Category: Politics

Rachel Reeves was charged with the broadcast media round this morning, as she fielded questions and criticisms in the wake of her first spring statement as chancellor.

The first wave of commentary has honed in on the government’s welfare reforms, the bulk of which were unveiled earlier this month by work and pensions secretary Liz Kendall — to some consternation in the Parliamentary Labour Party. But Reeves was forced to go further yesterday after the Office for Budget Responsibility (OBR), the fiscal watchdog, rejected officials’ estimate as to the savings the cuts would yield.

The OBR found the package would only save £3.4 billion, rather than the £5 billion the government hoped. After the further cuts, the watchdog said savings will now be £4.8 billion — which it described as “the largest package of welfare savings since the July 2015 budget”.

This move, together with the relevant impact assessment, has exacerbated internal criticism of the spring statement, which was already burgeoning in Labour circles ahead of Reeves’ remarks yesterday.

Responding to the chancellor’s statement, Debbie Abrahams, the Labour chair of the work and pensions select committee, told the commons: “All the evidence points to the fact that the cuts to health and disability benefits will lead to increased poverty, including severe poverty, and worsened health conditions.

“How will making people sicker and poorer help to drive our economy up and get people into jobs?”

Neil Duncan-Jordan, the MP for Poole, said: “We are talking about people’s lives here — my constituents are frightened.

“This policy will fuel the social determinants of poverty that ultimately create further pressure on the services the chancellor is trying to cut. And we know cuts won’t bring growth, they won’t create jobs — they will only create poverty.”

Rachael Maskell, the Labour MP for York Central, said: “The devastating impact of people losing essential income will fall on disabled people. I will not accept or vote for measures that will put people at risk or push deeper into poverty.”

Away from the commons, Clive Lewis, the Labour MP for Norwich South, expressed a broader discontent with the government’s programme in an interview with Sky News. “I think some of us already knew there were some problems in terms of the lack of a plan and an ideology behind it, the lack of a strategy”, he said.

“But they won a massive majority, a massive mandate, and you have to give people a chance. I think we’re at the point now where people can see that this isn’t what we expected — what a lot of the public expected, what MPs expected — in that sense it is a disappointment.”

Richard Burgon, Labour MP for Leeds East, told Times Radio that the government could face the “mother of all rebellions” if it does not rethink cuts to disability benefits.

Nadia Whittome, Labour MP for Nottingham East, told BBC Radio 4’s Today programme that people will look upon the spring statement as a “continuation of austerity for them.”

Bell Ribeiro-Addy, Labour MP for Clapham and Brixton Hill, posted to X: “The government’s own analysis shows that 50,000 children would be forced into poverty by planned cuts to disability benefits. I will be voting against this.

“No Labour MP should be voting to push children into poverty.”

Brian Leishman, the outspoken Labour MP for Alloa and Grangemouth, said: “The spring statement had awful cuts that will impact disabled people.

“The ‘tough political choice’ of cuts would be avoided if the government decided to tax multi millionaires instead… I’ll vote against cuts to disability benefit.”

In a statement on social media, Connor Naismith, the Labour MP for Crewe and Nantwich, said the government’s welfare measures “risk plunging vulnerable people into poverty.”

He said: “I cannot ignore the findings of the independent impact assessment, published today, that these changes will push an extra 250,000 people (including 50,000 children) into relative poverty after housing costs.”

Steve Witherden, the Labour MP for Montgomeryshire and Glyndŵr, labelled the benefit cuts “a political choice”, adding: “There are alternatives to ever deeper austerity. Properly taxing the wealthiest after decades of widening inequality would be a start.”

This morning in the House of Commons, DWP minister Stephen Timms was dragged to the despatch box to answer an urgent question on the impact of changes to the Personal Independence Payment on recipients of Carers Allowance.

Questioning the minister, David Pinto-Duschinsky, the Labour MP for Hendon, expressed his support for the reforms. The founder of the Get Britain Working Group of Labour MPs suggested the cuts would make the welfare system “more sustainable”.

But the majority of those Labour parliamentarians who spoke this morning asked Timms for “assurances”, which the minister tried his utmost to provide.

As the above quotes suggest, there is no question that a backlash is building in Labour circles over the government’s welfare cuts. But the question remains over whether such criticism will swell beyond the usual ranks of Keir Starmer’s awkward squad.

Ahead of the spring statement, government whips would have been in no doubt as to the opposition of MPs like Burgon, Maskell, Whittome and Leishman. And there is still a strong backbone of support in the parliamentary party, as Pinto-Duschinsky’s contribution implies.

Rachel Reeves, defending the government’s position this morning, insisted she was “absolutely certain” that the welfare changes announced at the spring statement will not push more people into poverty — appearing to contradict her own government’s impact assessment.

The extent of a potential rebellion will only become clear over the coming days and weeks, as these arguments are hashed out between ministers and would-be-rebels.

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Lunchtime briefing

PMQs: Ed Davey calls for ‘urgent review’ into intelligence sharing with the United States

Lunchtime soundbite

‘There is a good chance that economic and fiscal forecasts will deteriorate significantly between now and an autumn budget.

‘If so, she will need to come back for more; which will likely mean raising taxes even further’

—  “Good chance” Rachel Reeves will have to raise taxes in the autumn budget, Institute for Fiscal Studies director Paul Johnson says.

Now try this…

‘The Boden Belt: the Lib Dems are the new party of the posh’
James Heale writes for The Spectator. (Paywall)

‘Welfare cuts will push 250,000 people into poverty, says government impact assessment’
Via PoliticsHome.

‘“Why don’t you go back to your country?” Marjorie Taylor Greene snaps at top UK reporter’
“We don’t give a crap about your opinion and your reporting”, the staunch Trump supporter told journalist Martha Kelner, Politico reports.

