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A spring budget statement was delivered to the House of Commons by Rachel Reeves, the chancellor of the exchequer, on 26 March 2025.[1]

Background

The 2024 general election resulted in a Labour landslide.[2] Rachel Reeves presented her first budget as Chancellor in October 2024.[3][4] Subsequently, economic growth was less than expected and government bond yields and inflation rose.[5]

The spring statement was expected to focus on public finances, economic growth and the cost of living crisis.[6] The proposed spending cuts were presented to the Office for Budget Responsibility (OBR) on 5 March.[7] On 8 March, ITV News reported that large cuts would be in the statement.[8] Keir Starmer said that he would be "ruthless" in cutting benefits on a visit to Ukraine.[9] These cuts are intended to allow increased defence spending.[10] The Chancellor ruled out further tax rises.[11] Ministers have made the "moral case" for reform.[12] Billions of pounds in welfare cuts were predicted.[13][14] The government had described this as "reducing the welfare bill by getting people off benefits and into work".[15] There were fears from his own MPs of a return to austerity.[16]

There was speculation that Reeves might extend the freeze on tax thresholds beyond 2028.[17] Changes to inheritance tax and Individual Savings Accounts were also expected.[18][19] Expanding of VAT on private school fees for nurseries or university education or private healthcare have been suggested.[20] Spending cuts to government departments is a suggested way of stabilising public finances according to the Office for Budget Responsibility (OBR).[21] Proposed cuts have been supported by the opposition Conservatives.[22] Cuts to Personal Independence Payment have been controversial among Labour MPs.[23][24] Also criticised were David Lammy's cuts to foreign aid.[25] Rachael Maskell warned ministers against "draconian cuts".[26] Former Shadow Chancellor John McDonnell vocally opposes cuts to the Department for Work and Pensions.[27] Secretary of State for Work and Pensions Liz Kendall has pledged large scale reform.[28] She will present a green paper on welfare reform, the largest changes in over a decade.[29][30][31]

Charities including The Trussell Trust, Scope, and Mind wrote a letter to the government opposing the cuts.[32] Many of the new Labour MPs elected at the 2024 general election had campaigned in opposition to Conservative austerity and welfare cuts.[33] 80 MPs were reported as possible rebels on the vote,[34] which would be the biggest rebellion of the Starmer premiership so far.[35] These rebels had been previously critical of the cuts to the winter fuel allowance and the retention of the two-child benefit cap.[36]

On 12 March, the anticipation of welfare changes the issue was raised in Prime Minister's Questions by Ed Davey and Richard Burgon.[37] The same day, all 404 Labour MPs were summoned to Downing Street for a briefing on the spring statement.[38] This vote is considered a significant test of loyalty.[39] The welfare reform is supported by the "Get Britain Working Group" set up by David Pinto-Duschinsky.[40] A letter in support of Liz Kendall's proposals was signed by 36 Labour MPs.[41] Stoke-on-Trent South MP Allison Gardner said her name was added erroneously to the letter.[42] Scottish Labour signatories included Graeme Downie, Blair McDougall, Frank McNally, Gregor Poynton and Joani Reid.[43]

On 17 March, Reeves met with industry regulators.[44] She is expected to announce more plans for cutting regulations, including environmental measures, and abolishing quangos.[44] Starmer and Reeves are under pressure from MPs and charities over benefit changes.[45] Diane Abbott said a wealth tax would be better as cutting disability benefits is "not a Labour thing to do".[46] Treasury minister Emma Reynolds said "there will always be a safety net for the most vulnerable".[47] The proposed cuts will amount to £5–6 billion.[48]

An Institute for Fiscal Studies report showed that the number of people claiming health-related benefits has grown since the COVID-19 pandemic.[49] Between 2002 and 2024, the number of 16–64-year-olds claiming disability benefits increased from 360,000 to 1.28 million.[50] On 21 March, Reeves pledged no return to "tax and spend".[51] This was amid potential cuts to Universal Credit and the Personal Independence Payment.[52]

On 25 March 2025, BBC News Online reported that unannounced cuts to benefits and government departments would be made.[53]

The statement

The spring statement was made at 12:30pm in the House of Commons.[54][failed verification] There was emphasis on increasing defence spending.[53] Major welfare announcements included restrictions on universal credit and its health-related element in particular, and eligibility for personal independence payments. The health-related element of universal credit will no longer be available to young people aged under 22.[55] 10,000 Civil Service jobs are set to be cut.[56] Late payment penalties related to VAT and self-assessed income tax liabilities will be increased from 6 April 2025: the new rates will be 3% of the tax outstanding where tax is overdue by 15 days, a further 3% where either tax is overdue by 30 days, and an additional 10% per annum where either tax is overdue by 31 days or more.[57]

