In the 2024 – 25 financial year, the UK government’s spending priorities paint a vivid picture of a nation balancing urgent day-to-day needs with long-term challenges. From pensions and healthcare to net zero targets and public safety, each area tells a story of rising demand, fiscal pressure, and political trade-offs. Here’s a breakdown of how taxpayer money is being spent.
Welfare & Pensions
– £280 billion
The UK’s welfare and pensions budget is the largest area of public spending, amounting to approximately £280 billion in the 2024–2025 fiscal year. The largest portion of this is the State Pension, which costs £125 billion and is paid to over 12 million pensioners. It rises annually under the triple lock policy, which ensures it increases by the highest of either inflation, average earnings, or 2.5%.
Universal Credit follows at £60 billion, providing support to low-income households, the unemployed, and those unable to work due to health or caring responsibilities. Around £50 billion is spent on disability and carer benefits, including Personal Independence Payment (PIP), Disability Living Allowance (DLA), and Attendance Allowance. Housing Benefit and legacy payments like Jobseeker’s Allowance now largely fall under Universal Credit too.
Child Benefit and other family-related support account for £20 billion, helping families with children through direct payments and allowances. In response to ongoing economic pressures, £10–15 billion is allocated to cost-of-living payments, offering targeted relief to vulnerable households dealing with high inflation.
Health
– £190 billion
Outside of Welfare & Pensions, the Health budget is the government’s top spending priority. The largest share, £152 billion is allocated to NHS England’s core budget, which funds hospitals, GP surgeries, A&E departments, and essential front-line services. A further £10 billion supports public health initiatives, including vaccination programmes and preventative campaigns targeting smoking, obesity, and other long-term health risks.
Social care receives £18 billion, much of it distributed through local authorities to support elderly and vulnerable individuals in care homes or community settings. Additionally, £10 billion is invested in capital projects, including new hospital construction, infrastructure upgrades, and medical technology improvements. Despite this significant funding, the NHS continues to face major challenges, including growing treatment backlogs, staff shortages, and increasing pressure from an ageing population.
Education
– £120 billion
The education budget stands at £120 billion, with the government’s spending spread across schools, higher education, vocational training, and special needs support. The largest portion, £65 billion is allocated to primary and secondary education, funding teacher salaries, school maintenance, classroom resources, and curriculum development.
Higher education, including university funding and student loans, receives £20 billion, while £15 billion supports further education, apprenticeships, and T-level programmes aimed at improving vocational skills.
An additional £10 billion is directed towards supporting pupils with special educational needs and disabilities (SEND), as well as disadvantaged students through the Pupil Premium. Whilst another £10 billion is invested in capital projects, such as rebuilding schools and upgrading digital infrastructure.
Debt Interest
– £115 billion
Spending on debt interest amounted to £115 billion, making it one of the largest areas of government expenditure. This figure includes £60 billion in conventional interest payments on government borrowing and an additional £55 billion on index-linked gilts, which are government bonds whose repayments rise with inflation. Because a significant portion of the UK’s debt is tied to inflation, the recent period of high inflation has dramatically increased the cost of servicing this debt. Unlike other areas of public spending, debt interest does not fund services or investments; it simply covers the cost of borrowing accumulated from past deficits. As a result, high debt interest payments reduce the government’s fiscal flexibility, limiting its ability to increase funding for public services or introduce new policies.
Local Government
– £110 billion
The UK’s local government budget was around £110 billion and supports a wide range of essential community services. The largest share, about £45 billion, is dedicated to adult and children’s social care, providing vital support for vulnerable and elderly individuals.
Around £25 billion funds public services such as libraries, parks, waste management, and recreational facilities that contribute to community well-being.
Housing and homelessness services receive £15 billion to assist those in need of affordable accommodation and emergency shelter.
Public health grants account for £10 billion, helping local authorities run programmes focused on improving community health outcomes. The remaining £15 billion covers core council funding and business rate grants, which support the overall functioning of local councils. Despite this substantial funding, many local authorities face financial difficulties, with some declaring themselves effectively bankrupt through Section 114 notices, effectively declaring themselves bankrupt.
Defence & Security
– £56 billion
The UK’s defence budget totalled £56 billion, enabling the country to meet its NATO commitment of spending 2% of GDP on defence. The majority of this funding, £48 billion is allocated to the Ministry of Defence (MOD), covering military personnel costs, procurement of equipment, training, and investment in cyber defence capabilities. A significant portion also supports the maintenance and modernization of the UK’s armed forces, including the army, navy, and air force. The Trident nuclear deterrent program accounts for around £5 billion, ensuring the country’s strategic nuclear capabilities remain operational. Additionally, £3 billion is spent on international peacekeeping, security cooperation, and supporting global defence alliances. This comprehensive budget reflects the UK’s commitment to national security, global military presence, and fulfilling international obligations.