On this day in 2023:

Humza Yousaf ‘determined’ to deliver independence following election as SNP leader

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Rachel Reeves has appeared to reject her own government’s impact assessment of her welfare reforms, saying she is “absolutely certain” that the changes will not push more people into poverty. 

An official impact assessment from the government estimated the welfare cuts announced in the chancellor’s budget would leave 250,000 people, including 50,000 children, in relative poverty.

Delivering her spring statement to the House of Commons on Wednesday, Reeves unveiled a £14 billion package to repair the UK economy that included deep cuts to welfare, prompting criticism from Labour MPs who urged her to reverse the reforms amid warnings they will lead to increased poverty.

Last week, the government announced large cuts to the benefits system, insisting they would save £5 billion by 2030. But the chancellor was forced to go further in the spring statement after the Office for Budget Responsibility (OBR), the fiscal watchdog, rejected the government’s estimate as to how much money the reforms would save. 

The OBR found the package would only save £3.4 billion, rather than the £5 billion the government hoped. After the further cuts, the watchdog said savings will now be £4.8 billion.

At the spring statement, Reeves announced a freeze on the health element of universal credit for new claimants until 2030, after an initial cut of 50 per cent. The other changes announced last week include tightening the eligibility criteria for Personal Independence Payments (PIP) and scrapping the controversial work capability assessment.

Speaking to Sky News, the chancellor said: “I am absolutely certain that our reforms, instead of pushing people into poverty, are going to get people into work.

“And we know that if you move from welfare into work, you are much less likely to be in poverty.

“That is our ambition, making people better off, not making people worse off, and also the welfare state will always be there for people who genuinely need it.”

Josh Self is Editor of Politics.co.uk, follow him on Bluesky here.

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Source: Politics

The government needs to “toughen up” and start placing retaliatory tariffs on US carmakers like Tesla, the Liberal Democrats have said.

The party has urged ministers to place a 25 per cent retaliatory tariff on Elon Musk’s electric car company after the US announced that 25 per cent tariffs on all car imports will begin next week.

“I think there’s only one language that Donald Trump understands, and that is the language of strength”, Lib Dem deputy leader Daisy Cooper told BBC Radio 4’s Today programme.

“What we Liberal Democrats are very concerned about is that the government strategy so far seems to be to cower in the corner and just ask Donald Trump to be nice to us and just to hope that he doesn’t do anything nasty.

“That is not a strategy. So we think the government needs to toughen up.

“We think the government needs to start preparing for retaliatory tariffs, and that those tariffs, that preparation, should start by looking at putting tariffs on Tesla cars, because clearly Elon Musk is a huge backer of Donald Trump, and that’s where we would start.”

Cooper also urged the chancellor to rule out tax breaks for US tech barons such as Musk, and scrapping or reducing the digital services tax.

Media reports have suggested that Britain could slash the digital services tax — a levy on big tech companies — in order to stave off US tariffs. 

***Politics.co.uk is the UK’s leading digital-only political website. Subscribe to our daily newsletter for all the latest news and analysis.***

The comments came as the chancellor, Rachel Reeves, revealed the government is in discussions with the US about what the new 25 per cent tariffs on imported cars will mean for the automotive sector. 

Speaking to Times Radio, Reeves said: “The prime minister went to Washington just a couple of weeks ago and met the US president, and we are now having extensive talks with our counterparts in the US to protect trade between our countries. 

“Those conversations will continue.”

She added: “A million British people work for American firms. A million Americans work for British firms. Our two economies are so closely intertwined…

“I believe — and we make this case to the United States — that free trade, fair trade, is good for both of our countries, but let’s see where we get to in the next few days.”

During a press conference in the Oval Office on Wednesday, US president Donald Trump announced that cars and light trucks imported into the US would be subject to a 25 per cent tariff. 

“What we’re going to be doing is a 25 per cent tariff for all cars that are not made in the United States”, Trump said. 

The announcement came after the Office of Budget Responsibility (OBR), the fiscal watchdog, halved the UK’s economic growth forecast from 2 per cent to 1 per cent. 

In its economic forecast published on Wednesday, the OBR said the most “severe” scenario, in which the UK and other nations retaliated to the imposition of tariffs, would see GDP 0.6 per cent lower than forecast this year and 1 per cent lower next year.

This scenario would also “almost entirely eliminate” the chancellor’s £9.9 billion headroom against her fiscal rules, the watchdog added. That could force Reeves to return for further spending cuts or tax rises.

Josh Self is Editor of Politics.co.uk, follow him on Bluesky here.

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Dementia is the defining health and social care challenge of our time. Nearly one million people in the UK are living with the condition and it is the leading cause of death.  One in two of us will be affected by dementia in our lifetime, either through a diagnosis or by caring for a loved one.

Despite the known and growing impact of dementia, acknowledged by the political class over the last decade or more, the disease has been removed from NHS England’s Planning Guidance this year – with the full knowledge and support of the health secretary, Wes Streeting. The word ‘dementia’ does not feature once. The best thing we can do to support people living with dementia is to enable them to get a diagnosis, but the long-standing diagnosis target has also been scrapped. This is not the ‘change’ people voted for. Labour promised to prioritise the NHS – yet dementia has been dropped from the agenda entirely. We must put dementia firmly back on the health and social care agenda to ensure families get the high-quality care and support they need. Improving dementia care must be a priority.

First and foremost, dementia has a huge social impact and places extraordinary pressure on individuals and family members with no formal caring qualifications and who may be living with poor health themselves. But it also has a significant impact on the economy and puts pressure on the public purse – something the Treasury is more likely to respond to. The total cost of dementia in the UK stands at a staggering £42 billion per year. One in four hospital beds is occupied by someone with dementia. These patients stay in hospital twice as long, on average, as those without the condition. There isn’t the support outside hospitals to allow for timely discharge to an environment which is both better for the patient and more cost effective. Against this backdrop – which is no secret – the decision to remove the disease from the Planning Guidance seems particularly unfathomable. It makes it more likely, not less, that the experience of those affected by dementia will get worse while the costs to the public purse will grow.