References

  1. ^ "Rachel Reeves squeezes benefits as 2025 growth forecast halved in Spring Statement". BBC News. 26 March 2025.
  2. ^ "General election 2024 results in maps and charts". www.bbc.com. 6 July 2024. Retrieved 13 March 2025.
  3. ^ "Spring Statement: What will be in chancellor Rachel Reeves plan?". BBC News. 9 March 2025. Retrieved 11 March 2025.
  4. ^ "Reeves's tax hikes 'triggering redundancies and record low in business confidence'". The Independent. 17 February 2025. Retrieved 13 March 2025.
  5. ^ Barnett, Jack (17 March 2025). "Spring statement 2025: When is it and what could Rachel Reeves announce?". thetimes.com. Retrieved 17 March 2025.
  6. ^ "What to Expect from the Chancellor's Spring Statement 2025". Charlton Baker. Retrieved 11 March 2025.
  7. ^ Moules, James (5 March 2025). "Spring Statement: Backlash begins as 'politically painful' welfare cuts loom". LabourList. Retrieved 11 March 2025.
  8. ^ Asthana, Anushka (8 March 2025). "Details of more than £6bn in welfare cuts revealed". ITV News.
  9. ^ "Big benefit changes Labour could make in 2025". The Independent. 24 January 2025. Retrieved 11 March 2025.
  10. ^ "Labour MPs Raise Alarm Over Benefit Cuts". Politics Home. 6 March 2025. Retrieved 11 March 2025.
  11. ^ Vaughan, Richard; Merrick, Jane; Singh, Arj; Gye, Hugo (8 March 2025). "'We can't f**k around with benefits': Labour splits over how to pay defence bill". The i Paper. Retrieved 17 March 2025.
  12. ^ "What benefits are being cut and can Keir Starmer push reforms through the Commons?". The Independent. 11 March 2025. Retrieved 17 March 2025.
  13. ^ "Billions of pounds in spending cuts - including welfare - expected in spring statement". Sky News. Retrieved 11 March 2025.
  14. ^ "Labour to cut welfare spending 'by billions' – what changes could they make?". The Independent. 6 March 2025. Retrieved 11 March 2025.
  15. ^ Vaughan, Richard; Hazell, Will (23 February 2025). "Benefits and foreign aid cuts needed to fund extra defence spending, Labour MPs say". The i Paper. Retrieved 17 March 2025.
  16. ^ "Reeves budget: What's in and out of chancellor's 'austerity 2' spring statement". The Independent. 6 March 2025. Retrieved 13 March 2025.
  17. ^ Emery, Ruth (17 March 2025). "Spring Statement: what could Rachel Reeves say about pensions?". moneyweekuk. Retrieved 17 March 2025.
  18. ^ "Spring Statement 2025: From ISA changes to inheritance tax - what to expect from Rachel Reeves". www.gbnews.com. Retrieved 11 March 2025.
  19. ^ Wright, Joe (11 March 2025). "Spring Statement 2025: when is it and what taxes could Rachel Reeves raise?". The Telegraph. ISSN 0307-1235. Retrieved 11 March 2025.
  20. ^ Mason, Callum (7 March 2025). "The changes Rachel Reeves could make at Spring Statement - from ISAs to pensions". The i Paper. Retrieved 13 March 2025.
  21. ^ Doherty, Caitlin (6 March 2025). "Chancellor could have to break one annual fiscal event commitment – experts". The Standard. Retrieved 13 March 2025.
  22. ^ "Chancellor Rachel Reeves set to cut welfare spending by billions in upcoming Spring Budget". LBC. Retrieved 11 March 2025.
  23. ^ "How PIP could be changing as Labour 'looks to cut £5 billion' from the benefit". The Independent. 17 March 2025. Retrieved 17 March 2025.
  24. ^ "UK Government set to unveil 'catastrophic' £6bn in benefits cuts". The National. 8 March 2025. Retrieved 17 March 2025.
  25. ^ Donaldson, Kitty (6 March 2025). "Labour MPs are agitated – and benefit cuts have made it worse". The i Paper. Retrieved 17 March 2025.
  26. ^ "Politics latest: Work and pensions secretary confirms welfare reforms are coming 'imminently'". Sky News. Retrieved 17 March 2025.
  27. ^ Langford, Eleanor (14 January 2025). "Six sickness and disability benefit cuts DWP could make". The i Paper. Retrieved 11 March 2025.
  28. ^ McRae, Isabella (23 July 2024). "DWP to shift focus from benefits to work, Liz Kendall says". Big Issue. Retrieved 13 March 2025.
