Your Spring Statement Summary: All You Need to Know
Earlier today, the Chancellor delivered her Spring Statement to the House of Commons, covering the government’s economic plans for the remainder of the parliament. Although she didn’t announce any tax rises, Rachel Reeves did announce cuts to the welfare budget and government running costs. Alongside this, she announced significant investment into areas like defence and housing.
If you missed this afternoon’s statement, don’t worry, we’ve broken down the major announcements that are likely to impact you, your business, and your personal finances.
Tax Changes
Despite slower than expected economic growth, no personal tax rises were announced. Instead, funds are to be raised by improving HMRC technology to tackle tax avoidance, welfare and benefit cuts targeting £4.8 billion in savings by 2030, and general cuts to public spending and services. Additionally, reductions of 15% in administrative costs within government departments are targeted for 2030.
Ensure your tax affairs are compliant and efficient by getting in touch with our accountants.
Economic Reforms
Reeves unveiled the most ambitious planning reforms in decades, which the OBR has claimed will prevent a breach of fiscal rules and permanently boost GDP. The reforms, particularly in planning policy, are forecast to raise real GDP by 0.2% by 2029/2030, adding £6.8bn to the UK economy. Overall, government policies are expected to increase GDP by 0.6% over the next decade.
Despite a downgraded growth forecast for 2025 (from 2% to 1%), growth is projected to rise steadily:
- 2025: 1.0%
- 2026: 1.9%
- 2027: 1.8%
- 2028: 1.7%
- 2029: 1.8%
This will lead to a Cumulative GDP growth for the period between 2024-2030 of 9.4%.
On a positive note, Real Household Disposable Income per capita is expected to rise by 2.6% during this Parliament. This will make households £500 better off per year on average. Reeves described this as the “biggest positive growth impact” the OBR has ever projected for a policy with no fiscal cost.
Welfare Spending
Cuts will, however, be made to welfare spending with the intention of saving £4.8bn a year by 2030. Reeves’ plan for this is to include stricter tests for personal independence payments (Pip) and a freeze on incapacity benefits. She hopes to save £4.8bn through cutting Universal Health credit by 50% and announced a freeze for new claimants.
Public Service Reform (Civil Service)
A £3.25 billion fund will be used to modernise public services, with early spending focused on reducing civil service numbers, investing in AI tools and technologies for probation services, as well as supporting foster care. The reforms aim to cut government running costs and achieve an additional £3.5 billion in annual savings by 2029–2030.
Aid & Defence
Citing growing global uncertainty, the chancellor repeated the need for additional defence spending. As a result, a further £2.2bn was added to the £2.9bn which is due to be spent next year, in line with plans to make military expenditure 2.5% of national income by 2027. Furthermore, investment in new technologies, such as drones and AI capabilities, is hoped to create opportunities for skilled jobs. In particular, areas such as Glasgow, Derby and Newport should see more manufacturing roles, while Barrow will also receive additional investment.
Housing
A key policy area for Labour, Reeves also set out plans to support the construction of 1.3 million new homes, which she hopes will bring Labour close to its goal of delivering 1.5 million homes in England during this Parliament.
Capital Spending
Reeves also declared that the government will increase capital spending by 1.2bn per year.
She believes the UK economy is on track to meet its 2% inflation target, after the (BoE) inflation fell in February. The OBR forecast that CPI inflation will average 2.3% this year, 2.1% in 2026 and meeting the 2% target from 2027 onwards.
Following today’s statement, there will be a further spending review in June. If you are unsure on how any of this affects you as a contractor, Limited Company Director, or Business owner, then please get in touch with our accountants.
Sam Wright
Sam Wright is Danbro’s Marketing Manager. He produces regular content and feature articles on our digital and non-digital channels – and social platforms – for the Danbro Group and its subsidiaries, as well as having responsibility for the Company’s internal and external communications.
His background is in Journalism and Creative Writing, having previously contributed to publications such as The Daily Post, The Lancashire Evening Post, and The Blackpool Gazette.
He is a keen swimmer and avid Manchester United fan (but don’t hold that against him), and he lives in Lancashire with his wife, Sarah.