Cliff Notes
- Chancellor Rachel Reeves will reveal additional welfare cuts in her spring statement, following a report by the Office for Budget Responsibility indicating the initial reforms will save £3.4bn instead of the anticipated £5bn.
- The new measures are set to include a freeze on Universal Credit incapacity benefits for new claimants until 2030, along with a potential reduction in the basic rate of Universal Credit by 2029.
- Amidst rising public concern over the cost of living crisis and criticism from Labour MPs, Reeves will also announce an increase in defence spending to 2.5% of GDP by 2027, funded by cuts to the international aid budget.
Chancellor Rachel Reeves expected to announce further welfare cuts in spring statement
Rachel Reeves will unveil further welfare cuts in her spring statement after being told the reforms announced last week will save less than planned, Sky News understands.
The Office for Budget Responsibility (OBR) has rejected the government’s assessment that the package of measures, including narrowing the eligibility criteria for personal independence payments (PIP), will save £5bn.
The fiscal watchdog put the value of the cuts at £3.4bn, leaving ministers scrambling to find further savings.
Ms Reeves is now expected to announce that universal credit (UC) incapacity benefits for new claimants, which were halved under the original plan, will also be frozen until 2030 rather than rising in line with inflation
As originally reported by The Times, there will also be a small reduction in the basic rate of UC in 2029, with the new measures expected to raise £500m.
A Whitehall source told Sky’s political editor Beth Rigby that it is “hard to tell how MPs will react”, as while the OBR’s assessment means fewer people will be affected by the PIP changes than thought, they “might be unhappy about the chaotic nature of it all”.
The government did not publish an impact assessment of the crackdown on benefits it announced last week, saying that would come alongside the spring statement on Wednesday.
Several Labour MPs criticised the measures as pushing more sick and disabled people into poverty, while former Labour leader Jeremy Corbyn called the package a “disgrace” on Tuesday and accused the government of imposing austerity on the country.
Additional sources
- Reeves to put £2bn into affordable housing to ‘sweeten the pill’ of cuts – The Guardian
- FirstFT: Rachel Reeves to boost UK defence spending as public debt surges – Financial Times
- Chancellor Rachel Reeves expected to announce further welfare cuts in spring statement – Sky News
- What to expect from Rachel Reeves’s (brief) spring statement – The Guardian
- Rachel Reeves to announce extra £2.2billion defence spending in spring statement – Evening Standard