‘CATASTROPHIC’: Spring Statement welfare cuts will drive 250,000 more people into poverty

Chancellor ‘delivers security and national renewal in a new era of global change’

Chancellor vows to bring about “new era of security and national renewal” as she delivered a Spring Statement to kickstart economic growth, protect working people and keep Britain safe.
People to be on average £500 a year better off by the end of this parliament compared to under the previous government, putting more money in people’s pockets.
OBR forecast concludes government’s landmark planning reforms will result in a £6.8 billion boost to the economy and housebuilding at its highest level in over 40 years by 2029-30
Growth at the heart of Plan for Change as £13 billion of additional capital spend allocated alongside £2.2 billion defence funding boost next year.

THE Labour government said people will be on average £500 better off from 2029, relative to OBR’s autumn forecast, helping to deliver the Plan for Change as the Chancellor yesterday (Wednesday 26 March) announced a Spring Statement to grasp the opportunities in a changing world.

THEY WON’T. From November 2026, 370,000 people who already get PIP will lose it and another 430, 000 who would qualify now no longer will. These people will lose £4500 a year each. And 150,000 carers who look after them will no longer receive their £83.30 a week Carer’s Allowance.

The OBR has also concluded that the government’s landmark planning reforms will result in UK housebuilding reaching its highest level in over 40 years, bringing the UK one step closer to its Plan for Change mission to build 1.5 million homes.

The government says economy will be 0.2% larger in 2029-30 because of the reforms – worth around £6.8 billion in today’s money – growing to 0.4% over the next ten years. This represents the biggest positive growth effect it has ever forecasted for a policy that comes at zero-cost to taxpayers. The reforms will secure over 170,000 new homes for hard working families and leave borrowing £3.4 billion lower in 2029-30.

The Chancellor also set out how the government is protecting national security and maximising the growth potential of the UK defence sector by confirming a £2.2 billion increase in the defence budget in 2025-26 while ensuring UK defence is on the cutting-edge of technology and innovation.

But growth is still not where it should be, so at this Spring Statement, this government has gone ‘further and faster’ to kickstart growth by training up to 60,000 young people to get Britain building again; increasing capital investment by £13 billion over this parliament; and fixing public services by tearing out waste from its roots.

Growth

Kickstarting economic growth is the number one mission of this government, putting more money in people’s pockets. The government has already made considerable progress; supporting a third runway at Heathrow; revitalising the Oxford Cambridge Growth Corridor, launching the National Wealth Fund and making the right choices on public investment to drive growth across the UK.

The actions of this government across the Autumn Budget and Spring Statement, if sustained, lead to a 0.6% rise in the level of real GDP by 2034-35, signalling the government’s growth plan is working.

The OBR concluded that the stability rule is met by £9.9 billion and the investment rule is met by £15.1 billion. Both rules are met two years early, meaning from 2027-28 the government is only borrowing for investment and net financial debt is falling.

The government is not satisfied with short-term growth figures, and is going further and faster today to improve this:

To go further and faster to get Britain building, the Chancellor has today announced a further £13 billion of capital investment over the Parliament to go further on growth, on top of the £100 billion uplift announced at Autumn Budget. This will deliver the projects needed to catalyse private investment, boost growth and drive forward the UK’s modern industrial strategy – unlocking the potential of the Oxford Cambridge Growth Corridor which could add up to £78 billion to the UK economy by 2035.
Taken together, this greater capital investment more than offsets the modest savings on day to day spending and means the total departmental spending will increase over the next five years, when compared with plans in the Autumn.
Over this Parliament, the government is funding a £625 million package to boost skills in the construction sector, which is expected to provide up to 60,000 more skilled construction workers to support the government’s plans to deliver 1.5 million homes in England over the parliament and progress vital infrastructure projects.
As part of this, the government is providing further support to scale up existing construction skills pathway over this Parliament through £100 million for 35,000 additional training places in construction-focused Skills Bootcamps, supporting trainees, ‘returners’, and existing employees to succeed in the sector. Building on the £40 million investment in the new Growth and Skills Levy at Autumn Budget 2024, the government is also providing a further £40 million to support up to 10,000 more young people to access new construction Foundation Apprenticeships, which will provide a key entry route into a thriving industry.
The government is ensuring there are enough skilled construction workers in the system, with £100 million to deliver 10 Technical Excellence Colleges specialised in construction across every region in England, and £165 million to increase funding for training providers delivering construction courses for 16-19-year-olds and adults.
The government is committed to supporting employers to unlock further investment in training to deliver more skilled construction workers, and is providing £100 million, alongside a £32 million contribution from the Construction Industry Training Board to deliver up to 40,000 industry placements in construction each year.
Supported by the construction skills package, the government confirmed this week that there will be a £2 billion injection of new grant funding to deliver up to 18,000 new social and affordable homes. The new funding will only support developments on sites that will deliver in this Parliament, getting spades in the ground quickly to build homes in places such as Manchester and Liverpool.

Defence

The world is changing before our eyes, reshaped by global instability, including Russian aggression in Ukraine. Europe is facing a once-in-a-generation moment for its collective security, with conflicts overseas undermining security and prosperity at home.

A month ago, the PM announced the biggest sustained increase in defence spending since the Cold War as a result of the changing global picture, now reaching 2.5% of GDP by April 2027, and with an ambition to reach 3% in the next Parliament subject to economic and fiscal conditions.

We are going further and faster to protect our national security and maximise the economic growth potential of the UK defence sector:

Increasing the defence budget by £2.2 billion in 2025-26, taking additional spending on defence to over £5 billion since the Autumn Budget.
This raises spending on defence to 2.36% next year and will be invested in fitting Royal Navy ships with Directed Energy Weapons five years earlier than planned, providing better homes for military families and modernising His Majesty’s Naval Base Portsmouth.
Setting a minimum 10 percent ringfence for equipment spending on emerging technologies like drones and autonomous systems, dual-use technology, and AI-powered capabilities, so that British troops have the tools they need to fight and win in modern warfare.
Getting this new tech into the hands of our armed forces quicker by cutting away bureaucracy, with a new UK Defence Innovation unit within the Ministry of Defence spearheading efforts to identify promising technology and ensure these get to the frontline at speed, while also bolstering the UK tech sector and crowding in private investment.
Creating bespoke procurement processes for different types of military equipment, learning lessons from our rapid support for Ukraine to drive faster timescale targets for operationalising new tanks, aircraft and other essential tools for modern warfare.
This government is determined to transform the defence sector into an engine for growth by focusing this investment on where it boosts the productive capacity of the economy such as investment in innovation and novel technologies. As a result of the increase in defence spending to 2.5%, the government estimates this could lead to around 0.3% higher GDP in the long run, equivalent to around £11 billion of GDP in today’s money.
The government’s investment in defence will also support its number one mission to deliver economic growth. UK citizens will be protected from threats at home whilst creating a stable environment in which businesses can thrive, and supporting highly skilled jobs and apprenticeships across the whole of the UK.

Reform

The government is determined to make the public sector more productive and to improve services for working people. But the changing world means we need to go further and faster to ensure we can deliver the public services that working people care most about.

The government has shown its commitment to taking the difficult decisions required to drive efficiencies and reform the state – including announcing that the world’s largest quango, NHS England, will be brought back into the Department for Health and Social Care, reducing bureaucratic inefficiencies and duplication; and driving out wasteful government spend through cancelling thousands of government credit cards.

Getting more people into jobs is also central to the government’s growth mission. This broken welfare system that is letting people down by asking them to prove what they can’t do, rather than focusing on what they could do with the right support – trapping people due to fear of trying work, lack of support and poor financial incentives.

