The Spring Statement includes the latest economic and fiscal forecasts from the Office for Budget Responsibility (OBR) and a parliamentary address from the chancellor, looking at plans to balance the books in the face of weak economic growth and mounting debt interest costs.
She has committed to one major economic event – the Budget – each year, to “give families and businesses stability and certainty on tax and spending changes”.
That means we aren’t expecting big policy announcements on March 26, but that’s not stopping them being made beforehand.
This includes benefit reforms branded the biggest shake-up to the welfare system in a generation.
Work and Pensions Secretary Liz Kendall said the Government was taking “decisive action to fix the broken benefits system” in a bid to have a “more pro-active, pro-work system for those who can work”.
The £5 billion of savings will largely come from changes to eligibility for the Personal Independence Payment (PIP), but also from a reduction of the health element of Universal Credit, it is understood.
Will taxes rise in the Spring Statement?
The chancellor has previously ruled out further tax rises, but faces difficult choices because of the performance of the UK economy and world events.
The statement comes at a time of a faltering economy and drastically reduced headroom against the debt rules she set herself in October.
The Office for Budget Responsibility has forecast that spending on health and disability benefits for working-age adults will increase from £48.5 billion in 2023/24 to £75.7 billion in 2029/30.
Industry minister Sarah Jones was asked on Good Morning Britain whether the Government is considering any new taxes, and said: “I’m not going to speculate. I’m sorry about that, on what the Chancellor may or may not do.”
She added: “We know that we are waiting for the OBR, that we are looking at our spending, that we are investigating every penny that we spend in government, so that we are spending taxpayers’ money wisely.”
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Will borrowing increase?
With the economy seen to be underperforming and global factors, such as US trade tariffs, indirectly impacting the UK, there is growing speculation over whether the chancellor will break her self-imposed rules on borrowing.
The OBR’s forecast is expected to confirm that the £9.9bn financial buffer to meet her budget rule by the 2029-30 financial year has been wiped out.
Reeves has repeatedly said her rules are “non-negotiable”. Her two main rules are:
Are we expecting more cuts?
There are ongoing reviews of how the civil service functions, with cuts in budgets expected. Sir Keir Starmer and cabinet secretary Sir Chris Wormald have written to all civil servants calling for a “rewiring of the British state”.
Their message included plans to make the Civil Service smaller, while the proportion of civil servants in digital or data roles will double by 2030.
Will the personal allowance increase?
A petition to raise the HMRC income tax personal allowance threshold from £12,570 to £20,000 has received more than 100,000 signatories, although how it would be funded isn’t clear.
The petition to Parliament was started by Alan David Frost, saying: “Raise the income tax personal allowance from £12570 to £20000. We think this would help low earners to get off benefits and allow pensioners a decent income.
“We think it is abhorrent to tax pensioners on their State Pension when it is over the personal allowance. We also think raising the personal allowance would lift many low earners out of benefits and inject more cash into the economy creating growth.”
A response from the government said: “The Government is committed to keeping taxes for working people as low as possible while ensuring fiscal responsibility.”
Possible changes to ISAs
There has been speculation that the government could reduce the £20,000 tax-free annual limit for cash ISAs, to encourage more people to invest their savings in stocks and shares.
In a more positive move for savers, campaigners have also asked for changes to LISAs, or Lifetime ISAs, to make the rules more flexible.
Will there be compensation for the WASPI women?
Labour MPs have told ministers it is “not too late to put it right” by establishing a compensation scheme for women affected by state pension age changes.
They joined opposition MPs in supporting an e-petition, which collected more than 160,000 signatures, calling for the Government to “fairly compensate” Women Against State Pension Inequality (Waspi) campaigners.
A report by the Parliamentary and Health Service Ombudsman (PHSO) recommended the UK Government pay compensation to women born in the 1950s whose state pension age was raised so it would be equal with men.
The watchdog also said the women should be paid up to £2,950 each, a package with a potential total cost of £10.5 billion to the public purse, as poor communication meant they had lost out on the chance to plan their retirement finances.