Beyond the statistics, the human impact of dementia is devastating. Families are left to cope alone with the daily challenges of the disease. Carers and family members have become physically and emotionally drained, facing an uphill battle to access the right support. Many are at breaking point, but they are the people the “system” relies on. A new report by Maria Petrillo from the Centre for Care has demonstrated the financial penalty of undertaking a caring role is greater for women.

The lack of a clear, integrated support pathway means that people with dementia and their families face unnecessary obstacles to accessing the care they need. The structural problem with separation of health care – universal and free at the point of use, and social care – means tested and the responsibility of local councils – is perhaps best (or worst) demonstrated by the experiences of people with dementia. The broken divide between NHS healthcare and council-run social care is failing people with dementia. The forthcoming NHS 10-Year Plan must commit to fixing it.

I have seen the lack of integration in services first-hand during my time working for Dementia UK before I entered parliament. Admiral Nurses operate in and around the health and social care ‘gap’ to help the transition between different health and care settings. They provide wrap-around support for the whole family. By helping to solve the needs of family carers they solve the biggest need for the person with the dementia diagnosis – a carer better equipped to undertake their caring role. We need more specialist dementia nurses, including in hospitals, to help reduce avoidable hospital admissions and, where admissions happen, to support early discharge. This would not only improve health outcomes but also reduce pressure for hospital beds.

The government cannot afford to be complacent, but nor can the Opposition. Dementia must be recognised as a national priority, with dedicated resources and a clear plan for delivery. Without this commitment, the crisis will only deepen, and more families will be left to struggle alone. We owe it to those living with dementia, and to their loved ones, to act now.

Let’s put dementia back on the agenda – and build a future where no family has to face it alone.

Politics.co.uk is the UK’s leading digital-only political website. Subscribe to our daily newsletter for all the latest news and analysis.

Source: Politics

Labour’s vow to set out only one major “fiscal event” a year, detailed in its election manifesto, was designed to serve as a definite signal of a new era: in the place of political chaos and fiscal unpredictability — symbolised by the rise and rapid fall of Liz Truss — stability would reign. No longer would Britain reel from one economic programme to the next.

But as Rachel Reeves declared today, the “world has changed”. The circumstances that saw Labour catapulted to Downing Street as the harbingers of stability have reorganised themselves. The spring statement had initially been pencilled into ministerial diaries as a mere update. But the surrounding context has reimagined it as a defining moment in the story of this government, as Keir Starmer and Reeves adapt to the brutal realities that have befallen them.

That said, for all the emphasis Labour has placed on the shifting geopolitical tides, the spring statement today was given meaning by those factors that remain constant. Labour’s strictures — its fiscal rules, tax pledges and political commitments — still limit the chancellor’s agency.

Reeves’ self-imposed rules, which she stresses are “non-negotiable”, restrict her borrowing to fund day-to-day public spending. Labour’s manifesto pledge — to leave income tax, VAT and national insurance untouched — deprives Reeves of the Treasury’s most effective revenue-raisers. Meanwhile, the chancellor has committed to reviving Britain’s ailing public services and, crucially, rejecting any return to austerity.

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This is the same political-fiscal framework that dictated Labour’s travails in the long lead-in to the autumn budget. In October, the chancellor left herself around £9.9 billion of fiscal headroom (the buffer between the government’s fiscal rules and spending/tax plans; or money available for additional spending). That was after the government announced tax rises worth £40 billion, and £76 billion of new public spending. Ministers just about stuck to their tax commitments (a manifesto loophole allowed for an employer NI hike). Their spending plans neutralised accusations of “austerity 2.0”.

In the end, with just the £9.9 billion to spare, Reeves stuck to her fiscal rules.

But the economic conditions have worsened drastically since October, and Reeves’ leeway has vanished. The chancellor revealed today that the Office of Budget Responsibility (OBR) has revised down the UK’s growth forecast for 2025 from 2 per cent in the autumn to 1 per cent.

Reeves admitted her headroom had been wiped out, leaving the chancellor £4.1 billion in the red. She went on to outline £14 billion worth of cuts, designed to restore the government’s fiscal position to its status in the autumn.

Most of the policy announcements, on welfare, aid and defence spending, had been aggressively publicised beforehand. That includes the reporting yesterday which revealed the OBR had rejected the government’s estimate its welfare reforms will return £5 billion to the exchequer — concluding instead that the changes to disability and incapacity benefits will only save £3.4 billion.

This £1.6 billion shortfall has impelled Reeves to drive deeper with her cuts, confirming a few “final adjustments”. On top of already announced changes to disability and sickness benefits then, Reeves said the universal credit standard allowance will increase from £92 per week in 2025/26 to £106 pounds a week by 2029/30, while the universal credit health elements will be cut to the new claimants by around 50 per cent and then frozen.

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As expected, there were no more tax rises. But the chancellor did claim she will raise an extra billion pounds by cracking down harder on tax evasion. Meanwhile, savings — courtesy of “Whitehall efficiencies” — were promised. Reeves said a “leaner” government would spend £6.1 billion less on day-to-day operations by 2029-30.

Reeves told the commons: “Overall, day-to-day spending will be reduced by £6.1 billion by 2029-30 and it will now grow by an average of 1.2 per cent a year above inflation compared to 1.3 per cent in the Autumn.”

These measures will ensure the government’s books are balanced. Citing OBR figures, Reeves said the government’s budget will move from a deficit of £36.1 billion in 2025/26 and £13.4 billion in 2026/27, to a surplus of £6 billion in 2027/28, £7.1 billion in 2028/29 and £9.9 billion in 2029/30.