The social security system will always protect those who can never work, that is why this government is proposing an additional premium that will safeguard their incomes. And will end reassessments for people with the most severe, life-long conditions to give them dignity and security.

Helping more people into work is a central aim of these reforms and which is why the government is tackling incentives to be inactive by abolishing the WCA, rebalancing Universal Credit, and investing more into employment support.

We will always support those with long term health conditions through the Personal Independence Payment, which will remain an important non-means tested benefit for disabled people and people with long term health conditions. But these reforms will make the system more targeted and sustainable to ensure the safety net is there for those who need it most.

The OBR have now set out their final assessment of costings and confirmed this welfare package will reduce welfare spending by £4.8 billion in 2029-/30.

The government will modernise the Civil Service into a more productive and agile organisation that can effectively deliver the Plan for Change, underpinned by a digital revolution, while cancelling thousands of government procurement cards.

Today, the Chancellor has gone further:

The Chancellor has confirmed the creation of a £3.25 billion Transformation Fund to support the fundamental reform of public services, seize the opportunities of digital technology and Artificial Intelligence (AI), and transform frontline delivery to release savings for taxpayers over the long-term.
The Fund will invest in vital public services and accelerate the modernisation of the state by taking the next step to reform the children’s social care system through an additional £25 million for the fostering system. This will include funding the recruitment of a further 400 new fostering households, providing children with stability and addressing cost pressures on local government.
The fund will also support the managing offenders in the community, by providing £8 million for new technology so probation officers can focus on reducing reoffending, rather than filling out forms.
In addition, it will provide £42 million for three pioneering DSIT-led Frontier AI Exemplars. These Exemplars will test and deploy AI applications to make government operations more efficient and effective and improve outcomes for citizens by reducing unnecessary bureaucracy.
To create an agile and productive state we are also providing £150 million for government employee exit schemes. This will support a leaner and more efficient Civil Service, helping to reduce administration costs by 15% by the end of the decade.
The Chancellor also announced a package of measures to close the tax gap, raising £1 billion per year by 2029-30. The UK tax gap was estimated to be around £40 billion in 2022-23.
The Spring Statement earmarks around £80 million in new money for third party debt collectors to bring in £1.3 billion over the next five years – a return of around £16 for every pound spent for UK public services and investment projects. HMRC will also receive £4 million in new funding to pilot a new test and learn programme with the private sector to improve the tax collection agency’s approach to recouping older unpaid tax debt. Ministers will decide whether to proceed with a larger exercise later this year based on the results of this test.
An additional 600 staff will also be recruited into HMRC’s debt management teams. This means that for every £1 spent on these staff, over £13 of debt is expected to be recovered. The staff will work with the private sector to make collecting tax debt more efficient including through automating admin processes.
The Spring Statement also announces £100 million in new funding for HMRC to recruit a further 500 compliance officers from April 2025. This will raise £241 million in unpaid tax over the next five years.
Late payment penalties for VAT and Making Tax Digital for income tax Self Assessment will increase to incentivise taxpayers to pay on time. This will be from 2% to 3% at 15 days, 2% to 3% at 30 days, and 4% to 10% from day 31. This will take effect from April 2025.
As announced in the autumn, Making Tax Digital for income tax Self Assessment will be extended to sole traders and landlords with income over £20,000. The Spring Statement confirms that this additional group will join Making Tax Digital from April 2028. This will build on the existing plan which will see sole traders and landlords with income above £50,000 joining from April 2026, and those with income above £30,000 joining from April 2027. Around 4 million businesses have an income below the £20,000 threshold.

Looking Forward

This Spring Statement builds on the Autumn Budget and the decisions taken since required to deliver stability to the British economy and kickstart economic growth.

The government will set out its plans for spending and key public sector reforms at the Spending Review which will conclude on 11 June 2025.

This will not be a business-as-usual Spending Review. The government has fundamentally reformed the process to make it zero-based, collaborative, and data-led, in order to ensure a laser-like focus on the biggest opportunities to rewire the state and deliver the Plan for Change.

At the Spending Review, the Budget in the autumn and across the Parliament, the government will continue to prioritise growing the economy to deliver change.

RESPONSES:

UK spending cuts ‘risk harm to most vulnerable’

Finance Secretary responds to Spring Statement

Spending cuts announced by the Chancellor risk harming some of the most vulnerable people in society, Finance Secretary Shona Robison has said.

Responding to the Spring Statement, Ms Robison said: “Today’s statement from the Chancellor will see austerity cuts being imposed on some of the most vulnerable people in our society. The UK Government appears to be trying to balance its books on the backs of disabled people.

“Not content with these cuts, the UK Government is still expected to short-change Scotland’s public services on additional employer National Insurance costs to the tune of hundreds of millions of pounds. This will be felt in public services that people rely on up and down the country – services such as our NHS, GPs, dentists, social care providers, and universities.

“The UK Government’s choice to increase defence investment is welcome, but its choices to shortchange public services and deliver austerity cuts to some of the most vulnerable are deplorable.”

TRUSSELL:

Trussell responds to ‘catastrophic’ Spring Statement

Cara Hilton, Senior Policy Manager at Trussell in Scotland, said: “Today’s announcement has incredibly worrying implications for disabled people in Scotland.

“The insistence by the Treasury on driving through record cuts to disabled people’s social security to balance the books is both shocking and appalling. People at food banks are telling us they are terrified how they’ll survive.

“These brutal cuts to already precarious incomes won’t help more disabled people find work, but they will risk forcing more people to skip meals and turn to food banks to get by.

“Cuts come at a cost. Driving up hunger and hardship means more spending on already struggling public services, with increased hospital and GP visits a very likely outcome of these actions.

“Disabled people are already three times more likely to face hunger, and over three quarters of people in receipt of Universal Credit and disability benefits are already struggling to afford the essentials like food. This will only get worse.

“These cruel cuts are out of touch with what voters want from this government. The government says people voted for change in Westminster, but we know that seven in ten voters across political parties agree the social security for disabled people should at least be enough to cover essential living costs. This is a change for the worse, and it is disabled people who will pay the price.”

David, 46, has a bone disease and is terrified by the prospect of cuts to his disability benefits. He has recently been forced to turn to a Trussell food bank for support.

He said: “I am terrified now that the Chancellor has confirmed that my disability benefits will be cut. The bone tumours in my hips cause me pain everyday and force me to use crutches, and in the cold weather my symptoms worsen but I already can’t afford to put the heating on.

” I don’t know how I’ll survive. It’s not my fault I’m disabled, and I shouldn’t be punished for it.

“Life costs more if you’re disabled. Things like specialist equipment and travel to healthcare appointments all add up. PIP – which the government is brutally cutting – is there to account for these extra costs. It is not a luxury, and I shouldn’t need to use a food bank or turn to charities like Trussell for support.

“Cutting my benefits won’t get me back to work – it will just push me deeper into poverty.”

JOSEPH ROWNTREE FOUNDATION

“The Chancellor said today that she would not do anything to put household finances in danger Yet the government’s own assessment shows their cuts to health related benefits risk pushing 250,000 people into poverty, including 50,000 children.

“Their assessment also found:

800,000 will lose PIP according to the OBR
3m will lose money from changes to the main health element of UC, £500 a year for existing claimants, and £3000 for new claimants
£500m will come out of the carers benefits bill as 150,000 lose carers allowance or UC care element.

“The Chancellor said the world has changed, and today’s announcements places the burden of that changing world on the shoulders of those least able to bear the load. These cuts will harm people, deepening the hardship they already face.”

CHILD POVERTY ACTION GROUP:

Responding to today’s Spring Statement, chief executive of Child Poverty Action Group Alison Garnham said: “Stealth social security cuts bring neither stability nor security to struggling families and will push child poverty even higher.