Transport & Infrastructure
– £40 billion
The UK’s transport and infrastructure budget is approximately £40 billion, covering a wide range of projects aimed at improving connectivity and supporting economic growth. Around £10 billion is allocated to rail services, excluding the High Speed 2 (HS2) project, which itself receives £5 billion despite being scaled back.
Roads and highways receive £9 billion to maintain and upgrade the national road network, while public transport systems such as buses and light rail are supported with £7 billion to encourage sustainable travel.
Investment in electric vehicle (EV) infrastructure, including charging networks, totals £3 billion, alongside £1 billion dedicated to promoting active travel options like cycling and walking. Additionally, £5 billion is earmarked for the development of airports, ports, and freight facilities.
Immigration, Asylum & Borders
– £5.8 billion
The UK’s immigration, asylum, and borders budget was around £5.8 billion during the last fiscal year, covering a range of activities related to managing migration and border security. Approximately £1.9 billion is allocated to Border Force operations, which include passport control, customs enforcement, and securing the UK’s borders.
The asylum system and accommodation costs account for £3.1 billion, reflecting the financial pressure from increased arrivals and backlogs, with spending on temporary housing such as hotels. Enforcement against illegal migration, including efforts to prevent small boat crossings and legal costs related to the Rwanda deportation scheme, uses around £500 million. Additionally, £300 million is spent on visa processing and compliance activities.
Despite the political focus on immigration, this budget remains a relatively small portion of the overall government expenditure.
Environment, Energy & Net Zero
– £25 billion
The UK’s Environment, Energy, and Net Zero budget totals roughly £25 billion, focused on accelerating the transition to a sustainable and low-carbon economy. Energy efficiency schemes receive £10 billion, funding initiatives like the Boiler Upgrade Scheme and home insulation programmes to reduce energy consumption in households.
Renewable energy projects are supported with £8 billion, promoting wind, solar, and other clean power sources. Green transport and electric vehicle (EV) infrastructure grants account for £2 billion, encouraging the adoption of cleaner travel options.
Flood defences and climate resilience measures receive £3 billion to protect communities from extreme weather and rising sea levels. Additionally, £2 billion is allocated to sustainable agriculture and land management under environmental stewardship programmes, aiming to balance food production with conservation efforts.
Other Public Services
– £100+ billion
The Public Services budget, supports a wide range of essential government functions beyond the major sectors like health and education. Approximately £18 billion is dedicated to policing and crime prevention, helping maintain public safety and law enforcement. The justice system and prisons receive around £10 billion to fund courts, legal aid, and correctional facilities.
The UK also allocates £7.5 billion to foreign aid, supporting international development and humanitarian efforts. Culture, media, and sport collectively receive £2.5 billion to promote arts, heritage, and national sporting initiatives.
Science and research benefit from £15 billion in funding, fostering innovation and technological advancement.
Additionally, over £30 billion is distributed as grants to devolved nations such as Scotland, Wales, and Northern Ireland, supporting regional governance and services.
The Cabinet Office and civil service administration receive just over £10 billion to manage the day-to-day operations of government.
Conclusion:
The UK’s 2024–25 budget reflects a nation grappling with rising debt, inflation, and strained public services. While the government has prioritised core services like healthcare, pensions, and education, growing debt interest payments now at £115 billion are limiting fiscal flexibility.
It’s worth highlighting just how small immigration-related spending is in this wider context especially given its power as a topic to sway votes and public opinion. At £5.8 billion for the total spend and illegal immigration costs falling to £3.9 billion, it represents less than 1% of total government expenditure. In fact, the UK spends nearly 20 times more on servicing its national debt than on all immigration, asylum, and border-related costs combined. This contrast is rarely reflected in public debate but offers important perspective when discussing where public money really goes.
As the UK moves beyond the July 2025 General Election, a new government will face the immense challenge of restoring and reforming public services, tackling long-term issues like climate change and social care, and managing a growing debt burden. The choices ahead will not be easy, but understanding where we stand is the first step toward shaping where we go next.
References:
Public Spending: A Quick Guide – UK Parliament Library
https://commonslibrary.parliament.uk/research-briefings/cbp-8046/
Public Sector Finances, July 2025 – Office for National Statistics
https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/bulletins/publicsectorfinances/july2025
Spending Review 2025, June 2025 – HM Treasury
https://www.gov.uk/government/publications/spending-review-2025-document/spending-review-2025-html
