Three key points from the Spring Statement – and the three things Rachel Reeves DIDN’T say

THE Chancellor unveiled her Spring Statement today – but what does it mean for you?

Rachel Reeves focused her speech on reducing public spending rather than increasing taxes, as she seeks to balance Britain's finances.

The government faces the challenge of finding £5billion in annual savings, and last week she unveiled a series of benefit cuts aimed at closing the gap.

Amid a bleak economic outlook, the Chancellor took aim at Britain's swollen welfare budget, slashing it by £3.4billion through major reforms to personal independence payments (PIP) and Universal Credit.

However, the Office for Budget Responsibility (OBR) has warned that these measures fall short of addressing the broader challenges.

The economic watchdog forecasts inflation will rise, peaking at 3.8% in July this year, before gradually easing to 2.1% by 2026.

Unemployment is also expected to climb, with the rate predicted to reach 4.5% in 2025, up from 4.3% in 2024.

Despite these headwinds, the OBR projects that the measures announced in the Spring Statement will lead to a surplus in Treasury finances, with £6billion forecast for 2027-28 and £9.9billion by 2029-30.

So, what was announced today and what does it mean for your pocket?

Key announcements in the Spring Statement:

• No new tax rises: The Chancellor ruled out further tax hikes and pledged to crack down on tax avoidance, aiming to raise an extra £1bn.
• Growth downgraded for 2025: The OBR halved its GDP growth forecast for next year from 2% to just 1%.
• Growth boost from planning reforms: New housing policies expected to raise GDP by 0.6 per cent over the next decade.
• Housebuilding surge: 1.3 million homes expected over five years, with construction hitting a 40-year high.
• £2.2bn extra for defence: Additional funding confirmed to help meet the 2.5 per cent of GDP defence target.
• £400m Defence Innovation Fund: Backing new tech like drones and AI for the front line.
• Welfare shake-up: Targeted employment support and welfare reform to reduce benefit spending.
• Civil service cuts: New voluntary exit schemes and AI tools to shrink Government.

1. EVEN MORE BENEFIT CUTS

The Department for Work and Pensions (DWP) announced a significant overhaul of the benefits system last week, aimed at encouraging more people to return to work.

The reforms include tightening eligibility criteria for claiming PIP and streamlining the process for Universal Credit claimants seeking incapacity payments.

Giving her Spring Statement, the Chancellor said: “If you can work, you should work...

“More than 1,000 people qualify for PIP every single day.

“And one in eight young people are not in employment, education or training.”

However, Reeves unveiled additional reductions to Universal Credit's incapacity payments today.

For existing claimants, the monthly payment of £416.19 for individuals deemed to have limited capability for work and work-related activity will remain unchanged, with the rate frozen at this level until 2030.

But it was confirmed today that from April 2026, all new claims will see this amount halved to £208.10 per month – equivalent to approximately £50 per week – and this reduced rate will also be frozen until 2030.

Reeves today said the measures are predicted to claw back £4.8billion a year for the Government with changes to eligibility for PIP set to account for the largest proportion of savings.

Other changes to welfare previously announced include:

• Merging jobseeker's allowance and employment support allowance, with a system that awards higher payments to those who have a work history compared to those who have not.
• Abolishing the Work Capability Assessment (WCA) by 2028, with all health-related payments to be transitioned to PIP in the future.
• Banning under-22s from claiming incapacity benefits under Universal Credit entirely.
• Temporarily introducing an above-inflation rise to Universal Credit's standard allowance (until 2029), for a single person aged 25 and over, this will result in a £14 weekly rise from April 2026 – an increase from the current £92 per week to £106 per week.
• Raising the eligibility threshold for PIP, achieving £3.4billion in annual savings.
• Launching a “Right to Work Guarantee”, allowing unemployed individuals to attempt returning to work without losing benefits if they find it unsustainable.

2. CHANGES TO CHILD BENEFIT

Buried within the Spring Statement documents, the Government announced plans to simplify the process for parents claiming child benefit to pay the surcharge fee.

Currently, parents earning over £60,000 who claim Child Benefit are required to submit a self-assessment tax return to account for the high income child benefit charge.

However, Rachel Reeves will launch a new digital service letting mums and dads pay the surcharge directly through their PAYE code.

Child benefit is worth £1,1331.20 for the first child and £881.40 for each additional child, with the amount rising by 1.7% in April 2025.

Parents face a 1% tax on their child benefit for every £200 earned above £60,000, with the benefit gradually reduced until it is completely withdrawn for those earning over £80,000.

3. PAY RISE FOR THREE MILLION

Millions of workers are set to receive a pay rise of £1,400 per year starting next week.

During her Spring Statement, Rachel Reeves announced that the Government will increase the National Living Wage by 6.7%, effective from next Tuesday, April 1.

She told the Commons during her address: “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 3million people a pay rise from next week.”

However, it was rather cheeky of the Chancellor to highlight this, given that the pay rise was originally confirmed in the Autumn Budget in October

What wasn't mentioned?

Millions of savers can breathe a sigh of relief as Rachel Reeves chose not to introduce significant changes to ISA rules in the Spring Statement.

Although ISAs were not explicitly mentioned during her announcement, accompanying documents released afterwards suggested that potential reforms could still be on the horizon.

Currently, individuals can deposit up to £20,000 a year into an ISA, with all returns – regardless of the amount – remaining completely tax-free.

Speculation had arisen that the allowance for cash ISAs, the most popular type of account, might be slashed to £4,000.

However, the Spring Statement documents clarified the Government's intentions, stating that future reforms aim to “get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission”.

So, while no immediate changes have been made, the possibility of adjustments in the future has not been ruled out.

Drinkers and pub landlords alike will be raising a glass to Rachel Reeves today, as she chose to leave alcohol taxes untouched in her Spring Statement, as expected.

Decisions on alcohol duty will only happen in the Autumn Budget.

These widely unpopular charges typically rise each year in line with inflation, as was the case in February.

Much like drinkers, smokers can also breathe a sigh of relief, as the Chancellor made no mention of increasing cigarette duties in her announcement, as per expectations.