“Growth and better living standards are not achieved by taking money from families with the least.

“Government must invest in social security support – not cut it – for the most vulnerable, or risk being remembered as the Labour administration under whose watch child poverty continued to rise.”

CARERS UK:

STUC:

INDEPENDENT ALLIANCE MPs:

KIM JOHNSON MP:

OCTOPUS ENERGY:

Greg Jackson, CEO of Octopus Energy, said: “It’s good to see the focus on planning and other reforms that can unlock investment to help make Britain more productive and drive growth.

“We were also pleased to see the receipts from the Government’s sale of Bulb to Octopus funding 36,000 homes for armed forces families. It’s a sign of how business and Government can work together for the good of the country.”

FRONT PAGES:

MOMENTUM:

NEW ECONOMICS FOUNDATION:

JEREMY CORBYN:

PRIME MINISTER KEIR STARMER:

THE NATIONAL:

TRADES UNION CONGRESS (TUC):

Responding to today’s (Wednesday) Spring Statement, TUC General Secretary Paul Nowak said: “Labour inherited a toxic economic legacy from the Conservatives. But at the Budget the Chancellor took the right call to invest in repairing our public services and infrastructure.

“To rebuild Britain this approach must continue long-term. In the face of strong global headwinds, we need to keep building stronger foundations at home. That must include protecting the most vulnerable.

“As the last 14 years have shown us – you cannot cut your way to growth. UK taxes are low as a share of GDP. Those with the broadest shoulders must continue to contribute more through a fairer tax system.

“And the Tories’ botched Brexit deal must be improved to boost growth and trade.”

On the government’s social security reforms, Paul said: “Ministers need to rethink their plans. Decisions that affect millions of people’s lives must be made with care – not as a last-minute response to changed fiscal forecasts.

“These changes mean many disabled people – whether they are in work or not – will be pushed into hardship.

“And removing support could even make it harder for some people to stay in their jobs.

“Disabled people need timely access to high quality healthcare, and accessible jobs – particularly in the towns and communities where there are fewest opportunities.”

On the public sector workforce, Paul added: “Public sector workers are key deliverers of national renewal.

“But after 14 years of Tory chaos and ruin, many feel burnt out and demoralised.

“It’s vital the government invests in these workers and recognises the key role they play in improving the services we all rely on.

“Any approach to transforming our public services must include clear workforce plans for every part of our public sector, developed in partnership with staff and unions.”

On the OBR’s growth forecasts, Paul said: “It is time to review both the role of the OBR and how it models the long-term impacts of public investment. Short-term changes in forecasts should not be driving long-term government decision-making.”

UNITE THE UNION:

UK FINANCE:

David Postings, Chief Executive Officer, UK Finance said: “The chancellor’s Spring Statement focused on stability and growth in the UK. We welcome the government’s continued commitment to growing the economy and the financial services sector is committed to playing its part in support.

“Building on recent positive regulatory reform plans, we now look forward to the upcoming Industrial Strategy, which will be key to unlocking further investment and delivering growth through various sectors, including financial services.”

MENTAL HEALTH FOUNDATION:

LLOYDS BANKING GROUP:

Charlie Nunn, Chief Executive Officer, Lloyds Banking Group said: “A safe and lasting home is the foundation for good lives and livelihoods, and we welcome this boost to building much-needed social and affordable homes.

“As the UK’s biggest commercial supporter of social housing, we’re working across the private, public and community sectors to help increase provision of good quality, genuinely affordable housing for those in need.”

UNITE HOSPITALITY:

DAILY MIRROR:

POVERTY ALLIANCE:

Responding to the Spring Statement, Poverty Alliance chief executive Peter Kelly said: “People in the UK voted for change at the last election because they were desperate for a government that delivers a just and compassionate country. Today’s announcements undermine that ambition.

“It is completely unjust to, once again, balance the books on the backs of the those on the lowest incomes. Today’s statement layered additional cuts to our social security system on top of those announced last week. That will have a devastating impact for households across the country.

“The Government’s own analysis shows that these changes will push at least 250,000 people, including 50,000 children into poverty, undermining the forthcoming child poverty strategy before it’s even published.

“These cuts will push people into debt and destitution. They will continue the need for food banks. They will stop people heating their homes, or charging essential medical and support equipment.

“People know that there is no justification for these cuts. It does not have to be like this. The Chancellor could scrap her self-imposed fiscal rules or use our taxation system to raise the revenue needed for the better future we all want to see.

“The UK Government is re-running a failed experiment – austerity will not deliver economic growth. And it certainly won’t deliver a just and compassionate society.”

SCOTTISH HUMAN RIGHTS COMMISSION:

Deep concern about impact of UK Government’s Spring Statement

The Scottish Human Rights Commission (SHRC) is deeply concerned about the impact of announcements on the future of the UK welfare system in the UK Government’s Spring Statement, especially for disabled people and their families and communities.

Plans to cut the health element of Universal Credit will have a direct effect on the human rights of those disabled people in Scotland who are unable to work. Although payments to support people with the additional costs of disability are devolved in Scotland, the UK Government’s proposals will have negative consequences for the Scottish Budget.

Severe economic hardship

Earlier this month, the UN Committee on Economic, Social and Cultural Rights, which holds governments around the world to account for their record on human rights, warned that changes to the UK welfare system introduced since 2012 have “eroded the rights to social security and to an adequate standard of living, disproportionally affecting persons with disabilities, low-income families and workers in precarious employment” and warned that these changes have resulted in “severe economic hardship”.

Last year, the UN Committee on the Rights of Persons with Disabilities reiterated its position that the UK welfare system is leading to ‘grave and systematic’ violations of disabled people’s rights. Over the past week many disabled people, Disabled People’s Organisations and civil society organisations have expressed shock and fear about what further changes to the system could mean for people.

Professor Angela O’Hagan, Chair of the SHRC, says: “With these announcements, the UK Government is not only disregarding the expert findings and recommendations of human rights bodies, but actively pursuing regressive changes that further deteriorate the rights of disabled people in Scotland.

“Indeed, these steps may potentially represent a breach of the UK’s obligations under international human rights law, particularly its duty to progressively realise the rights to social security, an adequate standard of living, and non-discrimination.

“Social security, an adequate standard of living, and non-discrimination are not optional benefits — they are binding human rights that the UK is required to respect, protect, and fulfil for everyone.

“These proposals fly in the face of both the letter and the spirit of the UK’s human rights obligations.”

VOLUNTEER SCOTLAND:

We share the concerns voiced by many third sector organisations regarding the Chancellor’s Spring Statement on Wednesday (writes Volunteer Sotland’s SARAH LATTO).

The significant cuts to health-related benefits have the potential to push more people into financial difficulty. This would create significant additional demand for third sector services and the volunteers that support them.

This comes at a time when the third sector is facing unprecedented pressures, and volunteer participation is in significant decline. Given the reported challenges many organisations are experiencing in recruiting new volunteers, this could add considerable pressure to existing volunteers who give their time to support people in crisis. This is not sustainable and could contribute to a further decline in volunteer participation.

Last week we published research showing that weekly participation in formal volunteering can lead to wellbeing benefits worth an estimated £1000 per person per year.

This same research also found that the effect of volunteering on mental wellbeing for people with a disability or long-term health condition was seven times larger than for people without.

Despite these clear benefits, we are concerned that the announced reduction in welfare spend will prevent many people in receipt of benefits from pursuing volunteering.

Our ongoing research regarding the impact of the cost of living crisis on volunteering suggests that the capacity of many people to volunteer is increasingly diminished.

This is because of competing demands on their time and rising stress or anxiety regarding their finances. The planned changes to welfare spend will likely exacerbate this situation further, meaning many people in receipt of health-related benefits may feel unable to participate in an activity that is likely to improve their health and wellbeing.

