We were told today’s Spring Statement from chancellor Rachel Reeves would not include tax increases, focussing instead on cutting government spending. This prediction was right!
The announcement coincided with an economic forecast by the Office for Budget Responsibility (OBR) downgrading predicted growth for this year from 2% to 1%. The longer term prediction shows small but steady growth of the economy. The chancellor forecasts a government budget surplus by 2027 – 2028. Today’s changes intend to fuel that growth.
Key Spring Statement Points
- Housing
OBR has forecast that the government’s reforms will boost house building by 170,000 over the next five years, to 305,000. This falls 200,000 short of the government’s pledge to build 1.5 million new homes by the end of 2030.
- Welfare
Health-related universal credit for new claimants has already been cut to £50 per week (from £97). A new top-up will be introduced for people with the most severe conditions.
The universal credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30. According to the government’s own impact assessment, the changes will mean a further 150,000 people will not receive carer’s allowance or the carer element of universal credit.
From November 2026, the main disability benefit, personal independence payments (Pips), will have a stricter eligibility test.
In addition, the under-22s will no longer be able to claim the incapacity benefit top-up.
Defence
The government wants to: “boost Britain’s defence industry and to make the UK a defence industrial superpower”. With this in mind, 2.5% of GDP is to be spent on defence by 2027 with an additional £2.2bn to be spent in 2026.
The commitment is fully funded, with cash coming from Treasury reserves and also from the decision to slash foreign aid funding.
- Public Services
The administrative costs of government departments are to be reduced by 15% by 2030. This involves losing 10,000 civil service jobs, including staff working in HR, policy advice, communications and office management.
‘The Spring Statement was as predicted with few changes impacting commercial businesses,’ says Emily Bridges of re:accounts Chartered Accountants in Stevenage. ‘The welfare changes will impact many people and it will be interesting to see the effect of reducing civil service jobs … on services and the job market.’
How does the Spring Statement impact you or your business? If you have any queries or concerns, talk to the team at re:accounts. We’ll cut through the jargon, offering clear advice … and a coffee.
