This change is intended to take effect from April 2025, subject to Parliamentary process. Private schools which are ‘wholly or mainly’ concerned with providing full time education to pupils with an Education, Health and Care Plan will remain eligible for relief.

Business rates: retail, hospitality and leisure relief – For 2025-26, eligible retail, hospitality and leisure (RHL) properties in England will receive 40% relief on their business rates liability. RHL properties will be eligible to receive support up to a cash cap of £110,000 per business.

Business rates: multipliers – For 2025-26, the small business multiplier in England will be frozen at 49.9p. The government will lay secondary legislation to freeze the small business multiplier. The standard multiplier will be uprated by the September 2024 CPI rate to 55.5p.

Business rates: sectoral multipliers – The government intends to introduce permanently lower multipliers for Retail, Hospitality and Leisure (RHL) properties from 2026-27, paid for by a higher multiplier for properties with Rateable Values above £500,000.

Business rates reform – A discussion paper has been published setting the direction of travel for transforming the business rates system and inviting industry to a dialogue about future reforms.

Business rates: Disclosure Consultation Summary of Responses – The Valuation Office Agency (VOA) is publishing a response to the March 2023 Consultation on Disclosure, which sets out the next steps on increasing the transparency of business rates valuations by disclosing more information.

Stamp Duty Land Tax: Increase to the Higher Rates on Additional Dwellings – From 31 October 2024 the Higher Rates for Additional Dwellings (HRAD) surcharge on Stamp Duty Land Tax (SDLT) will be increased by 2 percentage points from 3% to 5%. Increasing HRAD ensures that those looking to move home, or purchase their first property, have a comparative advantage over second home buyers, landlords, and businesses purchasing residential property. This is expected to result in 130,000 additional transactions over the next 5 years by first-time buyers and other people buying a primary residence. This surcharge is also paid by non-UK residents purchasing additional property.

The single rate of SDLT that is charged on the purchase of dwellings costing more than £500,000 by corporate bodies will also be increased by 2 percentage points from 15% to 17%.

Energy Profits Levy – From 1 November 2024, the Energy Profits Levy (EPL) rate will rise by 3 percentage points to 38%, the investment allowance will be abolished, and the rate of the decarbonisation allowance will be set at 66% so its cash value is maintained. To provide certainty and to support a stable energy transition, the government will make no additional changes to tax relief available within EPL. The levy will end on 31 March 2030. The government will legislate for these measures in Finance Bill 2024-25. To support long-term stability and predictability in the oil and gas fiscal regime, the government will publish a consultation in early 2025 on how the taxation of oil and gas profits will respond to price shocks after the EPL ends. The government will also continue to have regular engagement with the sector to understand the evolving context of oil and gas investment, supported by bi-annual fiscal forums.

Relief for payments made into a Carbon Capture Usage and Storage Decommissioning Fund – The government will legislate in Finance Bill 2024-25 to provide relief for payments oil and gas companies make into decommissioning funds in relation to assets sold for use in Carbon Capture Usage and Storage, maintaining the tax treatment had these assets instead been decommissioned. This legislation will also remove receipts from the sale of these assets from the scope of the EPL.

Consultation on assessing effects of Scope 3 emissions from Offshore Oil and Gas Production and Development Projects – The government is publishing a consultation on new environmental guidance for assessing end use emissions related to oil and gas projects. This consultation seeks to provide stability for the oil and gas industry, support investment, protect jobs and ensure a fair, orderly and prosperous transition in the North Sea in line with our climate and legal obligations.

Climate Change Levy main and reduced 2026-27 rates – The main rates of the Climate Change Levy (CCL) for gas, electricity, and solid fuels will be uprated in line with Retail Price Index (RPI) in 2026-27. The main rate for liquefied petroleum gas will continue to be frozen. The reduced rates of CCL will remain at an unchanged fixed percentage of the main rates.

Carbon Price Support 2026-27 rates – The government will maintain Carbon Price Support rates in Great Britain at a level equivalent to £18 per tonne of CO2 in 2026-27.

Carbon Border Adjustment Mechanism: government response publication – The government has published its response to the March 2024 consultation on the introduction of a UK carbon border adjustment mechanism (CBAM). The response confirms that the UK CBAM will be introduced on 1 January 2027, placing a carbon price on goods that are at risk of carbon leakage imported to the UK from the aluminium, cement, fertiliser, hydrogen and iron & steel sectors. Products from the glass and ceramics sectors will not be in scope of the UK CBAM from 2027 as previously proposed. The registration threshold will be set at £50,000, retaining over 99% of imported emissions within the scope of the CBAM, while removing over 80% of otherwise registrable businesses. Over 70% of those removed from the CBAM altogether by this threshold are micro, small, or medium sized businesses.

Air Passenger Duty rates 2026-27 – For 2026-27, the government will increase rates of Air Passenger Duty (APD). This equates to £1 more for those taking domestic flights in economy class, £2 more for those flying to short-haul destinations in economy class, £12 for long-haul destinations, and relatively more for premium economy and business class passengers. The higher rate, which currently applies to larger private jets, will rise by a further 50% in 2026-27. From 2027-28 onwards, all rates will be uprated by forecast RPI and rounded to the nearest penny. The government is also consulting on extending the scope of the APD higher rate to capture all passengers travelling in private jets already within the APD regime.

Fuel duty rates 2025-26 – The government will freeze fuel duty rates for 2025-26, a tax cut worth £3 billion over 2025-26 which represents a £59 saving for the average car driver. The temporary 5p cut in fuel duty rates will be extended by 12 months and will expire on 22 March 2026. The planned inflation increase for 2025-26 will also not take place.

Company Car Tax rates 2028-29 and 2029-30 – The government is setting rates for Company Car Tax (CCT) for 2028-2029 and 2029-30 to provide long term certainty for taxpayers and industry. CCT rates will continue to strongly incentivise the take-up of electric vehicles, while rates for hybrid vehicles will be increased to align more closely with rates for internal combustion engine (ICE) vehicles, to focus support on electric vehicles.

• Appropriate Percentages (APs) for zero emission and electric vehicles will increase by 2 percentage points per year in 2028-29 and 2029-30, rising to an AP of 9% in 2029-30.
• APs for cars with emissions of 1 – 50 g of CO2 per kilometre, including hybrid vehicles, will rise to 18% in 2028-29 and 19% in 2029-30.
• APs for all other vehicle bands will increase by 1 percentage point per year in 2028-29 and 2029-30. The maximum AP will also increase by 1 percentage point per year to 38% for 2028-2029 and 39% for 2029-2030. This means for vehicle bands with emissions of 51 g of CO2 per kilometre and over, APs will increase to 19% – 38% in 2028-29 and 20% – 39% in 2029-30.

2025-26 Vehicle Excise Duty rates for cars, vans and motorcycles – The government will uprate standard Vehicle Excise Duty (VED) rates for cars, vans and motorcycles, excluding first year rates for cars, in line with the RPI from 1 April 2025.

VED First Year Rates – The government will change the VED First Year Rates for new cars registered on or after 1 April 2025 to strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine (ICE) cars.

• Zero emission cars will pay the lowest first year rate at £10 until 2029-30.
• Rates for cars emitting 1-50 g/km of CO2, including hybrid vehicles, will increase to £110 for 2025-26.
• Rates for cars emitting 51-75 g/km of CO2, including hybrid vehicles, will increase to £130 for 2025-26.
• All other rates for cars emitting 76 g/km of CO2 and above will double from their current level for 2025-26.