As a result, we join many voices from the third sector in urging the Chancellor to rethink her plans around welfare spend.

FRASER OF ALLANDER INSTITUTE:

Spring Statement reaction: a second fiscal event of the year after all

The Chancellor may have tried to portray it otherwise, but her words in the Commons and the length of the scorecard of measures published by the OBR betray a different story: this really was a fiscal event, and a significant one at that.

It was also one where the forecasting process was nowhere as smooth as we hoped it might be given how much hay the Chancellor made out of strengthening the role of the OBR in the Autumn. Instead, we have seen a number of measures either uncertified or included only on a provisional basis, and with no time to evaluate their supply-side effects.

Given how long these measures have been speculated about, the last-minute tweaks and the scramble to announce further welfare reforms to make the sums add up to the £5bn in savings are pretty disheartening. It also makes us wonder about the reasons for announcing the headline amounts last week, before ultimate certification by the OBR.

It is not credible that the Chancellor or the Work and Pensions Secretary were not aware of the OBR’s concerns at the time of the announcement, and so we are left to wonder why figures that weren’t final were bandied about beforehand instead of being left for the appropriate fiscal event.

The underlying picture deteriorated significantly, and so spending cuts have filled the gap

As widely predicted, the Chancellor would have seen her fiscal rules broken had she not made significantly policy decisions, which collectively cut current spending by nearly £9 billion a year by 2029-30.

Chart: How the Chancellor restored her headroom

Source: OBR

Debt servicing costs are the main reason for the deterioration. Higher market interest rates raised the cost of servicing government by just over £10 billion by the end of the decade, more than wiping the starting headroom. Faced with this, and after staking her credibility on complying with the fiscal rules, the Chancellor decided to mostly lean on the spending side of the ledger to essentially get back to where she started.

This means a heavily backloaded set of policy decisions, with spending cuts coming from 2027-28 onwards. Changes to incapacity and disability benefits mostly affect spending from then on, by £1.8 billion in that year and rising to £4.6 billion by 2029-30.

Changes to the path of day-to-day departmental spending also rise to over £5 billion by 2029-30, although some of that is offset by specific investment programmes such as employment support, DWP delivery and HMRC compliance. On net, current departmental spending has been cut by £3.6 billion by 2029-30 relative to plans.

There have also been some increasing in the tax take. Much of it is from compliance activity and tax debt collection, although there are also additional council tax increases allowed in England and increases to passport and visa fees. Receipts are higher by £2.3 billion by 2029-30 because of measures.

But the Chancellor has had to run just to stand still. She is just as close to missing her fiscal rule as she was in October, and that leaves her exposed to any weaknesses or market movements between now and the Autumn. Things may well turn out for the better – but that is far from guaranteed, and it’s as close to a 50-50 bet as it gets.

Chart: Headroom against the main fiscal target since 2010

Source: OBR

What do the announcements mean for the Scottish Budget?

In the very short-term, there is a small amount of additional funding (£28 million) for the Scottish Government in 2025-26 due to a small increase in departmental spending at UK Government level.

Towards the end of the forecast, however, the picture is significantly more challenging in terms of what it means for Holyrood’s finances. The cuts in departmental budgets announced by the UK Government – even after accounting for some consequentials from employment support programmes and DWP delivery of welfare reforms – mean significant reductions in funding for the Scottish Government relative to what was previously included in the forecasts. Of particular significance are the £200 million and £435 million cuts in implied funding for the Scottish Budget in 2028-29 and 2029-30.

The current forecast points to the PIP reforms reducing the block grant adjustment for social security devolution by increasing amounts, from £177 million in 2027-28 to £455 million in 2029-30. This is in line with what we discussed in recent blogs.

Put together, and in the absence of any other changes, the Scottish Budget would be around £900 million worse off on the current side in 2029-30 than previously projected. On the other hand, some additional capital spending on areas which are devolved in Scotland – so aside from the defence spending increases – are expected to raise the Scottish Government’s capital budget by nearly £250 million by 2029-30 relative to current plans.

Chart: Effects of the Spring Statement measures on the Scottish Budget

Source: OBR

There’s still much we don’t know about the welfare reforms

One key policy change from last week’s Green Paper that the OBR have not been able to cost is the removal of the Work Capability Assessment (WCA) that currently determines whether a person is eligible for the Universal Credit (UC) health element. The UK Government have proposed that the PIP assessment will be used instead.

The OBR note the absence of key policy detail, including how entitlement will operate in Scotland where PIP is being phased out. They do state that they expect the policy to have a “material” fiscal impact, both on spending on UC but this could be offset by an increase in people claiming PIP. The labour market response of this (as with most of the other Green Paper policies) is also yet to be analysed by the OBR.

These changes will directly impact on people in Scotland as UC is a reserved policy, but as already noted, how this will happen given that PIP will soon not exist in Scotland, is unknown. The number of people impacted could be significant. The Scottish Government could mitigate this impact through its own social security top up powers but, as with the recently announced mitigation of the two-child limit in UC, would need to be able to find the money to do so from within its own budget.

But distributional analysis shows significant numbers of people will be worse off

Alongside the Spring Statement documents, the UK Government also update their distributional analysis (the differential impact of policies on poorer, middle, and higher income households). The impact of the Spring Statement, the policies from the Spring Statement are added to the policies from the Autumn Statement, making it difficult to isolate the impact of the Spring Statement, although the regressive nature of the welfare measures is clear to see: those in the lower half of the income distribution are facing most of the cuts.

Separately, the UK Government has produced a statement on the impact of the health and disability reforms.

This makes for sobering reading. The impact of changes to the eligibility for PIP will affect 800,000 people who will no longer be eligible for the Daily Living component. They note a further 150,000 people will not receive Carer’s Allowance of the UC Carer element as a result. These numbers are for England and Wales only given that disability benefits are devolved.

These results, on their own, will increase the number of working age people in poverty by 250,000 and 50,000 children. The UK Government are careful to say that these estimates do not account for any employment impact of those who lose benefits subsequently moving into work, and we will need to wait for the OBR to judge on the strength of these employment effects to understand the potential for offsetting of these numbers.

The reduction and or freezing of the UC health element will affect Scottish claimants as well as those in England and Wales. 2.25 million people who are current claimants will be affected by the freeze and 730,000 new claimants will receive the new lower rate and freeze. A further 50,000 working age people will be in poverty as a result of these changes.

There is as yet no analysis of the impact of the abolition of the Work Capability Assessment in UC, and the only impact that is shown is the reversal of a 2023 change to the descriptors in the Work Capability Assessment, which will not apply given the decision to abolish it.

We’ll have to wait until the OBR has been able to look at the whole policy package in aggregate before we understand the full scale of the impact both on the UK and Scotland. But it is clear from what we know so far that this is a package of measures that will raise poverty across the UK.

How does departmental spending look in historical context?

In October, the Chancellor announced significant increases in departmental spending. But we and others also noticed how frontloaded some of those announcements were.

This has been made even more so by the changes at this forecast to the latter years of the projections. Day-to-day departmental spending per person is now forecast to grow by a strong 3.4% in real terms in 2025-26, slowing to 1.5% in 2026-27 and remaining at 0.6% a year for the rest of the decade.

We’ll leave others to decide on words to characterise this path of spending. We’ll instead note that this leaves spending per person only 8% higher than it was in 2007-08. And as a share of national income – a better measure of affordability and of the Government’s prioritisation of the country’s resources – there is a slight increase in spending in the short-term. But day-to-day departmental spending then falls back by 0.4 percentage points by the end of the decade relative to its peak of 16.1 per cent of GDP in 2025-26 and 2026-27.