Confronting internal criticism, Reeves implicitly insisted that today’s statement will not deliver “austerity 2.0”. In fact, Reeves sought to reassure MPs “that day-to-day spending will increase in real terms, above inflation, in every single year of the forecast.”

She added: “And in the spending review, apart from the reduction in overseas aid, day-to-day spending across government has been fully protected.”

But a Labour rebellion is brewing nonetheless. While Reeves’ path may prove economically sustainable, backbench MPs stand ready to voice political and moral objections. The welfare cuts, of course, have gone deeper than would-be-rebels had anticipated.

At prime minister’s questions prior to the spring statement, SNP Westminster leader Stephen Flynn shared his own experience of disability and asked Keir Starmer to explain to children “how the Labour party making mum and dad poor will lift them out of poverty”.

In the end, the political ramifications will only become clear once Labour backbenchers have descended on the details of the spring statement (and associated impact assessments) with their red highlighters.

These measures however, even if they are swallowed by the Parliamentary Labour Party, will do nothing to reorder the political-fiscal logic that landed Reeves in this situation in the first instance. Her fiscal rules remain intact; her tax pledges unbusted; and Labour still insists austerity is not and will never be on the agenda. Donald Trump’s second non-consecutive term is just beginning.

And so the build-up to the autumn budget begins. Paul Johnson, director of the Institute for Fiscal Studies, has already described Reeves’ statement as a “holding exercise ahead of the really significant decisions later in the year.”

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He adds: “What the chancellor has all but guaranteed is another six months of damaging speculation and uncertainty over tax policy. That didn’t go well between last July’s election and October’s budget.

“I fear a longer rerun this year.”

Reeves did unveil some good news about growth this afternoon. She revealed the OBR has upgraded the UK’s growth forecasts from next year, and for “every single year thereafter”. (Growth of 1 per cent in 2025, 1.9 per cent in 2026, 1.8 per cent in 2027, 1.7 per cent in 2028 and finally 1.8 per cent in 2029 still falls short of pre-election expectations, it should be said).

Concluding her speech, the chancellor said the OBR had scored the government’s housebuilding plans and found they will add £15.1 billion to the UK economy within a decade.

Staring down the opposition benches, Reeves maintained: “I say to the party opposite — the British people will be watching, because if the party opposite do not support these reforms they are opposing economic growth.

“We are clear on this side whose side we are on, the opposition parties must decide too.”

The chancellor will hope that this news on growth, which she delivered rousingly at the despatch box this afternoon, eases Labour worries and holds back the opposition charge.

But she will recognise that the government’s economic battles are far from over. Reeves’ fiscal tightrope, navigated today by a careful balancing act, stretches far into the future — with geopolitical headwinds still swirling.

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Lunchtime briefing

Reeves to unveil more welfare cuts in spring statement, defence secretary signals

Lunchtime soundbite

‘She is the chancellor who said she would not increase borrowing, but she did. She said she wouldn’t change her fiscal rules, but she did.

‘She said she wouldn’t put up national insurance, but she did. She said she wouldn’t cut winter fuel payment, but she did.

‘She said she wouldn’t tax farmers, but she did.’

—  Responding to the spring statement in the House of Commons today, shadow chancellor Mel Stride says “this chancellor has made all the wrong choices.”

Now try this…

‘UK spring statement: Rachel Reeves’ Project Growth still isn’t paying off’
British chancellor unveils latest fiscal update Wednesday as Labour MPs press for a Plan B, writes Politico’s Dan Bloom and Annabelle Dickson.

‘Wes Streeting: Israel’s attacks on Gaza are “unjustifiable” and “intolerable”’
Via the Guardian.

‘Why No 10 isn’t worried about a full-blown Labour rebellion’
Quite how many MPs would rebel against the Government is unclear – but the Spring Statement gives them the chance to compare notes, writes the i’s Kitty Donaldson. (Paywall)

On this day in 2023:

Michael Gove apologises to standards watchdog over failure to declare VIP football tickets

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A few weeks ago, the prime minister shocked even his own ministers by slashing the UK’s already depleted aid budget to just 0.3% of gross national income (GNI); far short of the 0.7% his party campaigned on. In protest, his international development minister Anneliese Dodds resigned. Today we have seen those cuts exacerbated and cemented in the chancellor’s spring statement, alongside a reduction to welfare that looks akin to the austerity we were promised was a thing of the past. It would appear the government has chosen those with the fewest resources – both in the UK and overseas – to shoulder the burden of its efforts to balance the books.

The Labour government took office on the promise of ‘change’, with a manifesto committed to building fairer societies. The prime minister declared ‘Britain is back’, signalling what many hoped would be a revived era of global leadership on issues of social justice and equality, and strengthened relationships with the world. Yet this vision is now in tatters.

Whether it’s austerity or aid cuts, evidence shows that cuts to public spending impact women and girls first and worst. As the global rollback on women’s rights advances at pace, what the government decides to do next with its aid budget could shape the future for women, whole societies, and our world, for decades to come.

Following the cuts in 2021, research from CARE International UK found very few safeguards had been put in place to avoid a disproportionate impact on vital programming for women and girls in crisis. While the Overseas Development Aid (ODA) budget was cut by a third, between 2021 and 2022, programming to prevent violence against women and girls fell by 41% and funding to women’s rights organisations fell 66% from its peak in 2017.

In fact, while the UK has a proud legacy of championing the rights of women and girls, new data analysis shows that funding for gender equality already stands at its joint lowest on record – almost half what it was pre-pandemic.

Running in parallel to these cuts, we’ve seen a surge in powerful and well-funded anti-gender movements and anti-rights actors who have successfully curbed and cut back women’s rights on numerous fronts – education, sexual and reproductive health and basic civil liberties, to name a few.

What this looks like, in reality, is women banned from speaking in public in Afghanistan, rising sexual violence against women in Sudan, and 140 women and girls killed every day in 2023 by a partner or close relative.