These changes will apply from 1 April 2025.

VED Expensive Car Supplement – The government recognises the disproportionate impact of the current VED Expensive Car Supplement threshold for those purchasing zero emission cars and will consider raising the threshold for zero emission cars only at a future fiscal event, to make it easier to buy electric cars.

2025-26 Heavy Goods Vehicle VED and Heavy Goods Vehicle Levy rates – The government will uprate the Heavy Goods Vehicle (HGV) VED rates in line with RPI from 1 April 2025. The government will also uprate the HGV Levy in line with RPI from 1 April 2025.

2025-26 Van Benefit Charge, Van Fuel benefit Charge and Car Fuel Benefit Charge – The government will uprate the Van Benefit Charge and Car and Van Fuel Benefit Charges by CPI from 6 April 2025.

VAT treatment of private hire vehicles – The government is considering the responses to the recent consultation on the VAT treatment of private hire vehicle services, as well as the impact of the recent Court of Appeal judgment, and will respond to the consultation in due course.

Treatment of double cab pick up vehicles – Following a Court of Appeal judgement, the government will treat double cab pick-up vehicles (DCPUs) with a payload of one tonne or more as cars for certain tax purposes. From 1 April 2025 for Corporation Tax, and 6 April 2025 for income tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind, and some deductions from business profits. The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025. Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6 April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.

Statutory open data scheme for road fuels prices (Fuel Finder) – The government is introducing a requirement for all UK retail petrol-filling stations to report prices and the unavailability of fuel within 30 minutes of a change. Subject to parliamentary timings and the passage of required legislation, the government intends to launch the scheme by the end of 2025.

Competition and Markets Authority Road Fuels Monitoring Function – The government is aiming to commence the Competition and Markets Authority’s information gathering powers in the Digital Markets, Competition and Consumers Act 2024 by January 2025 so that it can monitor competition in the market.

Plastic Packaging Tax rates – To incentivise businesses to use recycled instead of new plastic in packaging, the government will increase the Plastic Packaging Tax (PPT) rate for 2025-26 in line with CPI inflation.

Plastic Packaging Tax – Mass Balance Approach: Publication of the Summary of Responses – To support use of and investment in advanced chemical recycling technologies, businesses will be permitted to use a mass balance approach to evidence recycled content in chemically recycled plastic for PPT.

Landfill Tax rates – The government confirms the previously announced adjustment to Landfill Tax rates from 1 April 2025, which maintains the incentive to manage waste more sustainably. The government recognises the importance of maintaining the real-terms value of Landfill Tax rates. To ensure they reflect up-to-date market and economic conditions, the government will announce future Landfill Tax rates at the fiscal event immediately before, so those applicable from 1 April 2026 will be announced at Budget 2025.

Land Remediation Relief – The government will launch a consultation in spring 2025 to review the effectiveness of Land Remediation Relief, to consider whether the relief is still meeting its objectives and is good value for money.

Alcohol duty – The government will support pubs and the wider on-trade by cutting alcohol duty rates on draught products below 8.5% alcohol by volume (ABV) by 1.7%, so that an average ABV strength pint will pay 1p less in duty. The government will also increase the discount provided to small producers for non-draught products, and maintain the cash discount provided to small producers for draught products, increasing the relative value of Small Producer Relief. Alcohol duty rates on non-draught alcoholic products will increase in line with RPI inflation. These measures will take effect from 1 February 2025. The current temporary wine easement will also end as planned on 1 February 2025.

Guest beers consultation – The government will consult on ways to ensure that small brewers can retain and expand their access to UK pubs, and maximise drinkers’ choice, including through provisions to enable more ‘guest beers’.

Spirit Drinks Verification Scheme investment and consultation – The government will consult with industry to improve the Spirit Drinks Verification Scheme (SDVS) and make an investment of up to £5 million to support the SDVS.

Alcohol Duty Stamps Scheme: Abolition – The Alcohol Duty Stamps scheme will end following a review by HMRC. The government will introduce legislation in Finance Bill 2024-25 to end the Scheme from 1 May 2025.

Soft Drinks Industry Levy – To protect its real terms value, the Soft Drinks Industry Levy (SDIL) will be increased, over the next five years, to reflect the 27% CPI inflation between 2018 and 2024. Annual rate increases will take place on 1 April, starting on 1 April 2025, and will also reflect future yearly CPI increases.

Soft Drinks Industry Levy Review – To ensure the SDIL continues to encourage reformulation to help tackle obesity, the government will review the current SDIL sugar content thresholds and the current exemptions for milk-based and milk substitute drinks. Contributions from all interested stakeholders are welcomed as part of this review.

Tobacco duty rates – The government will renew the tobacco duty escalator at RPI+2% on all tobacco products until the end of this Parliament. To reduce the gap with cigarette duty, the rate on hand-rolling tobacco will increase by a further 10% this year. These changes will take effect from 6pm on 30 October 2024 and will be included in Finance Bill 2024-25.

Vaping products duty – A flat-rate excise duty on all vaping liquid will be introduced from 1 October 2026 at £2.20 per 10ml vaping liquid, accompanied by an equivalent one-off increase of £2.20 per 100 cigarettes / 50g of tobacco in tobacco duty to maintain the financial incentive to switch from tobacco to vaping.

Gaming duty bands – The Gross Gaming Yield bandings for gaming duty will be frozen from 1 April 2025 until 31 March 2026.

Remote gambling duty reform – The government will consult next year on proposals to bring remote gambling (meaning gambling offered over the internet, telephone, TV and radio) into a single tax, rather than taxing it through a three-tax structure. This will aim to simplify, future-proof and close loopholes in the system.

Audio-Visual Expenditure Credit: Additional tax relief for visual effects – From 1 April 2025, film and high-end TV productions will be able to claim an enhanced 39% rate of Audio-Visual Expenditure Credit on their UK visual effects costs. UK visual effects costs will be exempt from the Audio-Visual Expenditure Credit’s 80% cap on qualifying expenditure. Costs incurred from 1 January 2025 will be eligible. This measure was announced at Spring Budget 2024 and it will be legislated in Finance Bill 2024-25.

Independent Film Tax Credit – From 1 April 2025, UK films with budgets under £15 million and a UK lead writer or director will be able to claim an enhanced 53% rate of Audio-Visual Expenditure Credit, known as the Independent Film Tax Credit. Expenditure incurred from after 1 April 2024 on films that began principal photography on or after 1 April 2024 is eligible. This measure was announced at Spring Budget 2024 and has been legislated.

Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibitions Tax Relief: 45%/40% rates from 1 April 2025 – From 1 April 2025, the rates of Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibitions Tax Relief will be set at 40% for non-touring productions and 45% for touring productions and all orchestra productions. These rates apply UK-wide. This measure was announced at Spring Budget 2024 and has been legislated.

Research & development tax reliefs: improving administration – The government will discuss widening the use of advance clearances in research & development reliefs with stakeholders, with the intention to consult on lead options in spring 2025. The government has also published a document setting out further information on the scale and characteristics of error and fraud up to 2023-24, the policy and operational changes that have been made to address this, and further data on customer experience.

Advance tax certainty for major projects – The government will launch a consultation in spring 2025 to develop a new process that will give investors in major projects increased tax certainty in advance.