Chart: Resource departmental spending per person in real terms and as a share of GDP since 2007-08

Source: OBR, FAI analysis

King’s Speech reaction

Speaking after the King’s Speech, Scottish Secretary Ian Murray said: “This is a King’s Speech which will deliver the change our country needs. It will deliver for all four nations of the UK and all four corners of Scotland.

“We have a bold and ambitious legislative programme which will ensure we deliver on our mandate.

“Our plans will deliver growth and jobs for our economy. It will establish GB Energy, a publicly owned energy generation company which will create jobs and cut bills for good, and establish a National Wealth Fund to invest in the industries and jobs of the future.

“The King’s Speech also delivers the biggest transfer of power towards working people in a generation, with new rights on sick pay and redundancy, and better pay. It will ban exploitative zero hour contracts and increase the minimum wage to a real living wage. A better deal for working people, with less insecurity and more money in their pockets, is the first step towards reducing poverty in Scotland and across the UK.

“We have been clear that we want to reset our relationship with the Scottish Government, and to work together to deliver better outcomes for people.

“Our rail ownership bill will ensure that ScotRail is kept in public hands, and we want to work with the Scottish Government to pass laws that will reduce the availability of addictive vapes to young people.

“We promised change. This King’s speech demonstrates we are rolling up our sleeves and delivering that change.”

Bills which will apply in Scotland:

Renters Rights Bill [only in respect of discrimination against tenants on benefits or with children]
National Wealth Fund Bill
Pensions Schemes Bill
Planning and Infrastructure Bill [some measures]
Employment Rights Bill
Passenger Railway Services (Public Ownership) Bill
Railways Bill
Bank Resolution (Recapitalisation) Bill
Product Safety and Metrology Bill
Border Security, Asylum and Immigration Bill
Armed Forces Commissioner Bill
Digital Information and Smart Data Bill
Draft Audit Reform and Corporate Governance Bill
Great British Energy Bill
Sustainable Aviation Fuel (Revenue support Mechanism) Bill
Terrorism (Protection of Premises) Bill [Reintroduced]
Draft Equality (Race and Disability) Bill
Tobacco and Vapes Bill [Reintroduced]
House of Lords (Hereditary Peers) Bill
Cyber Security and Resilience Bill
Commonwealth Parliamentary Association and International Committee of the Red Cross (Status) Bill
Lords Spiritual (Women) Act 2015 (Extension) Bill
Budget Responsibility Bill
Hillsborough Law [Public Candour] Bill [TBC – territorial extent to be determined]

Scotland’s Deputy First Minister Kate Forbes has reiterated the Scottish Government’s intention to work collaboratively with the UK Government to deliver on shared ambitions for Scotland.

Ms Forbes commented on the King’s Speech: ““The Prime Minister has said he wants to reset the relationship with the Scottish Government, respect the devolution settlement and work constructively together.

“I am pleased to see this approach reflected in the King’s Speech, and we will support the opportunities it presents to improve the lives of people in Scotland.

“I look forward to early and meaningful engagement on UK Bills, including the New Deal for Working People. We have been clear in our opposition to the inappropriate use of zero hours contracts and other types of employment that offer workers minimal job or financial security.

“We also welcome the Tobacco and Vapes Bill being taken forward. This is an important step forward in public health, and a four-nations approach will offer more certainty for businesses and consistency for consumers.

“The priorities of the Scottish Government for the year ahead will be announced in the First Minister’s Programme for Government, when he will set out how we will deliver for communities right across the country.”

Commenting on the King’s Speech, STUC General Secretary Roz Foyer: “Pomp and pageantry aside, this is a more progressive programme for government than we’ve seen after 14 years of Tory mismanagement.

“The New Deal for Working People can be the start of a new chapter for workers. If enacted fully, the New Deal gives rights, security and respect to working people throughout the UK. It must now be delivered in full without delay. It is right this is accompanied by a new industrial strategy council.

“We look forward to working with the UK Government to ensure this body is representative and impactful, creating a minimum floor of working rights across every nation of the UK. It’s further welcome that the UK Government finally seeks to legislate further to end the scourge of race-based pay discrimination – working people of all nationalities deserve nothing less.

“This will, undoubtedly, be aided if the Labour Government sticks true to its pledge and seeks to revitalise the devolution settlement through the Council of the Nations and Regions.

As part of this, we must see further powers devolved to the Scottish Parliament, including powers over employment, migration and more.

The siting of GB Energy in Scotland is very positive. We hope it will become more than an inward investment tool and will develop a strategy for direct public ownership to deliver the infrastructure and supply chain jobs we so desperately need.

“The commitment to bring railways back into public ownership is a long-standing demand of trade unions who have fought against the carnage brought by privatisation.

“Economic growth is a welcome, central tenant of this government’s mission. But that cannot be done through the exploitation of working people. The Prime Minister has a job on his hands to restore standards and investment to public life and public services. With the Scottish Parliament elections just around the corner, we look forward to him delivering on his pledges for workers in Scotland.

Commenting on today’s King’s Speech Joanna Elson CBE, Chief Executive of Independent Age said: “Today’s King’s Speech outlined the UK Government’s focus on national renewal and it’s important that this renewal reaches the two million older people currently living in poverty across the UK.

“We are pleased to see the UK Government commit to improving private pensions for future older people who are able to save, including better access to small pension pots, but we also need action for the 150,000 pensioners currently living in poverty in Scotland. Ensuring people have enough money to live with dignity in later life is fundamental in a compassionate society and an essential part of social renewal.

“Right now, we need to see action to increase uptake of social security support for older people on a low income. Currently Pension Credit isn’t received by around a third of older people who should be getting it. In the longer term the UK Government should lead a cross-party review to establish what level of income is needed to avoid poverty in later life and ensure everyone is able to reach it. We are also calling on the UK Government to establish a consistent national social tariff for energy.

“The Scottish Government can also act to reduce poverty in later life, a key first step would be announcing a plan to reduce pensioner poverty in the Programme for Government – expected in September.

“Going forward, in both Westminster and Holyrood, it’s essential parliamentarians work towards the aim of making poverty in later life a thing of the past.”

More than 60 leading local government figures and influential academics came together today for the Saving Local Government Finance Summit to reflect on the legislative commitments in the King’s Speech and to deliberate on how the Government plans to carry out its promises for local government, including devolution and planning reform.

Despite optimism in the air, the consensus at the summit was clear: without significant reforms in funding, particularly for social care, local councils cannot maximise their role in delivering the government’s Five Missions. While not in the King’s Speech for immediate legislative attention, reforming local government funding was considered most pressing, particularly to stem the flow of bankruptcies.

Reflecting on the King’s Speech, Dr Jonathan Carr-West, Chief Executive, LGIU, said: “The Government’s early local government commitments are positive, and the sector welcomes multi-year funding settlements, the conclusion of competitive bid funding and a more collaborative approach from the new government.

“However, the elephant in the room is what’s not being said: local government funding reform. WIth half of all councils at risk of going bust in the next parliament, now is the time to provide sustainable funding and stem the flow of bankrupt boroughs.”

In reaction to the devolution commitments, Dr Carr-West, Chief Executive, LGIU, said: “The regions must have a say in how devolution is rolled out with bespoke solutions available: what works for Cumbria may not for Chingford.

“And while much attention has been on the role of metro mayors, especially with the introduction of the new council of nations and regions, it is essential that central government listens to other democratically elected local leaders.

“Underpinning any devolution roll-out is trust. Central government needs to trust its local counterpart to do its job. Devolution should also help councils win back the trust of the people they serve so that they can build consensus for difficult and contentious decisions that are increasingly necessary.”

