Chancellor Rachel Reeves has given her long-awaited Spring Statement to Parliament today, as she lays out her latest plans for the public finances.
1.Economy
The Chancellor confirmed that the Office for Budget Responsibility has downgraded growth forecasts for 2025 from 2% in autumn to just 1% today.
Reeves told the House: “I am not satisfied with these numbers. That is why we on this side of the house are serious about taking the action needed to grow our economy, backing the builders, not the blockers, with a third runway at Heathrow Airport … increasing investment with reforms to our pension system and a new national wealth fund.”
2.Welfare
The Chancellor confirmed deep cuts to welfare.
The reforms include stricter tests for personal independence (Pip) payments, affecting hundreds of thousands of claimants. Reeves told the Commons that her measures would ensure a predicted £4.1bn hole in the public finances within five years would be turned back into a £9.9bn surplus.
She also went further than initially planned after the OBR said that the reforms would save less than forecasted. The chancellor said the health element of universal credit would be cut by half and frozen for new claimants.
Reeves also told the House: “The Universal Credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30, while the Universal Credit Health element will be cut by 50% and then frozen for new claimants.”
3. Housing
Arguably one of Reeves’ highlights in the Spring Statement, the Chancellor told the Commons that the government’s planning reforms would lead to housebuilding reaching a 40 year high, as confirmed by the OBR.
It comes after yesterday’s announcement that the Chancellor was investing a further £2bn in grant funding to deliver up to 18,000 new homes in England and go some way to “fixing the housing crisis”.
The Chancellor told Parliament that her previously announced planning reforms, including reintroducing mandatory housing targets and developing grey belt land “will permanently increase the level of real GDP by 0.2 per cent in 29/30, an additional £6.8 billion for our economy.”
4.Living Standards
Reeves told the Commons that under this Labour government working people would have more money in their pockets.
The Chancellor said: “The OBR has confirmed today that people will be on average over £500 a year better off under this Labour government. That will mean more money in the pockets of working people.”
Following the statement, Labour MP Dan Tomlinson posted on X: “Our number one priority as a government is higher living standards.
“Compared to last year, living standards are up £500 a year.
“More to do, but this is progress – opposed every step of the way by the Conservatives.”
5.Defence
The Labour government announced that there would be an extra £2.2bn next year for the Ministry of Defence.
Reeves confirmed the government met its pledge to spend 2.5% of GDP by 2027, which comes as Trump pressures European countries to fund their own defence as the US begins to pull back from its commitments to NATO and European allies.
Basit Mahmood is editor of Left Foot Forward
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