Capital allowances: Green First Year Allowances – The government will extend for a further year the 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle chargepoints, to 31 March 2026 for corporation tax purposes and 5 April 2026 for income tax purposes.

Capital allowances: Extending full expensing to assets bought for leasing – The government will explore extending full expensing to assets bought for leasing or hiring, when fiscal conditions allow.

Capital allowances: Greater clarity on what qualifies for capital allowances – HMRC will continue to work with stakeholders to improve and clarify guidance on areas of uncertainty within the capital allowances system.

Capital allowances: Tax treatment of predevelopment costs – A consultation will be launched in the coming months that explores the tax treatment of predevelopment costs.

Reserved Investor Fund and related provisions – The government is proceeding with the introduction of the Reserved Investor Fund (Contractual Scheme) – a new type of UK-based investment fund. Related provisions will also make minor changes to the tax rules in respect of Co-ownership Authorised Contractual Schemes. Secondary legislation will be brought forward before the end of the tax year 2024-25.

Private Intermittent Securities and Capital Exchange System Stamp Taxes on Shares Exemption – The government is committed to delivering the Private Intermittent Securities and Capital Exchange System (PISCES), a new innovative market for trading private company shares. In line with that commitment, the government is announcing that PISCES transactions will be exempt from Stamp Duty and Stamp Duty Reserve Tax. The exemption will be introduced to a similar timeline to the legislation establishing the PISCES regulatory framework.

Modernising Transfer Pricing – The government will publish a further consultation on reforms to the UK’s rules on transfer pricing, permanent establishments, and Diverted Profits Tax in spring 2025. This includes the potential removal of UK-to-UK transfer pricing. The government will also publish consultations in spring 2025 on further changes to the transfer pricing rules, including:

• considering lowering the thresholds for exemption from transfer pricing for medium-sized businesses while retaining an exemption for small businesses, and
• introducing a requirement for multinationals in scope of transfer pricing rules to report information to HMRC on certain cross-border related party transactions

Alongside this the government will review the transfer pricing treatment of cost contribution arrangements, to ensure that the rules are certain and do not act as a deterrent to investment that brings economic benefits to the UK.

Technical changes relating to Advance Pricing Agreements for certain financing arrangements – The government will introduce technical amendments in Finance Bill 2024-25 to provide certainty that Advance Pricing Agreements are available for financing arrangements covered by the Transfer Pricing rules in line with HMRC’s existing Statement of Practice 1 (2012).

Multinational Top-up Tax: Undertaxed Profits Rule – OECD Pillar 2 – The government will legislate for the Undertaxed Profits Rule (UTPR) in Finance Bill 2024-25. The UTPR is the final part of the G20-OECD Global Minimum Tax agreed by over 135 countries and jurisdictions. It will take effect for accounting periods beginning on or after 31 December 2024. Technical amendments to the Multinational and Domestic Top-up Tax legislation will also be included in Finance Bill 2024-25 to incorporate latest international updates and following stakeholder consultation.

Offshore Receipts in Respect of Intangible Property Repeal – The government is confirming that the Offshore Receipts in Respect of Intangible Property (ORIP) rules will be abolished in respect of income arising from 31 December 2024, based on its view that the Pillar 2 Undertaxed Profits Rule will more comprehensively discourage the multinational tax-planning arrangements that ORIP sought to counter. Repeal of ORIP will be legislated in 2024-25.

Corporate Tax Roadmap – The government has published a Corporate Tax Roadmap. The Roadmap includes a commitment to cap the Corporation Tax Rate at 25%; maintain the Small Profits Rate and marginal relief at current rates and thresholds; and maintain key features as such as Full Expensing, the Annual Investment Allowance, R&D relief rates, and the Patent Box. The Roadmap also outlines areas for further exploration including a new process for advanced assurance for major projects and simplifying and improving tax administration.

Rollover of 2021 Business Tariff Suspensions – Following feedback from businesses, the government will maintain tariff-free imports to avoid unnecessary costs for UK businesses. This measure will extend, until June 2026, tariff suspensions on goods ranging from aluminium frames used by UK bicycle manufacturers to ingredients used by UK food producers.

Alternative Finance: Tax rules for alternative finance – Alternative finance tax rules will be amended to put certain tax consequences of alternative and conventional financing arrangements on a level playing field. This follows a consultation on tax simplification for alternative finance and the government has published a summary of responses. The changes will apply UK-wide from 30 October 2024. This will be legislated for in Finance Bill 2024-25.

Annual Tax on Enveloped Dwellings (ATED): Annual chargeable amounts – The annual chargeable amounts for ATED will be uplifted by the September CPI figure of 1.7% for the 2025-2026 ATED chargeable period. This uprating will be implemented through a Treasury Order.

Welfare and labour markets

Welfare cap reform – The government is setting a new welfare cap in its fiscal framework and has reset the cap for 2029-30. The margin has been revised and, to support ongoing spending control and to strengthen accountability, the Department for Work and Pensions will publish an annual report on welfare spending.

Universal Credit: Moving Employment and Support Allowance claimants onto Universal Credit sooner – The government will migrate Employment and Support Allowance claimants to Universal Credit from September 2024 instead of 2028. This move will bring more people into a modern benefit regime, continuing to ensure they are supported to look for and move into work. 

DWP Fraud and Error: 3,000 new fraud and error staff – The government is expanding DWP’s fraud and error staff by 3,000, as part of its £110 million investment in 2025-26 to tackle fraud and error. This is expected to deliver gross savings of £705 million in 2029-30.

DWP Fraud and Error: new powers to recover debt – The government will increase DWP’s powers to recover debt as part of the forthcoming Fraud, Error and Debt Bill. This is expected to save £260 million in 2029-30.

DWP Fraud and Error: new investment to prevent fraud and error – The government will invest in DWP to carry out additional checks on Universal Credit claimants who have changes in their circumstances, as part of a £110 million investment in 2025-26 to tackle fraud and error. This is expected to save £250 million in 2029-30.

DWP Fraud and Error: Extending Targeted Case Review – The government will extend DWP’s Targeted Case Review which helps spot incorrect Universal Credit claims, saving £2.5 billion in 2029-30.

HMRC Fraud and Error: investment in additional 180 counter-fraud staff to tackle fraud and error in Child Benefit and Tax-Free Childcare – The government will invest in 180 new counter-fraud staff to increase HMRC’s capabilities to better tackle fraud and error in Child Benefit and Tax-Free Childcare. This is expected to deliver a gross saving of £95 million in 2029-30.

Universal Credit: Fair Repayment Rate – The government is creating a new Fair Repayment Rate which caps debt repayments made through Universal Credit at 15% of the standard allowance. This will mean 1.2 million households will be better off by £420 per year on average as a result of this change. This measure increases the public sector net cash requirement by £385 million in 2029-30.

Universal Credit: surplus earnings – The government will maintain the Universal Credit surplus earnings threshold at £2,500 in Great Britain until March 2026.

Universal Credit: amend Severe Disability Premium transitional protection regulations – The government will amend the Severe Disability Premium to better support claimants who move from supported or temporary accommodation into rented housing.