  29. ^ Fox, Aine (10 March 2025). "Chancellor urged to safeguard disability benefits from welfare reform cuts". The Standard. Retrieved 11 March 2025.
  30. ^ Morgan, William; Howard, Linda (4 February 2025). "Charities urge DWP to consider disabled people's views in benefits reform". Manchester Evening News. Retrieved 11 March 2025.
  31. ^ "Long-term sick to lose benefits and need to search for work in DWP overhaul". The Independent. 3 February 2025. Retrieved 11 March 2025.
  32. ^ "Starmer braces for rebellion over welfare cuts". The Independent. 10 March 2025. Retrieved 11 March 2025.
  33. ^ "Welfare reform is next, but Labour ministers are treading carefully". BBC News. 1 February 2025. Retrieved 11 March 2025.
  34. ^ Donaldson, Kitty (10 March 2025). "Labour rebels are overestimating their numbers - welfare cuts are coming". The i Paper. Retrieved 11 March 2025.
  35. ^ "Labour warned of 'embarrassing' revolt over welfare spending cuts: 'Not going to make a difference'". www.gbnews.com. Retrieved 11 March 2025.
  36. ^ Donaldson, Kitty; Chaplain, Chloe (7 November 2024). "Labour MPs fear looming benefits cuts as claimants still in the dark over reforms". The Independent. Retrieved 11 March 2025.
  37. ^ "Starmer urged to protect disability benefit claimants". BBC News. 12 March 2025. Retrieved 13 March 2025.
  38. ^ "Labour MPs criticise impending benefit cuts - as all 404 MPs summoned to Downing Street briefing". Sky News. Retrieved 13 March 2025.
  39. ^ Watson, Iain; Farley, Harry (12 March 2025). "Disability benefit cuts test loyalty of Labour MPs". BBC News. Retrieved 13 March 2025.
  40. ^ "Bringing It All Back Home". POLITICO. 10 March 2025. Retrieved 13 March 2025.
  41. ^ "Labour MP U-turns on benefit cuts letter". The Spectator Australia. 12 March 2025. Retrieved 13 March 2025.
  42. ^ Green, Daniel (12 March 2025). "MP removes name from colleagues' pro-welfare reform letter amid cuts backlash". LabourList. Retrieved 13 March 2025.
  43. ^ "Scottish Labour MPs say 'moral duty' to reform benefits as Reeves eyes up £6bn cut". The Herald. 10 March 2025. Retrieved 13 March 2025.
  44. ^ a b "Rachel Reeves summons regulators to No 10 in drive for cuts to red tape". BBC News. 17 March 2025. Retrieved 17 March 2025.
  45. ^ "Charities and MPs warn Starmer over benefits changes". BBC News. 17 March 2025. Retrieved 17 March 2025.
  46. ^ Chorley, Camille (17 March 2025). "Diane Abbott rejects Starmer's proposal to cut disability benefits: 'It's not a Labour thing to do'". The Independent. Retrieved 17 March 2025.
  47. ^ "Minister defends planned benefit cuts amid growing Labour backlash". The Independent. 17 March 2025. Retrieved 17 March 2025.
  48. ^ "Trade offs for ministers over towering benefits bill". BBC News. 17 March 2025. Retrieved 17 March 2025.
  49. ^ "The role of changing health in rising health-related benefit claims". Institute for Fiscal Studies. 12 March 2025. Retrieved 17 March 2025.
  50. ^ "The major question thrown up by Labour's benefits plans". BBC News. 17 March 2025. Retrieved 17 March 2025.
  51. ^ "Rachel Reeves says Spring Statement will not 'tax and spend'". BBC News. 22 March 2025. Retrieved 22 March 2025.
  52. ^ "When is the Spring Statement – and what will be in it?". The Independent. 21 March 2025. Retrieved 22 March 2025.
  53. ^ a b "Spring Statement: Reeves to make further welfare cuts but boost defence". BBC News. 25 March 2025. Retrieved 26 March 2025.
  54. ^ Guyoncourt, Sally (26 March 2025). "What time the 2025 Spring Statement is, and how to watch live". The i Paper. Retrieved 26 March 2025.
  55. ^ "Spring Statement 2025: Key points at a glance". BBC News. 9 March 2025. Retrieved 26 March 2025.
  56. ^ "Civil service to axe 10,000 jobs, Chancellor Rachel Reeves says - as she eyes cutting £2bn in costs". Sky News. 24 March 2025. Retrieved 26 March 2025.
  57. ^ H M Treasury, Spring Statement 2025: Policy Costings, p. 22, accessed on 28 March 2025
Allikas: https://en.wikipedia.org/wiki/March_2025_United_Kingdom_spring_statement
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