That’s why we’re calling on the government to protect women and girls, by reversing the cuts and ensuring that at least 20% of UK aid has gender equality as the main objective.

The previous government pledged that at least 80% of ODA programmes would have a focus on gender equality, but much of this target is met through ‘gender mainstreaming’ – where the needs of women and girls are considered in decision-making but are not the primary goal of the programme. Our limited ODA could be part of the solution, but unless more funding explicitly tackles the root causes of gender inequality it risks acting as a sticking plaster, not a sustainable solution.

It may sound like splitting hairs, but in the wake of monumental aid cuts – this matters. Only by setting this new target can we truly protect programming that specifically meets the needs of women and girls – to prevent gender-based violence, support girls’ education, or access to sexual and reproductive rights. History has taught us that without this ringfencing, it’s these programmes that are hit first and worst. And when these programmes are lost – they rarely return.

Women globally continue to bear the brunt of decisions made by men. But gender equality isn’t just a women’s issue – it concerns everyone. There is evidence in abundance that when women thrive, communities and economies prosper, and societies become more peaceful. Attacking women’s rights leads to the erosion of universal rights. It’s in everyone’s interest, including men and boys, and the British government’s, to ensure that today’s decisions don’t cause irreparable harm.

And we know that the British public back this, too. New polling by More in Common, commissioned by CARE, shows that that the overwhelming majority – 86% – think it’s important for the British government and politicians to stand up for women and girls across the world. And almost two thirds, 65%, agree it’s important that the UK aid budget is used to protect women and girls’ rights, with only 8% believing it’s not important at all.

The world has changed immeasurably since the prime minister took office last year. But with rapidly evolving global dynamics, the government should look to adopt a fairer and more flexible approach to fiscal rules, rather than clinging to rigid policies that continue to harm those most in need, in the UK and the world. At a minimum, this should start by protecting women and girls with the aid budget.

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The Independent Alliance, a parliamentary faction of progressive, pro-Palestinian MPs, has issued a scathing statement condemning the government’s spring statement. 

The group, of which Jeremy Corbyn is the most senior member, accuses the chancellor of going “further than even the Tories ever dared”.

The statement reads: “After 14 years of Conservative rule, we were told that austerity was over. That was a lie.”

Speaking in the House of Commons on Wednesday afternoon, Rachel Reeves confirmed deep cuts to welfare and public services, along with billions of pounds in long-term investment aimed at growing the economy.

The chancellor said her measures would ensure a predicted £4.1 billion hole in the public finances within five years would be turned into a £9.9 billion surplus.

Last week, the government announced large cuts to the benefits system, insisting they would save £5 billion by 2030. But the chancellor was forced to go further in the spring statement after the Office for Budget Responsibility (OBR), the fiscal watchdog, rejected the government’s estimate as to how much money the reforms would save. 

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The OBR found the package would only save £3.4 billion, rather than the £5 billion the government hoped. After the further cuts, the watchdog said savings will now be £4.8 billion.

Addressing MPs, Reeves announced a freeze on the health element of universal credit for new claimants until 2030, after an initial cut of 50 per cent.

The other changes announced last week include tightening the eligibility criteria for Personal Independence Payments (PIP) and scrapping the controversial work capability assessment.

Responding, the Independent Alliance argued the government “has not just refused to undo the suffering the Tories have inflicted. They have gone even further than the Tories ever dared.”

It said: “These cruel cuts are not just robbing the most vulnerable people of security. They are robbing them of dignity – and the government should be ashamed of the hateful rhetoric they have fuelled.

“People with disabilities are not a cost to society. They are creators, performers, artists, teachers and campaigners – and they are being dehumanised by a heartless government, one broken pledge at a time.

“The government says there isn’t any money to help people. We don’t believe them. Having just announced an enormous increase in military spending, the government should be honest about what they really mean: no money for the poor, endless money for war.

“There is an alternative: tax the super-rich to fix our public services and empower those in need. Instead of going after the most vulnerable in society, let’s “crack down” on corporations, billionaires and tax evaders hoarding this nation’s wealth.

“Austerity is not a tough choice. It’s the wrong choice. The right choice is redistributing wealth and power to bring about a more equal and caring society for all.”

Alongside Corbyn, the former Labour leader, the other members of the Independent Alliance include Shockat Adam, who defeated former Labour frontbencher Jonathan Ashworth in Leicester South last July, as well as Ayoub Khan, Adnan Hussain and Iqbal Mohamed, who all also stood on pro-Palestinian platforms.

Josh Self is Editor of Politics.co.uk, follow him on Bluesky here.

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Source: Politics

Rachel Reeves has presented her first highly-anticipated spring statement to the House of Commons.

Addressing MPs, the chancellor announced that the Office for Budget Responsibility’s economic growth forecast for 2025 has been slashed from 2 per cent to 1 per cent, although GDP growth forecasts for future years have been upgraded.

Read Reeves’ full statement below. 

This Labour Government were elected to bring change to our country, to provide security for working people and to deliver a decade of national renewal. That work began in July, and I am proud of what we have delivered in just nine months: restoring stability to our public finances, giving the Bank of England the foundation to cut interest rates three times since the general election, rebuilding our public services, with record investment in our NHS bringing waiting lists down for five months in a row, and increasing the national living wage to give 3 million people a pay rise from next week.

Now our task is to secure Britain’s future in a world that is changing before our eyes. The threat facing our continent was transformed when Putin invaded Ukraine. It has since escalated further and continues to evolve rapidly. At the same time, the global economy has become more uncertain, bringing insecurity at home as trading patterns become more unstable and borrowing costs rise for many major economies. The job of a responsible Government is not simply to watch this change. This moment demands an active Government—a Government not stepping back but stepping up, a Government on the side of working people helping Britain reach its potential. We have the strengths to do just that as one of the world’s largest economies, an ally to trading partners across the globe, and a hub for global innovation. These strengths and the progress we have made so far mean that we can act quickly and decisively in a more uncertain world to secure Britain’s future and to deliver prosperity for working people.