Households Support Fund and Discretionary Housing Payments – The government will provide £1 billion in 2025-26, including Barnett impact, to extend both the Household Support Fund (HSF) in England, and Discretionary Housing Payments (DHPs) in England and Wales. The HSF will help households facing the greatest hardship and financial crisis, including supporting them with the cost of essentials such as food, energy and water. This builds on the previous investment of £500 million, including Barnett impact, to extend the HSF in England to 31 March 2025. DHPs are administered by Local Authorities and will continue to support vulnerable and low-income claimants to meet additional housing costs or temporarily cover rent.

Targeting Winter Fuel Payments – As announced in July 2024, the Winter Fuel Payment will be targeted to those in receipt of Pension Credit or certain other income-related benefits from winter 2024-25, saving an average £1.5 billion of taxpayers’ money each year. The Winter Fuel Payment continues to be worth £200 for eligible households, or £300 for eligible households with someone aged over 80.

Enhancing Pension Credit take-up for new claims to Housing Benefit – The government has been working to maximise Pension Credit take up and ensure those eligible for this benefit are receiving it. There has been a significant increase in Pension Credit claims following the announcement to target Winter Fuel Payments. The government is optimising the use of Housing Benefit data and individuals applying for Housing Benefit from Spring 2025 will be proactively encouraged to apply for Pension Credit. The government is contacting 120,000 pensioners currently in receipt of Housing Benefit inviting them to claim Pension Credit too.

Bringing together the administration of Housing Benefit and Pension Credit – The administration of Pension Credit and Housing Benefit will be brought together for new claimants from 2026. This is two years earlier than previously announced, and will support more people to receive the benefits that they are entitled to.

National Living Wage increase – From April 2025 the National Living Wage will increase to £12.21 per hour for all eligible employees, and the National Minimum Wage for 18-20 year olds will increase to £10.00 per hour for all eligible workers. The government is also increasing the minimum wages for Under 18s and Apprentices to £7.55 per hour, and the Accommodation Offset rate will increase to £10.66 a day.

State Pension and Pension Credit uprating for 2025-26 – The government will maintain the State Pension Triple Lock for the duration of this parliament. The basic and new State Pension will increase by 4.1% from April 2025, in line with earnings growth. The Pension Credit Standard Minimum Guarantee will also increase by 4.1% from April 2025.

DWP and HMRC working age benefits uprating for 2025-26 – The government will uprate working age benefits by September 2024 CPI of 1.7% from April 2025. This will see around 5.7 million families on Universal Credit gain £150 on average in 2025-26.

Get Britain Working White Paper – The government will shortly publish the Get Britain Working White Paper which will set out its £240 million investment to trail new ways of getting people back into work. The government will test new approaches and collect robust evidence on how to tackle the root causes of ill-health-related inactivity, support young people who are ‘not in education, employment, or training’ (NEET), and help people to develop their careers.

Get Britain Working Trailblazers – As part of the Get Britain Working package, the government will establish eight trailblazer areas across England and Wales that bring together health, employment and skills services to improve the support available to those who are inactive due to ill health and help them return to work. This will include NHS England Health and Growth Accelerators in at least three Integrated Care Systems to develop evidence of the impact of targeted action on the top health conditions driving economic inactivity. It will also establish a further eight Youth Guarantee Trailblazer areas to test new ways of supporting young people into employment or training, by bringing together and enhancing existing programmes in partnership with local areas.

High Income Child Benefit Charge reform, simplification and targeting of economic support to households – The government will not proceed with the reform to base the HICBC on household incomes. This is because it would have come at a significant fiscal cost of £1.4 billion by 2029-30 if setting the threshold to £120,000-£160,000, where no families would lose out. [footnote 123] To make it easier for all taxpayers to get their HICBC right, the government will allow employed individuals pay their HICBC through their tax code from 2025, and pre-prepopulate Self Assessment tax returns with Child Benefit data for those not using this service. The government will also explore how better data use and sharing across government departments can improve the targeting of economic support to households, especially in times of crisis.

Devolution, housing and local government

Mortgage guarantee scheme – The government will engage with industry over the coming months on the Mortgage guarantee scheme (MGS) to develop plans to make MGS permanently available to support lending at 95% loan to value. A permanent scheme will end the stop-start availability of the scheme, and give lenders confidence throughout the cycle, while making it easier for first-time buyers to realise the dream of home ownership. The government intends to announce further details of the scheme in Phase 2 of the Spending Review.

Social rent settlement – The government is consulting on a new long-term social housing rent settlement of CPI+1% for 5 years to offer certainty for social housing providers and give the sector the confidence to build tens of thousands of new social homes in England. The government will be consulting on whether further measures could provide even greater certainty.

Reducing Right to Buy discounts – Reducing discounts on the Right to Buy scheme, and enabling councils in England to keep receipts generated by sales, will deliver on the government’s commitment to protect existing council housing stock and boost council capacity to ensure that vital social housing is available to those who need it most.

English Devolution White Paper – The government is working closely with local leaders on the upcoming English Devolution White Paper. This will set out the government’s plans to widen devolution to more areas and deepen the powers of existing mayors and their combined authorities, ensuring they have the tools needed to boost economic growth.

Granting borrowing powers for newly established Mayoral Combined (County) Authorities – At Autumn Statement 2016, it was announced that Mayoral Combined Authorities would be given powers to borrow for new functions subject to a cap agreed with HM Treasury. In line with this approach, the government will legislate to provide the North East Combined Authority; East Midlands Combined County Authority; and York and North Yorkshire Combined Authority with borrowing powers across the full range of their functions.

Integrated settlements for Mayoral Combined Authorities – The government is implementing integrated settlements for Greater Manchester and West Midlands Combined Authorities from the start of the 2025-26 financial year, and for Liverpool City Region Combined Authority and the North East, South Yorkshire and West Yorkshire Mayoral Combined Authorities from the start of the 2026-27 financial year. Noting its unique devolution arrangement, the government will also explore how an integrated settlement could apply for the Greater London Authority from 2026-27.

Extend 100% business rates retention for the West of England Combined Authority, Cornwall and Liverpool City Region for 2025/26 – The government is extending 100% business rates retention arrangements for West of England Combined Authority, Cornwall and Liverpool City Region for 2025-26.

Extend 67% business rate retention for the Greater London Authority for 2025-26 – The government is extending 67% business rates retention arrangements for the Greater London Authority for 2025-26.

Extending the Public Works Loan Board Housing Revenue Account rate – The government is extending the discounted Public Works Loan Board Housing Revenue Account lending rate until March 2026. This will support local authority financing of capital expenditure on social housing in their Housing Revenue Account.

Welsh coal tips funding – The government is providing the Welsh Government with £25 million in 2025-26 to support essential work to keep disused coal tips maintained and safe.

Enterprise and growth

Local growth funding reforms – The government will set out its long-term vision for local growth funding in Phase 2 of the Spending Review. The government is continuing to invest in programmes which are important to growth and provide stability for local leaders and investors.

Regional growth strategy – The government is setting out the next steps for delivering its strategy for regional growth, across investment, devolution and local growth funding reform – which will create good jobs and spread prosperity across the UK.

City and Growth Deals – Proceeding with the Mid South West and Causeway Coast and Glens City and Growth Deals. The Budget confirms £162 million investment over 15 years, subject to value for money assessments of business cases, supporting economic growth in Northern Ireland’s rural regions. The government also confirms £25 million for the 10-year investment in the Argyll and Bute City and Growth Deal to drive inclusive and sustainable economic growth, subject to a value for money assessment of business cases.

