Reeves confirms ‘final adjustments’ have been made to plans for disability benefit cuts
Reeves says the welfare changes will save £4.8bn.
She says there have been “final adjustments” since the announcement last week.
Referring to these changes, she says:
The universal credit standard allowance will increase from £92 per week in 25/26 to £106 pounds a week by 29/30 while the universal credit health elements will be cut to the new claimants by around 50% and then frozen.
Key events
The latest inflation forecasts show that the cost of living will be rising at a faster, more painful, pace than expected this year.
Reeves says the OBR now forecasts inflation will average 3.2% this year (reminder, it was 2.8% in February). Back at October’s budget, inflation was forecast to be 2.6% this year.
In 2026, inflation is forecast to drop to 2.1% – just above the Bank of England’s target, but below the 2.3% inflation rate forecast in the budget.
Reeves says inflation is then seen at around 2% from 2027 onwards.
Reeves confirms OBR has cut growth forecast for 2025 from 2% to 1%
Reeves confirms that the OBR has cut its growth forecast for this year from 2% to 1%. She goes on:
I am not satisfied with these numbers, and 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.
That is a serious plan for growth. That is a serious plan to improve living standards.
Reeves says capital spending is being protected.
She says the last government cut capital spending, and that was a mistake.
Reeves say day-to-day spending to rise by 1.2% a year above inflation, not 1.3% as previously planned
Reeves is now talking about government spending plans.
She says overall day to day spending will be cut by £6.1bn from what was previously planned by 2029/30.
That means it will grow by 1.2% a year above inflation, not 1.3% as planned in the autumn.
Reeves is now talking about plans to cut the cost of running government.
The government wants to cut the cost of running Whitehall by 15% by the end of the decade, saving £2bn.
She says she is announcing £3.25bn of extra investment to reform the way public services are delivered.
This will make public services more efficient and more effective.
Reeves confirms the plans to increase defence spending. (See 8.52pm.)
Here’s a chart showing the new deficit forecasts, compared to the forecasts in last years budget:
Reeves: Fiscal rule still being met in 2029-30
Reeves confirms that she is still meeting her fiscal rule to deliver a current balance in five years’s time (ie, day-to-day spending to be funded by tax receipts), thanks to the decisions (ie benefit cuts) she is taking today.
The latest forecasts show that the headroom to achieve a current balance is still £9.9bn in 2029-30 – without the new measures, Reeves says it would have been a deficit of £4.1bn.
But, the deficit is higher than previously forecast in the next two financial years, with smaller surpluses in the two years after that.
Here are the new forecasts, compared to the numbers the chancellor announced in the last budget:
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2025-26: A deficit of £36.1bn, compared with a £26.2bn deficit forecast in October’s budget
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2026-27: A deficit of £13.4bn, compared with a £5.2bn deficit forecast in October’s budget
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2027-2028: A surplus of £6bn, compared with a £10.9bn surplus forecast in October’s budget
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2028-2029: A surplus of £7.1bn, compared with a £9.3bn surplus forecast in October’s budget
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2029-2030: A surplus of £9.9bn, matching the £9.9bn surplus forecast in October’s budget
Reeves confirms ‘final adjustments’ have been made to plans for disability benefit cuts
Reeves says the welfare changes will save £4.8bn.
She says there have been “final adjustments” since the announcement last week.
Referring to these changes, she says:
The universal credit standard allowance will increase from £92 per week in 25/26 to £106 pounds a week by 29/30 while the universal credit health elements will be cut to the new claimants by around 50% and then frozen.
Reeves says she will raise further £1bn by crackdown on tax avoidance and evasion
Reeves says she will set out the steps she has taken.
The budget protected working people by not raising income tax, national insurance for workers, or VAT, she says.
This statement does not contain any further tax increases, she says.
But it is not right people are evading tax, she says.
The budget contained measures to raise £6.5bn by a crackdown on tax avoidance and evasion by the end of the forecast period.
She says new measures announced today will increase this by £1bn.
The OBR has approved these figures, she says.
Reeves says spring statement cuts will restore £9.9bn budget surplus headroom by 2029/30
Reeves says the OBR’s forecast shows, without the measures announced today, the budget would have been in deficit by £4.1bn deficit in 2029/30.
She says she has acted to restore in full the headroom planned in her budget last year – with a surplus of £9.9bn in 2029/30.
She says that is more than the headroom of £6.5bn planned by the last Tory government.
Reeves turns to the OBR forecast.
In the autumn she set out new fiscal rules, she says.
She says the people have seen what happens when a government borrows beyond its means. She attacks the Truss mini-budget, saying the Tories “crushed the economy”, and ordinary people suffered.
There is nothing progressive about working people paying the price for economic irresponsibility, she says.
She says people voted for Labour knowing they would not take risks with the public finances.
She reminds MPs of the two main fiscal rules.