As I set out at the Budget last year, I am today returning to the House to provide an update on our public finances, supported by a new forecast from the independent Office for Budget Responsibility, ahead of a full spending review in June. I will then return to the House in the autumn to deliver a Budget in line with our commitment to deliver just one major fiscal event a year.

Let me now turn to the OBR’s forecasts; I want to thank Richard Hughes and his team for their dedicated work. The increased global uncertainty has had two consequences: first on our public finances and secondly on our economy. I will take each in turn.

In the autumn, I set out our new fiscal rules that would guide this Government. These fiscal rules are non-negotiable. They are the embodiment of this Government’s unwavering commitment to bring stability to our economy and to ensure security for working people, because the British people have seen what happens when a Government borrow beyond their means. The mini-Budget delivered by the Conservatives resulted in higher bills, higher rents and higher mortgages, and it was not the wealthy who suffered most when they crashed the economy; it was ordinary working people. They continue to feel the effects two and a half years later of the damage that the Conservatives did.

Let me be clear: there is nothing progressive, there is nothing Labour, about working people paying the price for economic irresponsibility. The British people put their trust in this Labour Government because they knew that we—they knew that I—would never take risks with the public finances and would never do anything to put household finances in danger. We must earn that trust every single day.

I set out two rules at the Budget. The first was our stability rule, which ensures that public spending is under control, balancing the current budget by 2029-30 so that day-to-day spending is met by tax receipts. The second was our investment rule to drive growth in the economy, ensuring that net financial debt falls by the end of the forecast period, while enabling us to invest alongside business.

Turning first to the stability rule, the OBR’s forecast shows that before the steps that I will take in this statement, the current budget would have been in deficit by £4.1 billion in 2029-30, having been projected to be in surplus by £9.9 billion in the autumn, as the UK, alongside our international peers like France and Germany, has seen the cost of borrowing rise during this period of heightened uncertainty in global markets. As a result of the steps that I am taking today, I can confirm that I have restored in full our headroom against the stability rule, moving from a deficit of £36.1 billion in 2025-26 and £13.4 billion in 2026-27 to a surplus of £6 billion in 2027-28, £7.1 billion in 2028-29 and £9.9 billion in 2029-30. That compares with the headroom left by the previous Government of just £6.5 billion. That means that we are continuing to meet the stability rule two years early, building resilience to shocks in this, a more uncertain world.

The OBR forecast that the investment rule would also be met two years early, with net financial debt of 82.9% of GDP in ’25-26 and 83.5% in ’26-27, before falling to 83.4% in ’27-28, to 83.2% in 2028-29 and then to 82.7% in 2029-30, providing headroom of £15.1 billion in the final year of the forecast, broadly unchanged from the autumn forecast.

After the last Government doubled the national debt—[Interruption.] After they doubled the national debt, debt interest payments now stand at £105.2 billion this year. That is more than we allocate to defence, the Home Office and the Ministry of Justice combined. That is the legacy of the Conservative party. The responsible choice is to reduce our levels of debt and borrowing in the years ahead, so that we can spend more on the priorities of working people, and that is exactly what this Government will do. I said that our fiscal rules were non-negotiable and I meant it. I will always deliver economic stability and I will always put working people first. I said it at the election; I said it at the Budget; and I say it again today.

Let me now set out the steps that the Government have taken. At the Budget we protected working people by keeping our promise not to raise their rates of national insurance, income tax or VAT. At the same time, we began to rebuild our public services after the Conservatives left a £22 billion black hole in our public finances. Ours were the right choices: the right choices for stability and the right choices for renewal, funded by the decisions that we took on tax.

As I promised in the autumn, this statement does not contain any further tax increases, but when working people are paying their taxes while still struggling with the cost of living, it cannot be right that others are still evading what they rightly owe in tax. In the Budget, I delivered the most ambitious package of measures we have ever seen to cut down on tax evasion, raising £6.5 billion per year by the end of the forecast. Today I go further, continuing our investment in cutting-edge technology, investing in HMRC’s capacity to crack down on tax avoidance, and setting out plans to increase the number of tax fraudsters charged every year by 20%. These changes raise a further £1 billion, taking the total revenue raised from reducing tax evasion, under this Labour Government, to £7.5 billion. These figures are verified by the Office for Budget Responsibility and I to thank my hon. Friend the Exchequer Secretary for his continued work in this area.

Last week, my right hon. Friend the Secretary of State for Work and Pensions set out this Government’s plans to reform the welfare system. The Labour party is the party of work: we believe that if you can work, you should work, but if you cannot work, you should be properly supported. This Government inherited a broken system: more than 1,000 people every day are qualifying for personal independence payments; one in eight young people are not in employment, education or training. If we do nothing, we are writing off an entire generation. That cannot be right and we will not stand for it. It is a waste of their potential and it is a waste of their futures, and we will change it.

As my right hon. Friend said in her statement last week, the final costings will be subject to the OBR’s assessment. Today, the OBR has said that it estimates that the package will save £4.8 billion in the welfare budget, reflecting its judgments on behavioural effects and wider factors. This also reflects final adjustments to the overall package, consistent with the Secretary of State’s statement last week and the Government’s “Pathways to Work” Green Paper.

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 for new claimants by around 50% and then frozen.

On top of that, we are investing £1 billion to provide guaranteed, personalised employment support to help people back into work, and £400 million to support the Department for Work and Pensions and our jobcentres to deliver these changes effectively and fairly, taking total savings from the package to £3.4 billion. While spending on disability and sickness benefits will continue to rise, these plans mean that welfare spending as a share of GDP will fall between 2026 and the end of the forecast period, which is very different from what we inherited from the Conservative party. We are reforming our welfare system, making it more sustainable, protecting the most vulnerable and, most importantly, supporting more people back into secure work and lifting them out of poverty.