Future of Freeports and Investment Zones – The government is confirming funding for Investment Zones and Freeports across the UK, announcing the approval of the East Midlands Investment Zone to support advanced manufacturing and green industries, and confirming that five new customs sites will be designated in existing Freeports shortly. The government will also work to ensure the Freeports policy model aligns with the national Industrial Strategy.

Brand Scotland – Supporting Scottish trade and investment by providing £0.75 million to establish Brand Scotland, a programme run by the Scotland Office to promote Scottish investment opportunities and exports across the globe.

Industrial Strategy – The government launched a green paper on its modern Industrial Strategy earlier this month. This set out eight growth-driving sectors and announced that government will produce sector plans for each as part of its promise to help these sectors thrive. The Budget confirms long-term support for growth-driving sectors ahead of the full modern Industrial Strategy’s publication in the Spring, including:

Committing £975 million in R&D funding for the aerospace sector over five years. Further details will follow in Phase 2 of the Spending Review.

Committing over £2 billion in R&D and Capital funding over 5 years to support the automotive sector, including the zero emissions vehicle manufacturing sector and supply chain. Further details will follow in Phase 2 of the spending Review.

Up to £520 million for a new Life Sciences Innovative Manufacturing Fund to drive growth and build resilience for future health emergencies.

Tax reliefs for the UK’s world-leading creative industries, which will provide £15 billion of support over the next 5 years.

UK Export Finance support for critical minerals – UK Export Finance will support companies supplying critical minerals to UK exporters in growth-driving sectors such as EV battery production, clean energy, aerospace and defence. This new support targets projects that secure critical minerals from overseas and will boost supply chain resilience in key manufacturing sectors.

Small Business Strategy – The government will bring forward a Small Business Strategy Command Paper in 2025. This will set out the government’s vision for supporting small businesses, from boosting scale-ups to growing the co-operative economy, across key policy areas such as creating thriving high streets, making it easier to access finance, opening up overseas and domestic markets, building business capabilities, and providing a strong business environment. The paper will complement the government’s forthcoming Industrial Strategy and Trade Strategy.

Made Smarter – Funding for the Made Smarter Adoption programme will double to £16 million in 2025-26, supporting more small manufacturing businesses to adopt advanced digital technologies and enabling the programme to be expanded to all nine English regions.

Digital Adoption Taskforce – The SME Digital Adoption Taskforce will be extended and will produce an interim report early in 2025 with practical steps and recommendations to enhance SME adoption of digital technology, using insights from local and international experiences.

Digital adoption pilots – The Department for Business and Trade will shortly announce details on a £4 million pilots package to encourage tech adoption for SMEs.

Prompt payments – From 1 October 2025, companies bidding for government contracts over £5 million per annum will be excluded from the procurement process if they do not pay their own suppliers within an average of 45 days.

The Bank Referral Scheme and Commercial Credit Data Sharing – The government has published the second post-implementation reviews on both policies and intends to launch consultations on how it can further enhance them in spring 2025.

Cross-government Review of Technology Adoption for Growth, Innovation and Productivity – The government will task the government Chief Scientific Adviser, Professor Dame Angela McLean, with National Technology Adviser, Dr Dave Smith, to lead a review on barriers to the adoption of transformative technologies that could enhance innovation and productivity, with a focus on the growth-driving sectors identified in the Industrial Strategy green paper. Reinforcing the government’s growth mission, the review’s recommendations will directly inform the development of the industrial strategy and sector plans that will be published alongside Phase 2 of the Spending Review.

East West Rail consultation – East West Rail will connect Oxford, Milton Keynes and Cambridge and unlock land for housing and laboratories, supporting the wider Cambridge life sciences cluster. The Budget will announce the East West Rail consultation, the next step in the project, which will be launched by the Secretary of State for Transport in November 2024.

Social impact investment vehicle – The government is announcing that work will begin to develop a social impact investment vehicle, led by the Chief Secretary to the Treasury, working with DCMS, to support the government to deliver its missions. This will bring together socially motivated investors, the voluntary sector and government to tackle complex social problems. This will be designed and developed through engagement with the sector, with further details to be announced at Phase 2 of the Spending Review.

Mineworkers’ Pension Scheme – The government will transfer the Investment Reserve Fund in the Mineworkers’ Pension Scheme to the scheme’s Trustees. This will be paid out as an additional pension to members of the scheme. The government will also take forward a review of the existing surplus sharing arrangements.

Implementation of Lifelong Learning Entitlement to amended timetable – The government will deliver the Lifelong Learning Entitlement (LLE), but will postpone its launch by one year. The LLE will launch in September 2026 for learners studying courses starting on or after 1 January 2027.

This annex sets out the government’s financing plans for 2024-25, which were previously revised on 23 April 2024. [footnote 124] Further details of the revised financing remit for 2024-25, including progress against the remit to date, can be found on the website of the UK Debt Management Office (DMO). [footnote 125] The government’s debt management framework remains as set out in the Debt Management Report 2024-25. [footnote 126]

Debt management objective

The debt management objective, as set out in the Debt Management Report 2024-25, is “to minimise, over the long term, the costs of meeting the Government’s financing needs, taking into account risk, while ensuring that debt management policy is consistent with the aims of monetary policy”.

Debt management policy

The government’s decisions on the structure of the financing remit are made in accordance with the debt management objective, the debt management framework, and wider policy considerations. In determining the overall structure of the financing remit, the government assesses the costs and risks of debt issuance by maturity and type of instrument. Decisions on the composition of debt issuance are also informed by an assessment of investor demand for debt instruments by maturity and type, as well as the government’s appetite for risk. Alongside these considerations, the government takes into account the practical implications of issuance (for example, the scheduling of operations throughout the year).

While decisions on debt management policy must be taken with a long-term perspective, specific decisions on funding the government’s gross financing requirement are taken annually. Those decisions are announced in advance of the forthcoming financial year and are typically updated in April (a technical adjustment to reflect outturn data from the previous year) and, as now, when the Office for Budget Responsibility (OBR) publishes subsequent fiscal projections.

Financing arithmetic

The updated financing arithmetic for 2024-25 is set out in Table A.1.

The OBR’s October 2024 forecast for the 2024-25 central government net cash requirement (excluding NRAM ltd, Bradford & Bingley, and Network Rail), which is referred to as CGNCR (ex NRAM, B&B, and NR) is £165.1 billion, which represents an upward revision of £22.3 billion since the forecast published at the Spring Budget on 6 March 2024. This measure is used in the financing arithmetic, as it reflects the forecast cash requirement of the Exchequer.

The DMO’s net financing requirement (NFR) for 2024-25 was revised up by £12.4 billion on 23 April 2024 from £265.3 billion at Spring Budget 2024, to £277.7 billion. The DMO’s NFR is being revised up by a further £22.2 billion at the Autumn Budget 2024, to £299.9 billion. The net financing requirement (NFR) for the Debt Management Office (DMO) comprises: CGNCR (ex NRAM, B&B, and NR) plus any financing for gilt redemptions, and other adjustments, less the net contribution to financing from National Savings and Investments (NS&I), and any other in-year contributions to financing.

The upward revision to the DMO’s NFR will be delivered through i) an increase in gross gilt issuance this year of £19.2 billion and ii) a £3.0 billion increase in financing raised through net issuance of Treasury bills (T-bills) for debt management purposes.