On planning reform, Dr Carr-West said: “The briefings before today have pulled in different directions.

“On the one hand, there were those saying the government will liberate councils, by streamlining the planning process, empowering and working together with local leaders to build new homes where local communities want them.

“On the other hand, there were those who claimed the government aimed to bind councils to unachievable targets imposed by the centre.

“As it is, the details we have now are still limited and we’ll need to see – and contribute to – how the plans develop. There is a huge opportunity here to open up planning and expand local growth.”

Specifically on social care, Dr Carr-West said: “The funding of social care is a perennial thorn in the side for every government, central and local.

“This is an issue that demands a solution, and although there was no mention of legislative reform in the King’s Speech, the proposed Royal Commission leaves a vital opportunity to reconsider how social care is funded with local government, service providers, and service users as central to the consultation.”

General Election: Change Starts Now?

Campaigning organisation 38 Degrees said: “This is a momentous election. It is a message from across the UK that people want change. But today is not progress – it is just the chance to deliver it. Labour have won big on a message of change. Now they have to make that change real.

Commenting on the result of the General Election, STUC General Secretary Roz Foyer said: “A new dawn has broken. It cannot be a false one.

“We congratulate Labour on its victory. The new Government can offer hope to workers after 14 years of Tory attacks on our communities, our people and our public services. Through cooperation with the Scottish Government, we can invest in jobs and services.

“The change that the new Prime Minister offered during the campaign must start now. This is day one of his Labour Government. We need decisive action to turn our back on the austerity-driven, public service-slashing, trade union-attacking ways of the Tory past.

“It’s time to rebuild. We will work with the Prime Minister to deliver a progressive Scotland that delivers for working people. He must now deliver for us.”

Responding to the result of the UK general election, David McNeil, SCVO Strategic Director of Development, said: “I would like to offer my congratulations to Keir Starmer on his appointment as Prime Minister.

“There is a pressing need for a more humane politics that puts people and communities first. The new government must move quickly to deliver just that.

“Everyday charities, community organisations and faith groups across Scotland deal with the consequences of decisions made at Westminster – on immigration, social security, employment law, the economy and more.

“Our sector holds a wealth of experience in addressing major societal issues. The knowledge we hold should be seen as an asset to policy and practice design from the outset. This is an opportunity that the new UK government must grasp with both hands.

“It is welcome that, over the weekend, the new Prime Minister and First Minister of Scotland met to commit to improving the relationship between the Scottish and UK Governments. It is our hope that this reset in relations will benefit voluntary organisations across Scotland, and the communities and people that they serve.”

Jonathan Carr-West, Chief Executive, Local Government Information Unit said: “As we witness a change of government, we should be proud of our democracy and grateful to the electoral administrators who make it all happen and to all the candidates, winners and losers, who put themselves up for election.

“We offer special congratulations to all the councillors and council leaders entering parliament.

“We know that local government stands ready to work with the new government and we offer a reminder that national success has local foundations. Labour has set out clear missions for government but these can only be achieved in partnership with local democratic institutions.

“We congratulate the new government and we urge it to set out a new relationship with councils across the country based on genuine collaboration and parity of esteem.”

The Fire Brigade Union said: “Finally, after 14 years of misery, the Tories are gone. Now the work begins to undo the destruction they caused and improve working people’s lives.“

COSLA’s President, Councillor Shona Morrison, has written to the new Prime Minister, Sir Kier Starmer and the Secretary of State for Scotland, Ian Murray, following the announcement of the results of the UK 2024 General Election.

Councillor Morrison said: “Firstly, I would like to extend my congratulations to the new Prime Minister, Sir Kier Starmer. Today I have written to the new Prime Minister and the Secretary of State for Scotland outlining some of the key issues faced by our local government members and the communities they represent.

“We will welcome opportunities to work closely with the UK Government and Scottish Government as partners to improve the wellbeing of people in our communities, continue on the vitally important journey towards a just transition to net zero, and ensure that those in our communities facing the most difficult challenges are fully supported by their local services.

“Our membership, Scotland’s 32 Councils, are the closest sphere of government to people in our communities, and deliver essential services for those communities every day.

“The incoming Government must listen to local government, take into account of our concerns and expertise, and work in partnership with us to ensure there is fair funding and empowerment to make the most effective decisions for the people we are elected to represent.”

First Minister comments on COP28

Recognition of climate crisis is historic, he reckons – but environmental campaigning groups disagree

Commenting on the conclusion of the COP28 summit in Dubai, Scotland’s First Minister Humza Yousaf said: “I welcome the news that an agreement has been reached at COP28, notably, the $700 million committed to address loss and damage and the pledge to transition away from fossil fuels in a just, orderly and equitable manner.

“This recognition that the climate crisis is a fossil fuel crisis is historic. It is disappointing that there was not a stronger resolution committing to the phase-out of all unabated fossil fuels, however we must all now work together to turn these words into action and to keep global warming below 1.5 degrees.

“The agreement on loss and damage represents a significant step forward in the fight for global climate justice. We must, however, recognise that this sum is only a fraction of what will be needed to address the irreversible economic and non-economic losses which are being suffered by developing countries every year.

“We are at a pivotal moment in the fight to tackle the climate emergency and address the devastating effects of climate change – and Scotland will continue to play our part.

“It is absolutely crucial that we have political consensus on climate change – both at home and abroad – and that we work together to make a constructive contribution to addressing this monumental challenge.”

COP28: Weak climate deal slammed

Self-interest, weak leadership and a lack of urgency

Responding to the conclusion of the COP28 climate conference in Dubai, Friends of the Earth’s international climate campaigner, Rachel Kennerley – who has been attending the talks – said: “Self-interest, weak leadership and a lack of urgency by wealthy countries like the UK, Japan and US and the EU bloc, has resulted in a desperately inadequate COP28 resolution that leaves the world on a collision course with the worst of climate breakdown.

“These talks will never achieve the breakthrough we need until the rich countries that have contributed most to the climate crisis, including the UK, face up to their responsibilities by phasing out the use of fossil fuels fairly and fast and by providing adequate funding for poorer nations.

“Rishi Sunak may like to claim that the UK is showing global leadership on this issue, but under his premiership key climate policies have been watered down, his international promise to cut UK emissions by a third has veered dangerously off course and he has declared an ambition to ‘max out’ North Sea gas and oil.

“We urgently need our leaders to seize the huge opportunities growing a green economy would bring, from new, long-term jobs and lower energy bills, to improving our health and wellbeing, as well as protecting the planet for future generations.”

Greenpeace: COP28 sends the signal the fossil fuel industry has been afraid of

The final outcome of the COP28 climate summit in Dubai is not the historical deal the world needs, but it does send the signal the fossil fuel industry has been afraid of: the fossil fuel era is ending.

In response to the final COP28 outcome, Kaisa Kosonen, Senior Political Advisor at Greenpeace International said: “The signal that the fossil industry has been afraid of is there: ending the fossil fuel era, along with a call to massively scale up renewables and efficiency this decade, but it’s buried under many dangerous distractions and without sufficient means to achieve it in a fair and fast manner.

“You won’t find the words ‘phase out’ in the text, but that’s what the equitable transition away from fossil fuels in line with 1.5°C and science will necessitate, when implemented sustainably. And that’s what we’re determined to make happen, now more than ever.

“The outcome leaves poorer countries well short of the resources they will need for renewable energy transition and other needs. For the many goals of the agreement to be realised, rich countries will need to significantly step up financial support and make fossil fuel polluters pay. Only last year the fossil fuel industry made $4 trillion in profits, and they need to start paying for the harm and destruction they have caused.