At the Budget, I fixed the foundations of our economy to deliver on the promise of change. That work has already begun. There are some 2 million extra appointments in our NHS; waiting lists are down; new breakfast clubs are opening across England; there have been the largest settlements in real terms for Scotland, Wales and Northern Ireland in the history of devolution; and asylum costs are falling—promises made, and promises kept, and every single one of them was opposed by Opposition parties.

At the Budget, alongside providing an increase in funding for this year and next, I set the envelope for the spending review, which we will deliver in June, led by the Chief Secretary to the Treasury. That will set departmental budgets until 2028-29 for day-to-day spending, and until 2029-30 for capital spending.

Today’s statement reflects two steps that we have taken on our spending plans. First, because we are living in an uncertain world, as the Prime Minister has set out, we will increase defence spending to 2.5% of GDP and reduce overseas aid to 0.3% of gross national income. That means that we save £2.6 billion in day-to-day spending in 2029-30 to fund our more capital-intensive defence commitments. Secondly, in recent months, we have begun to fundamentally reform the British state, driving efficiency and productivity across Government to deliver tangible savings and improve services across our country.

Earlier this month, the Prime Minister set out our plans to abolish the arm’s length body NHS England, and to ensure that money goes directly to improving the service for patients. The Secretary of State for Health and Social Care is driving forward vital reforms to increase NHS productivity, and is bearing down on costly agency spend to save money so that we can improve patient care.

The Chancellor of the Duchy of Lancaster is taking forward work to reduce the cost of running Government significantly—by 15%. That will be worth £2 billion by the end of the decade. This work shows that we can make our state leaner and more agile, and deliver more resources to the frontline, while ensuring that we control day-to-day spending to meet our fiscal rules.

Today, I build on that work by bringing forward £3.25 billion of investment to deliver the reforms that our public services need through a new transformation fund. That is money brought forward now to bring down the cost of running Government by the end of the forecast period by making public services more efficient, more productive and more focused on the user. I can confirm today the first allocations from this fund, including funding for voluntary exit schemes to reduce the size of the civil service, and for pioneering artificial intelligence tools to modernise the state; investment in technology for the Ministry of Justice to deliver probation services more effectively; and up-front investment so that we can support more children in foster care, to give them the best possible start in life and reduce cost pressures in the future.

Our work to make Government leaner, more productive and more efficient will help deliver a further £3.5 billion of day-to-day savings by 2029-30. Overall, day-to-day spending will be reduced by £6.1 billion by 2029-30, and it will now grow by an average of 1.2% a year above inflation; for comparison, in the autumn, that figure was 1.3%. I can confirm to the House that day-to-day spending will increase in real terms above inflation in every single year of the forecast. In the spending review, apart from the reductions in overseas aid, day-to-day spending across Government has been fully protected.

I can also confirm our approach to capital investment. In the autumn Budget, I announced £100 billion of additional capital spending to crowd in investment from the private sector, in order to fix our crumbling infrastructure and create jobs in every corner of our country. Today, I am not cutting capital spending, as the Conservative party did time and again, because that choked off growth and left our school roofs literally crumbling. That was the wrong choice. It was the irresponsible choice. It was the Tory choice. Today, I am instead increasing capital spending by an average of £2 billion per year, compared with in the autumn, to drive growth in our economy and to deliver in full our vital commitments on defence. This Government will ensure that every pound we spend will deliver for the British people by increasing productivity, driving growth in our economy and improving our frontline public services.

Let me turn to the impact of increased uncertainty on our economy. To deliver economic stability, we must work closely with the Bank of England, supporting the independent Monetary Policy Committee to meet the 2% inflation target. There have been three interest rate cuts since the general election, and today’s data shows that inflation fell in February, having peaked at 11% under the previous Government. The Office for Budget Responsibility forecasts that consumer prices index inflation will average 3.2% this year, before falling rapidly to 2.1% in 2026 and meeting the 2% target from 2027 onwards, giving families and businesses the security that they need, and providing our economy with the stable platform that it needs to grow.

Earlier this month, the OECD downgraded this year’s growth forecast for every G7 economy, including the UK, and the OBR has today revised down our growth forecast for 2025 from 2% in the autumn to 1% today. I am not satisfied with these numbers. We Labour Members are serious about taking the action needed to grow our economy; we are backing the builders, not the blockers, with a third runway at Heathrow airport and through the Planning and Infrastructure Bill. We are increasing investment with reforms to our pension system and a new national wealth fund, and tearing down regulatory barriers in every sector of our economy. That is a serious plan for growth. That is a serious plan to improve living standards. That is a serious plan to renew our country.

A changing world presents challenges, but also opportunities for new jobs and new contracts in our world-class defence industrial centres from Belfast to Deeside, and from Plymouth to Rosyth. In February, the Prime Minister set out our Government’s commitment to increasing spending on defence to 2.5% of GDP from April 2027—the biggest sustained increase in defence spending since the end of the cold war—and an ambition to spend 3% of GDP on defence in the next Parliament. That was the right decision in a more insecure world—we are putting an extra £6.4 billion into defence spending by 2027—but we have to move quickly in this changing world, and that starts with investment. Today, I can confirm that I will provide an additional £2.2 billion for the Ministry of Defence in the next financial year—a further down payment on our plan to deliver 2.5% of GDP by 2027. This additional investment is about increasing not just our national security, but our economic security.