Table A.1: Financing Arithmetic in 2024-25 (£ billion)(1)

Gilt issuance by method, type, and maturity.

The planned split of gilt issuance by type, maturity, and issuance method were previously set out in April 2024. Total gilt sales in 2024-25 are now forecast to rise by £19.2 billion to £296.9 billion.

The increase in gilt sales of £19.2 billion will be implemented as follows:

• An increase of £3.1 billion in short-dated conventional gilts to £103.8 billion (35.0% of total issuance in 2024-25).
• An increase of £6.0 billion in medium-dated conventional gilts to £92.0 billion (31.0% of total issuance in 2024-25).4
• An increase of £9.2 billion in long-dated conventional gilts to £59.2 billion (19.9% of total issuance in 2024-25). [footnote 127]
• An increase of £3.4 billion in index-linked gilts to £33.4 billion (11.2% of total issuance in 2024-25).
• A reduction of £2.5 billion in the unallocated portion [footnote 128] to £8.5 billion. Since April 2024, the unallocated portion had been drawn-down to £3.1 billion via transfers to the short, medium, and long conventional, as well as the index-linked gilt, sales programmes. Relative to just prior to this remit revision, the unallocated portion of gilt issuance is being increased by £5.4 billion.

Auctions will remain the government’s primary method of gilt issuance. It is anticipated that £236.4 billion (79.6%) of total gilt sales will take place via auction in 2024-25, and £50.1 billion (16.9%) will be issued by syndication. The government will also continue to have the option to schedule gilt tenders, which may be used to assist with delivery of the financing remit and may also be used for market management reasons.

Green gilts and green retail savings products

The government continues to progress with its Green Financing Programme, under which the UK issues sovereign green bonds (‘green gilts’) via the DMO, and retail Green Savings Bonds (GSBs) via NS&I. As of 29 October 2024, the Green Financing Programme has raised a total of £43.4 billion.

The government’s plans to raise £10.0 billion via issuance of green gilts in 2024-25, subject to demand and market conditions, remain unchanged. Total green gilt proceeds in the financial year to-date are £5.7 billion.

The GSBs were brought on sale via the NS&I website on 22 October 2021, and this product has allowed UK savers to support the government’s green spending initiatives. NS&I forecast to have raised £1.8 billion since the initial October 2021 launch as of October 2024. NS&I expect additional inflows for 2024-25 to be below the upper limit of £500 million, subject to market conditions.

Treasury bills

It was planned that net Treasury bill issuance would make a zero contribution to meeting the 2024-25 NFR. Following this Autumn Budget 2024 revision, net issuance of Treasury bills will now contribute £3.0 billion to the net financing requirement for 2024-25.

NS&I’s net financing target in 2024-25 remains at £9.0 billion, within a range of ± £4.0 billion. This target reflects NS&I’s requirement to balance the interests of its savers, the taxpayer, and the wider financial services sector. The proceeds from the sale of the retail Green Savings Bonds do not form part of NS&I’s annual net financing target. They will be reported as part of the financing arithmetic before the financial year-end.

Illustrative future gross financing requirement

Table A.2 sets out the illustrative gross financing requirement for each financial year from 2025-26 to 2029-30, using the OBR’s October 2024 forecast for CGNCR (ex NRAM, B&B, and NR) and taking into account current planned gilt redemptions.

Table A.2: Illustrative gross financing requirement (£ billion)(1)

Table B.1 sets out a full list of expenditure items within the scope of the welfare cap.

Table B.1: Benefits and tax credits in scope of the welfare cap

Statistical annex.

This annex provides further details of the projections of public expenditure that result from decisions made in Phase 1 of the Spending Review. In the spending framework, spending is broken down into departmental expenditure limits (DEL) and annually managed expenditure (AME). Fixed DEL budgets are set for each department. Spending that is considered difficult to control within fixed budgets due to its size or volatility is categorised as AME. Budgets are separated into capital, which generally equates to spending within public spending gross investment (PSGI) in the national accounts, and resource, generally within public sector current expenditure (PSCE).

Table C.1 sets out the composition of total managed expenditure (TME) over the forecast period. TME is the totality of public sector spending, DEL and AME, current and capital. The difference between TME and current receipts is public sector net borrowing (PSNB). Table C.1 sets out total current and capital spending and how this breaks down into resource DEL, resource AME, capital DEL, and capital AME.

Accounting adjustments reconcile DEL and AME budgets with the National Accounts definitions of PSCE, PSGI, and TME. An explanation of these adjustments is provided at Annex D of PESA 2024.

Table C.2 sets out total DEL by department. Tables C.3 and C.4 set out resource and capital DEL by department.

In Tables C.2 and C.3 the 2024-25 resource DEL figures differ from departmental budgets shown in table C.6. This is because Tables C.2 and C.3 show 2024-25 resource DEL baselines, whereas Table C.6 shows 2024-25 resource DEL budgets. As usual at spending reviews, baselines are used to represent ongoing spend, with one-off or time limited spend removed, so 2024-25 figures are consistent with 2025-26. Also as usual, real growth figures are calculated using GDP deflators consistent with the OBR’s latest forecast.

A proportion of resource DEL, in particular depreciation, is not currently used in measurement of the fiscal aggregates by the ONS and so does not directly impact on the government’s fiscal rules. Tables C.2, C.3, and C.6 therefore exclude depreciation.

Financial transactions are a part of departmental capital DEL budgets. Table C.5 below details departmental plans for financial transactions that contribute to net lending.

Table C.1: Total Managed Expenditure (TME)(1)

Table c.2: total departmental expenditure limits (del) excluding depreciation(1), table c.3: resource departmental expenditure limits (del) excluding depreciation, table c.4: capital departmental expenditure limits (del), table c.5: capital departmental expenditure limits (del) financial transactions (fts), table c.6: departmental budgets for 2024-25, public sector receipts and spending.

Chart D.1 shows public sector current receipts by main type. Public sector current receipts are expected to be around £1,229 billion in 2025-26.

Chart D.1: Public sector current receipts 2025-26

Figures may not sum due to rounding.

Other taxes includes capital taxes, stamp duties, vehicle excise duties, customs duties and other smaller tax receipts. Other non-taxes includes interest and dividends, gross operating surplus and other smaller non-tax receipts.

Source: Office for Budget Responsibility.

Chart D.2 shows public spending by main function. Total Managed Expenditure (TME) is expected to be around £1,335 billion in 2025-26.

Chart D.2: Public sector spending 2025-26

Illustrative allocations to functions are based on HMT analysis including capital consumption figures from the Office forNational Statistics.

Source: Office for Budget Responsibility and HM Treasury calculations.