“This is not the historical deal that the world needed: It has many loopholes and shortcomings. But history will be made if all those nearly 130 countries, businesses, local leaders and civil society voices, who came together to form an unprecedented force for change, now take this determination and make the fossil fuel phase out happen. Most urgently that means stopping all those expansion plans that are pushing us over the 1.5°C limit right now.”

Ghiwa Nakat, Executive Director, Greenpeace Middle East & North Africa, said: “COP28 has sent an unprecedented signal to the world that the starting gun has been fired for the end of the fossil fuel era.

“We commend the efforts of the COP presidency to conclude with a final acknowledgement of the need to transition away from fossil fuels and to mobilise climate finance with more than $700million pledged to the operationalised Loss and Damage Fund.

“But communities on the frontline of the climate catastrophe need more than this. They need to see an unwavering and resolute commitment to a rapid, equitable, and well-funded phaseout of all fossil fuels – together with a comprehensive finance package for developing countries to transition to renewables and cope with escalating climate impacts.

“We leave Dubai knowing that hope is still alive but our mission is far from over!”

Mike Robinson, chair of Stop Climate Chaos Scotland said: “It is hard to feel any excitement about this outcome, and given these talks were hosted by the head of an oil company, many people will be completely unsurprised that the final outcome fails to give any sense of urgency and ignores what the science has been telling us for decades – ‘cop-ping out’ of delivering a long overdue agreement to urgently phase out from the coal, oil and gas that is fuelling the crisis.

“This failure means the world remains on track for catastrophic levels of heating and the debt owed to countries who did least to cause the crisis to help them to cope and recover from extreme climate impacts will only increase.

“The onus is now on individual countries to do what is so urgently needed, and channel their efforts into delivering progress, rather than impeding the necessary change. The UK Government must cancel the new oil and gas licensing round. At the same time, the Scottish Government must clearly and strongly oppose new oil development, and say no to new gas at Peterhead, while swiftly delivering a robust new climate plan that gets us on track to meeting and exceeding our climate targets through a just transition that is fairly funded by making the biggest polluters pay for their damage.”

Fr Leonard Chiti, Jesuit Provincial for Southern Africa and part of the SCIAF delegation at COP28 said: “COP28 has sent a clear signal that the fossil fuel era is coming to an end and that every nation must now redouble their efforts to reduce emissions in line with the 1.5C temperature goal.

“However, it simply has not gone far enough; not urgent enough, not ambitious enough. At the start of COP28, Pope Francis and many others called for the elimination of fossil fuels. This final text does not secure that, and we must now re-double our efforts towards a fossil fuel free future.”

Chancellor unveils ‘a Budget for growth’

CRITICS SAY IT’S A BUDGET FOR THE RICH

Childcare revolution to expand 30 hours free childcare for children over the age of nine months, alongside boosts to subsidised childcare for parents on Universal Credit, including upfront support.
A £27 billion tax cut for business through radical ‘full expensing’ policy and capital allowances reform which will drive investment and growth.
Measures to ease cost-of-living burden will help more than halve inflation, with extension of Energy Price Guarantee and duties on fuel and a pub pint both frozen.
Major set of reforms to support people into work, removing barriers that stop those on benefits, older workers, and those with health conditions who want to work from working.
Inflation falling, debt down and growth up in Chancellor’s Spring Budget for growth that delivers upon the Prime Minister’s economic priorities.

A revolution in childcare, a £27 billion tax cut for business and a trio of freezes to help families with the cost-of-living headlined the Chancellor’s Spring Budget today, Wednesday 15 March.

Aimed at achieving long-term, sustainable economic growth that delivers prosperity for the people of the United Kingdom, the Spring Budget breaks down barriers to work, unshackles business investment and tackles labour shortages head on.

Chancellor of the Exchequer, Jeremy Hunt said: “Our plan is working – inflation falling, debt down and a growing economy. Britain is on a lasting path to growth with a revolution in childcare support, the biggest ever employment package and the best investment incentives in Europe.”

The Chancellor announced 30 hours of free childcare for children over the age of nine months, with support being phased in until every single eligible working parent of under 5s gets this support by September 2025.

The government will also pay the childcare costs of parents on Universal Credit moving into work or increasing their hours upfront, rather than in arrears – removing a major barrier to work for those who are on benefits. The maximum they can claim will also be boosted to £951 for one child and £1,630 for two children – an increase of around 50%.

The Chancellor went on to set out plans to continue to support households with cost-of-living pressures including keeping the Energy Price Guarantee at £2,500 for the next three months and ending the premium that over 4 million households pay on their prepayment meter, bringing their charges into line with comparable customers who pay by direct debit.

Taken together with all the government’s efforts to help households with higher costs, these measures bring the total support to an average of £3,300 per UK household over 2022-23 and 2023-24.

To help household budgets further, the planned 11p rise in fuel duty will be cancelled, maintaining last year’s 5p cut for another twelve months and saving a typical driver another £100 on top of the £100 saved so far.

The generosity of Draught Relief has also been significantly extended from 5% to 9.2%, so that the duty on an average draught pint of beer served in a pub both does not increase from August and will be up to 11 pence lower than the duty in supermarkets. The commitment to duty on a pub pint being lower than the supermarket has been termed the “Brexit Pubs Guarantee” by the Chancellor, and this change will also be enjoyed by every pub in Northern Ireland thanks to the Windsor Framework.

The Chancellor also set out a comprehensive plan to remove the barriers to work facing those on benefits, those with health conditions and older workers. An increase in the pensions Annual Allowance from £40,000 to £60,000 and the abolition of the Lifetime Allowance will remove the disincentives to working for longer.

A new ‘Returnerships’ skills offer for older workers and more stringent Universal Credit job search requirements also feature in the plan that will boost the UK’s workforce, fill vacancies and support economic growth.

In line with the government’s vision for the UK to be the best place in Europe for companies to locate, invest, and grow, a new policy of ‘full expensing’ will be introduced for the next three years to boost business investment in an effective cut to corporation tax of £9 billion per year.

This makes the UK the joint most competitive capital allowances regime in the OECD and the only major European economy to have such a policy. The independent Office for Budget Responsibility (OBR) forecast that this will increase business investment by 3% for every year it is in place.

Mr Hunt signalled an intention to make this scheme – which covers equipment for factories, computers and other machinery – permanent when responsible to do so.

Accompanying forecasts by the OBR confirm that with the package of measures Mr Hunt set out today, the economy is on track to grow with inflation halved this year and debt falling – meeting all of Prime Minister Rishi Sunak’s economic priorities. This comes alongside the confirmation that there are no new tax rises within the Spring Budget.

Childcare

Significant reforms to childcare will remove barriers to work for nearly half a million parents with a child under 3 in England not working due to caring responsibilities, reducing discrimination against women and benefitting the wider economy in the process.

30 hours of free childcare for children over the age of nine months with working parents by September 2025, where eligibility will match the existing 3-4 year-old 30 hours offer.
This will be introduced in phases, with 15 hours of free childcare for working parents of 2-year-olds coming into effect in April 2024 and 15 hours of free childcare for working parents of nine months – 3 years old children in September 2024.
The funding paid to nurseries for the existing free hours offers will also be increased by £204 million from this September rising to £288 million next year.
Schools and local authorities will be funded to increase the supply of wraparound care, so that parents of school age children can drop their children off between 8am and 6pm – tackling the barriers to working caused by limited availability of wraparound care.
Childcare costs of parents moving into work or increasing their hours on Universal Credit paid upfront rather than in arrears, with maximum claim boosted to £951 for one child and £1,630 for two children – an increase of around 50%.
In recognition of both the importance and short supply of childminders, incentive payments of £600 will be piloted from Autumn of this year for those who sign up to the profession (rising to £1,200 for those who join through an agency) to increase the number available and increase choice and affordability for parents.