As defence spending rises, I want the whole country to feel its benefits, so I will now set out the immediate steps that we are taking to boost Britain’s defence industry, and to make the UK a defence industrial superpower. We will spend a minimum of 10% of the Ministry of Defence’s equipment budget on new, novel technologies, including drones and artificial intelligence-enabled technology, driving forward advanced manufacturing production in places like Glasgow, Derby and Newport, creating demand for highly skilled engineers and scientists, and delivering new business opportunities for UK tech firms and start-ups. We will establish a protected budget of £400 million in the Ministry of Defence—a budget that will rise over time—for UK defence innovation, and a clear mandate to bring innovative technology to the frontline at speed.

We will reform our broken defence procurement system, making it quicker, more agile and more streamlined, and giving small businesses across the UK better access to Ministry of Defence contracts—something welcomed by the Federation of Small Businesses. We will take forward our plan for Barrow, a town at the heart of our nuclear security, working with my hon. Friend the Member for Barrow and Furness (Michelle Scrogham). We are providing £200 million to support the creation of thousands of jobs there. We will regenerate Portsmouth naval base, securing its future, as called for by my hon. Friend the Member for Portsmouth South (Stephen Morgan). We will secure better homes for thousands of military families—the homes that they deserve, which were denied to them by the previous Government—in the constituencies of my hon. Friends the Members for Plymouth Moor View (Fred Thomas), for Plymouth Sutton and Devonport (Luke Pollard) and for York Outer (Mr Charters) and in Aldershot. That is the difference that this Labour Government are making.

Finally, we will provide £2 billion of increased capacity for UK Export Finance to provide loans for overseas buyers of UK defence goods and services. I want to do more with our defence budget, so that we can buy, make and sell things here in Britain. I want to give our world-leading defence companies and those who work in them further opportunities to grow, and to create jobs in Britain, as military spending rightly increases all across Europe. To oversee all this vital work, my right hon. Friend the Defence Secretary and I will establish a new defence growth board to maximise the benefits from every pound of taxpayers’ money that we spend, and we will put defence at the heart of our modern industrial strategy to drive innovation, which can deliver huge benefits for the British economy. That is how we make our country a defence industrial superpower, so that the skills, jobs and opportunities of the future can be found right here in the United Kingdom.

As the previous Government learned to their detriment, there are no shortcuts to economic growth. It will take long-term decisions. It will take our putting in the hard yards. It will take time for the effect of the reforms that we are introducing to be felt in the everyday economy. It is right that the Office for Budget Responsibility should consider the evidence and look carefully at measures before recognising a growth impact in its forecast, but I can announce to the House that the OBR has considered and has scored one of the central planks of our plan for growth.

In my first week as Chancellor, I announced that we were pursuing the most ambitious set of planning reforms in decades to get Britain building again, and in December we published changes to the national planning policy framework, driven forward tirelessly by my right hon. Friend the Deputy Prime Minister. We are reintroducing mandatory housing targets, and bringing grey-belt land into scope. The OBR has today concluded that these reforms will permanently increase the level of real GDP by 0.2% in ’29-30—an additional £6.8 billion for our economy—and by 0.4% of GDP within 10 years, which is an additional £15.1 billion in the British economy. That is the biggest positive growth impact that the OBR has ever reflected in its forecast, for a policy with no fiscal cost. Taken together with our plans to increase capital spending, which we set out in the Budget last year, this Government’s policies will increase the level of real GDP by 0.6% in the next 10 years. That is the difference that this Labour Government are making.

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A cabinet minister has appeared to confirm reports that further cuts to welfare spending are in the pipeline after the budget watchdog ruled previously-announced measures will not save the £5 billion a year expected by 2030.

According to multiple reports on Wednesday morning, the Office for Budget Responsibility (OBR) found that the measures would only cut the welfare bill by £3.4 billion, with Rachel Reeves now expected to announce further measures to save a further £500 million.

John Healey, the defence secretary, told Times Radio: “That’s a calculation we may see confirmed by the Office for Budget Responsibility about the longer-term savings that our plans to change the welfare system may bring.

“That’s a must-do for any responsible government, particularly one that believes in the importance of our social security system.”

Healey added: “You can’t have a benefits system that is failing people and out of control in this way.

“That’s why the plans that [work and pensions secretary] Liz Kendall laid out last week, and that you’ll hear more from the chancellor this afternoon in the spring statement, are so important.

“We want the social security system to work. It’s got to be there to support the poorest, but it’s also got to be there to make sure those who can work are able to do so.”

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Overall, the chancellor is expected to announce about £15 billion of savings to meet her self-imposed fiscal rules, after the OBR forced her to reopen spending plans by halving its growth forecasts. 

Speaking in the House of Commons on Wednesday afternoon, Reeves will unveil an extra £2.2 billion to be spent on the UK’s defence over the next year.

Reeves will say the UK must “move quickly in a changing world” to up its defence commitment. The extra funding is being put on the table as the government aims to hike defence spending to 2.5 per cent of the UK’s economic output by 2027.

Reeves will insist this plan, set out by the prime minister in February, was the “right decision in a more insecure world”, adding: “But we have to move quickly in a changing world. And that starts with investment.”

“This increase in investment is not just about increasing our national security but increasing our economic security, too. As defence spending rises, I want the whole country to feel the benefits”, the chancellor is expected to tell MPs.

The April funding increase will help pay for new technologies, like long range laser and microwave weapons — collectively known as directed energy weapons — which will be fitted to warships.

Commenting on this announcement, Healey said national security was “the bedrock of a successful economy”.

“This significant increase in defence spending, on top of the £2.9 billion announced by the Chancellor at the Budget, means an extra £5 billion for our Armed Forces next financial year”, he said.

Healey added: “This investment will make Britain stronger and safer in a more insecure world. And it will ensure defence is an engine for growth, creating good jobs across the nation.

“These are the bold first steps of the largest sustained increase in defence spending since the Cold War announced by the prime minister last month.

“Our government is delivering for defence and investing in the outstanding men and women who keep Britain secure at home and strong abroad.”

Josh Self is Editor of Politics.co.uk, follow him on Bluesky here.

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Source: Politics