Fixing the Foundations: public spending audit 2024-25 , HM Treasury, August 2024. Details of numerical references, including National Statistics, used in this chapter can be found in ‘Autumn Budget 2024 data sources’.  ↩

‘Charter for Budget Responsibility’, HM Treasury, October 2024.  ↩

‘A Strong Fiscal Framework: Explaining the government’s new fiscal framework and rules’, HM Treasury, October 2024.  ↩

This is based on a comparison with Spring Budget 2024 capital spending plans to 2028-29 and the forecast pre-measures assumption that capital spending rises with nominal GDP in 2029-30.  ↩

Economic Policy Uncertainty Index for the United Kingdom , Baker, Bloom, & Davis, retrieved from FRED, Federal Reserve Bank of St. Louis, October 2024.  ↩

Public Sector Finances , Office for National Statistics, October 2024.  ↩

Fixing the Foundations: public spending audit 2024-25 , HM Treasury, August 2024.  ↩

Government Response to the OBR Review of DEL Forecasting , HM Treasury, October 2024.  ↩

Economic and Fiscal Outlook , Office for Budget Responsibility, March 2024.  ↩

GDP output approach – low level aggregates , Office for National Statistics, September 2024.  ↩

HMT calculations based on ONS and OECD data: UK GDP would have been £171 billion larger, in real terms, at 2022 prices and on an annualised basis in 2024Q2 if it had grown at the OECD average from 2010Q2 to 2024Q2.  ↩

HMT calculations based on OECD Quarterly GDP per capita .  ↩

HMT calculations based on OECD Productivity Database .  ↩

Cracking the Productivity Code: An international comparison of UK productivity , Van Reenen, J., and Yang, X., June 2024.  ↩

HM Treasury calculations based on published data from national statistics agencies.  ↩

HM Treasury calculations based on OECD Productivity Database .  ↩

HM Treasury calculations based on ONS and OECD data: UK GDP per head at current market prices in 2023 (ONS IHXT) uplifted by the percentage difference in UK and Germany/US output per hour worked (OECD Productivity levels, US dollars per hour PPP converted, current prices).  ↩

OECD Infra-annual labour statistics. The UK economic inactivity rate is 1.4 percentage points higher than before the pandemic (2024 Q2 vs 2019 Q4), making it the only G7 economy where the inactivity rate has not returned to pre-pandemic levels.  ↩

Summary of Labour Market Statistics , Office for National Statistics, October 2024.  ↩

‘Precautionary Saving and the Marginal Propensity to Consume’, Kimball, July 1990.  ↩

‘Investment under Uncertainty’, Dixit & Pindcyk, 1994.  ↩

‘The Impact of Uncertainty Shocks’, Bloom, 2009., Econometrica, Vol. 77, No. 3, 623–685.  ↩

‘Uncertainty Shocks in a Model of Effective Demand’, Basu, & Bundick, 2017., Econometrica, Vol.85, No.3, 937-958.  ↩

The Economic Impact of Fiscal Policy Uncertainty: Evidence from a New Cross-Country Database , IMF Working Papers, September 2024.  ↩

OECD Economic Surveys: United Kingdom , Organisation for Economic Co-operation and Development, September 2024.  ↩

Autumn statement: Supplementary fiscal aggregates , Office for National Statistics, November 2016.  ↩

Public sector net debt (PSND) includes government debt liabilities for currency and deposits, debt securities and loans. It is presented net of assets treated as ‘liquid’ in UK public finance statistics.  ↩

As defined by international guidance: European System of Accounts and The System of National Accounts .  ↩

‘A Strong Fiscal Framework: Explaining the government’s new fiscal framework and rules’, HM Treasury, October 2024.  ↩

Fiscal rules and investment in the upcoming Budget , Institute for Fiscal Studies, September 2024.  ↩

In the OBR October 2024 forecast, figures presented as a % of GDP (for both outturn and forecast) are based on the vintage of nominal GDP data that was available when the OBR closed the pre-measure forecast, so do not reflect upward revisions in the latest Quarterly National Accounts published on 30 September.  ↩

‘A strong fiscal framework: Explaining the government’s new fiscal rules and framework’, HM Treasury, October 2024.  ↩

Strengthening the UK’s fiscal framework , Institute for Government, February 2024.  ↩

How do the parties’ policy proposals fit in with their fiscal rules? , Institute for Fiscal Studies, June 2024.  ↩

United Kingdom: 2024 Article IV Consultation , International Monetary Fund, July 2024.  ↩

Budget Responsibility Act 2024 , UK General Public Acts, September 2024.  ↩

‘Financial Transactions Control Framework’, HM Treasury, October 2024.  ↩

Managing Public Money , HM Treasury, May 2012.  ↩

Consolidated Budget Guidance , HM Treasury, March 2023.  ↩

Investment and Capital Stocks Dataset , IMF, 2024. Median of G7 countries excluding the United Kingdom, data up to 2019.  ↩

Fiscal Monitor , International Monetary Fund, October 2024.  ↩

OBR, Discussion paper no.5: Public investment and potential output, 2024.  ↩

The long-term impacts assume that public investment remains constant as a share of GDP beyond the forecast period.  ↩

Public investment and potential output , National Institute of Economic and Social Research, October 2024: Section: “General equilibrium effects”.  ↩

Central government net cash requirement excluding NRAM ltd, Bradford & Bingley, and Network Rail.  ↩

Revision to the DMO’s Financing Remit 2024-2025 , UK Debt Management Office, October 2024.  ↩

Fiscal Monitor , International Monetary Fund, October 2024. The OBR forecasts GGGD in 2024 to be 103.0% of GDP, which would not change this relative ranking.  ↩

Fiscal Risks and Sustainability Report , Office for Budget Responsibility, September 2024.  ↩

OECD Economic Outlook, Volume 2024 Issue 1 , Organisation for Economic Co-operation and Development, May 2024.  ↩

Fixing the Foundations: Public Spending Audit 2024-25 – HM Treasury   ↩

Fraud and error in the benefit system, Financial Year Ending (FYE) 2024 , DWP, 2024  ↩

OBR policy measure data base, OBR, April 2024.  ↩

This is based on the assumption that a full-time worker on NLW works 35 hours a week, 52 weeks a year.  ↩

Department for Business and Trade calculations – for further details see Data Sources.  ↩

This is based on the assumption that a full-time worker on the 18-20 NMW works 35 hours a week, 52 weeks a year.  ↩

Department for Work and Pensions, Carer’s Allowance cases in payment, Stat X-plore, February 2024.  ↩

This is the number of carers who are expected to make a successful new claim to Carer’s Allowance between April 2025 and March 2030. It has been calculated by inflating forcasted inflows in employment by the proportion of carers falling between the baseline earnings limit and in the increased earning limit (according to the earnings distribution), and applying a take-up assumption to reflect the likelihood of making a claim.  ↩

Department for Work and Pensions analysis (Ad hoc statistical analyses 2024), Department for Work and Pensions, October 2024  ↩

Department for Work and Pensions analysis (Ad hoc statistical analyses 2024), Department for Work and Pensions, October 2024  ↩

Department for Work and Pensions, State Pension Caseload, Stat X-plore, May 2023.  ↩

A new full State Pension will increase from £221.20 a week in 2024-25 to £230.25 a week in 2025-26. This is an increase of £9.05 a week, or £470.60 a year if a pensioner receives 52 weeks of State Pension.  ↩

The Standard Minimum Guarantee for single pensioners will increase from £218.15 a week in 2024-25 to £2,27.10 a week in 2025-26 – an increase of £8.95 a week or £465.40 over 52 weeks. The Standard Minimum Guarantee for pensioner couples will increase from £332.95 a week in 2024-25 to £346.60 a week in 2025-26 – an increase of £13.65 a week or £709.80 over 52 weeks.  ↩

HMRC KAI calculations use Vehicle Licensing Statistics Data Table 1103a (DfT, DVLA) and Hydrocarbon Oils Bulletin (HMRC) quantities, split into fuel use by vehicle type using HMRC KAI’s OBR certified Fuel Duty Forecast Model. The baseline duty rate uses RPI consistent with the OBR October 2024 forecast.  ↩

Road fuel retail market consultation: impact assessment , DESNZ, 2024.  ↩

Comparative tables of Revenue Statistics in OECD member countries, combining calendar year total revenue from employer Social Security Contributions and Payroll taxes based on the latest dataset for G7 countries OECD Data Explorer • Comparative tables of Revenue Statistics in OECD member countries ; OBR October 2024 Economic and Fiscal Outlook forecast for fiscal year 2025-26 Employer NICs and Apprenticeship Levy receipts.  ↩

HMT Calculations of National Insurance Liabilities on four full time workers on the National Minimum Wage. Based on four workers being paid the 2025-26 National Minimum Wage, working 35 hours per week for 52 weeks a year.  ↩

HMRC modelling based on taxpayer data.  ↩

The tax to GDP ratio is forecast to reach 38.2% of GDP in 2029-30, which is in the middle of the pack in the G7 based on the latest data – lower than France (46.1%), Italy (43.0%) and Germany (39.3%), above Japan (34.1%), Canada (33.2%), and the US (27.7%). Comparative tables of Revenue Statistics in OECD member countries, OECD Data Explorer • Comparative tables of Revenue Statistics in OECD member countries   ↩

Do Tax Structures Affect Aggregate Economic Growth? Empirical Evidence From A Panel Of OECD Countries , Arnold, OECD, 2008.  ↩

ONS and industry data, via the British Beer and Pub Association, 2024  ↩

‘Economic and Fiscal Outlook’, Office for Budget Responsibility, October 2024.  ↩

HMRC internal analysis based on ‘Economic and Fiscal Outlook’, Office for Budget Responsibility, October 2024.  ↩

‘Independent investigation of the NHS in England - Lord Darzi’s report on the state of the National Health Service in England’ , Department of Health and Social Care, September 2024. .  ↩

‘Statistical Press Notice - NHS referral to treatment (RTT) waiting times data’ , NHS England, October 2024.  ↩

‘A&E Activity and Performance Summary’ published in ‘A&E Attendances and Emergency Admissions’ , NHS England, October 2024.  ↩

2019‑20 to 2021‑22.  ↩

The underlying figure for core spending power is an estimate and subject to data changes. Final figures will be published as part of the 2025‑26 Local Government Finance Settlement.  ↩

In both cases the costs from 2024‑25 onwards will be classified as Annually Managed Expenditure, and the funding set out in the Budget is neither a target nor a limit - those eligible will receive the compensation they are due.  ↩

Costs calculated on cash basis using the management information that was used to calculate ‘Post Office Horizon financial redress data as of 31 March 2024’ , Department for Business and Trade, October 2024.  ↩

‘Infected Blood Compensation Scheme Summary: August 2024’ , Infected Blood Compensation Authority, Cabinet Office, August 2024.  ↩

‘The Inquiry Report’ , Infected Blood Inquiry, May 2024. ‘Second Interim Report’ , Infected Blood Inquiry, April 2023.  ↩

‘Recommendations to the government from Sir Robert Francis KC’ , Infected Blood Compensation Authority, August 2024.  ↩

All 2024‑25 PRB reports are available at Office for the Pay Review Bodies - GOV.UK .  ↩

‘Record-breaking International Investment Summit secures £63 billion and nearly 38,000 jobs for the UK’ , Department for Business and Trade, October 2024.  ↩

Economic and Fiscal Outlook, Office for Budget Responsibility, October 2024.  ↩

Output per hour for the year 2023, using US$ current prices adjusted for PPP, OECD.  ↩

Baseline funding for highways maintenance in 2024-25 is made up of the following funding pots: Highways Maintenance Block (HMB) needs, Highways Maintenance Block (HMB) incentive, Potholes funding, 2024-25 Network North Uplift. The baseline does not include the City Region Sustainable Transport Settlements equivalent levels in the HMB and Potholes funding pots, which are accounted for elsewhere, and does not include the Integrated Transport Block because it is not dedicated spend on highways maintenance. These are published online. In 2025-26, £500 million has been allocated on top of that baseline.  ↩

‘Independent investigation of the NHS in England’ , Department of Health and Social Care, September 2024.  ↩

HMT analysis of ONS Subnational Productivity data 2022 (nominal values) . The increase in nominal UK GDP is estimated by increasing the productivity of the UK’s nine largest cities (measured by productivity jobs) outside of London and Edinburgh to the national average.  ↩

‘Invest 2035: Industrial Strategy Green Paper’ , Department for Business and Trade and HM Treasury, October 2024.  ↩

HMT calculation based on Labour Force survey data for the three months to August 2024 where an employment rate of 80% is multiplied by the UK population aged 16‑64 (42.4 million) and the actual UK employment level (31.8 million) is subtracted from this figure. Data: ONS Labour Market Table A01.  ↩

HMT calculation based on Labour Force survey data for the three months to August 2024, equal to the difference between the current female participation level (16.2 million) and the participation level that would result from multiplying the female population aged 16‑64, by the participation rate of men aged 16‑64 (81.2%).  ↩

The National Living Wage (Amendment) Regulations 2024 Impact Assessment, Department for Business and Trade, January 2024.  ↩

Economic and Fiscal Outlook, Office for Budget Responsibility, March 2023.  ↩

Core research for these purposes covers Research England, Research Council, UKRI talent, UKRI international subscriptions, and National Academies funding.  ↩

Contracts for Difference (CfD) Allocation Round 6: Results, Department for Energy Security and Net Zero, 2024.  ↩

Vehicle licensing statistics: April to June 2024, Department for Transport, 2024.  ↩

EV charging statistics 2024, zapmap, 2024.  ↩

This excludes 2019/20 – 2021/22.  ↩

The underlying figure for core spending power is an estimate and subject to data changes. Final figures will be published as part of the 2025-26 local Government Finance Settlement.  ↩

The 2025‑26 figures are exclusive of expected budget cover transfer adjustments which are made at Main Estimates. Acounting for these anticipated adjustments, forecast average real growth is 4.6% between 2023‑24 and 2025‑26  ↩

Core research for these purposes covers Research England, Research Councils, UKRI talent, UKRI international subscriptions and National Academies funding.  ↩

This includes an adjustment to remove £760 million of one off Cost of Living Payments from 2023‑24 RDEL.  ↩

Measuring tax gaps 2024 edition: tax gap estimates for 2022 to 2023 , HM Revenue and Customs, 20 June 2024.  ↩

HMRC annual report and accounts: 2023 to 2024 , HM Revenue and Customs, 30 July 2024.  ↩

HMRC monthly performance report: March 2024 , HM Revenue & Customs, 30 July 2024.  ↩

Internal HM Treasury estimate provided by HM Revenue and Customs and based on Spring 2024 assumptions.  ↩

‘Revision to the DMO’s Financing Remit 2024-25’ , UK Debt Management Office, April 2024.  ↩

United Kingdom Debt Management Office .  ↩

‘Debt Management Report 2024-25’ , HM Treasury, March 2024.  ↩

Includes green gilt issuance. More detail is provided in paragraph A.13.  ↩

The DMO’s financing plans include an initially unallocated portion of issuance from which gilts of any maturity or type may be issued (excluding green gilts). The unallocated portion is used in such a way as to respond appropriately to developments in the gilt market in-year.  ↩

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