Employment

The Chancellor set out a comprehensive plan to help people move into work, increase their hours, and extend their working lives, including for those on benefits.

The Lifetime Allowance charge will be removed before being abolished altogether, removing barriers to remaining in work and simplifying the tax system by taking thousands out of the complexity of pension tax.
The Annual Allowance will be increased from £40,000 to £60,000, incentivising highly-skilled workers to remain in the labour market. As a result of the pensions tax measures announced today, an estimated 80% of NHS doctors will not receive a tax charge with respect to accruals under the 2015 NHS career average scheme.
A new ‘Returnerships’ apprenticeship targeted at the over 50s will refine existing skills programmes to make them more accessible to older workers, giving them the skills and support they need to find a recognisable path back into work.
The midlife MOT offer will be expanded and improved to ensure people get the best possible financial, health and career guidance well ahead of retirement. There will be an enhanced digital midlife MOT tool and an expansion of DWP’s in person midlife MOTs for 50+ Universal Credit claimants, aiming to reach 40,000 per year.
A DWP White Paper on disability benefits reform will herald the biggest change to the welfare system in the past ten years, to make sure it better meets the needs of those on disability benefits in Great Britain. This includes removing the Work Capability Assessment, meaning the majority of claimants will now have to do one health assessment rather than two. Reforms will also support claimants to try work without fear of losing their financial support.
A new voluntary employment scheme for disabled people and those with health conditions called Universal Support will be funded in England and Wales. The government will spend up to £4,000 per person to find them a suitable role and cater to their needs, supporting 50,000 places per year once fully rolled out.
Over £400 million plan to tackle the leading health causes keeping people out of work, with investment targeted at services for mental health, musculoskeletal conditions, and cardiovascular disease.
Strengthening work search and work preparation requirements for around 700,000 lead carers of children aged 1-12 claiming Universal Credit in Great Britain.
Increasing the Administrative Earnings Threshold (AET) – which determines how much support and Work Coach time a claimant will receive based on their earnings – for an individual claimant, from the equivalent of 15 to 18 hours at National Living Wage and removing the couples AET in Great Britain. Over 100,000 non-working or low-earning individuals will be asked to meet more regularly with their Work Coach for support to move into work or increase their earnings.
The application and enforcement of the Universal Credit sanctions regime will be strengthened, by providing additional training for Work Coaches to apply sanctions effectively, including for claimants who do not look for or take up employment, and automating administrative elements of the sanctions process to reduce error rates and free up Work Coach time.
Elsewhere, international talent will be attracted through a new migration package that includes adding five construction occupations to the Shortage Occupation List and expanding the range of short-term business activities that are covered under the UK’s six-month business visit visa offer.

Enterprise

The Chancellor put forward a plan to boost innovation, drive business investment and hold down energy costs.

A ‘full expensing’ policy introduced from 1 April 2023 until 31 March 2026 and an extension to the 50% first-year allowance in the same period – a transformation in capital allowances worth £27 billion to businesses over three years.
A £500 million per year package of support for 20,000 research and development (R&D) intensive businesses through changes to R&D tax credits.
Generous reforms to tax reliefs for the creative sectors will ensure theatres, orchestras, museums and galleries are protected against ongoing economic pressures and even more world-class productions are made in the UK.
The Medicines and Healthcare products Regulatory Agency (MHRA) will receive £10 million extra funding over two years to maximise its use of Brexit freedoms and accelerate patient access to treatments. This will allow, from 2024, the MHRA to introduce new, swift approvals systems, speeding up access to treatments already approved by trusted international partners and ground-breaking technologies such as cancer vaccines and AI therapeutics for mental health.
All of the recommendations from Sir Patrick Vallance’s review into pro-innovation regulation of digital technologies, published alongside Spring Budget today, are to be accepted.
£900 million of funding for an AI Research Resource and an exascale computer – making the UK one of only a handful of countries to have one – and a commitment to £2.5 billion ten-year quantum research and innovation programme through the government’s new Quantum Strategy.

Levelling Up

To level up growth across the UK and spread opportunity everywhere, local communities will be empowered to command their economic destiny.

Greater responsibility for local leaders to grow their local economy.
Over £200 million for high quality local regeneration projects in areas of need, from the transformation of Ashington Town Centre to a skills and education campus in Blackburn.
Over £400 million for new Levelling Up Partnerships for twenty areas in England most in need of levelling up, such as Rochdale and Mansfield.
Business rates retention expanded to more areas in the next Parliament.
Delivering trailblazer devolution deals for the West Midlands and Greater Manchester Combined Authorities that include single multi-year settlements for the next Spending Review, alongside a commitment to negotiate further devolution deals in England.
12 Investment Zones across the UK including four across Scotland, Wales and Northern Ireland
£8.8 billion over the next five-year funding period for a second round of the City Region Sustainable Transport Settlements.

Many of today’s decisions on tax and spending apply in Scotland, Wales and Northern Ireland.

As a result of decisions that do not apply UK-wide, the Scottish Government will receive around an additional £320 million over 2023-24 and 2024-25, the Welsh Government will receive an additional £180 million, and the Northern Ireland Executive will receive an additional £130 million.

Scottish Secretary Alister Jack said: “Today the Chancellor has set out a Budget which continues cost of living support and will deliver sustainable, long-term growth, helping us halve inflation and reduce our national debt.

“Maintaining the Energy Price Guarantee until June will save the average family £160 a year and gives certainty over their bills until summer. We’ve also made changes to Universal Credit to help people get back to work.

“Other UK Government direct investment in Scotland includes £8.6 million for Edinburgh’s world-class festivals, more than £1 million for five new vital community ownership projects, and investment in Scotland’s innovative high tech sector. The Chancellor has also confirmed there will be Investment Zones in all parts of the UK, building on Scotland’s two new Freeports.”

STAKEHOLDER REACTION: CHILDCARE

Chris McCandless, European CEO, Busy Bees Nurseries said: “Today’s announcement is a positive step for children, parents and providers of early years education.

“At Busy Bees, we know the difference that a great early education makes to a child’s future and look forward to working with the government on implementing these changes. It’s now critical to ensure this increased funding is used to deliver the most favourable impact on parents and staff, and to generate the desired benefit for the economy.”

Justine Roberts, founder and CEO, Mumsnet said: “This is a hugely significant intervention from the Chancellor. Mumsnet has been campaigning for years for childcare to be recognised as the vital national infrastructure that it is, and to see it at the centre of today’s Budget is testament to the work we have done to drive it up the political agenda.

“We know from our users that the current gap in support between the end of maternity leave and a child’s third birthday means for many women it is simply not financially feasible to return to work.

“This has long term consequences for their careers and pensions, as well as slowing economic growth, so it is welcome that the government has listened to us on this issue and set out a plan to address it.

“We are also pleased that the Chancellor has heeded calls to reform the childcare element of Universal Credit so that it no longer forces parents into debt, and has announced changes to increase the supply of wraparound care to better reflect the needs of working parents.

“That said, there are clearly concerns about whether the funding allocated is actually sufficient to deliver this expanded provision. We would urge the Chancellor to engage with these concerns immediately in order to ensure the offer to families that he has outlined can actually be delivered.”

Joeli Brearley, CEO and Founder, Pregnant Then Screwed said: “The budget announcement on childcare today was the main event in the Spring budget which just shows the power of collective action and we are elated to hear that the childcare sector will now receive a significant investment, and that universal credit will be paid upfront, these schemes will change parents’ lives.

“Parents of young children felt ignored, but this will restore their faith in democracy so we thank Minster’s for hearing our cry and bridging the gap for mothers from the end of maternity leave so that they are supported to be able to work.

“It is imperative that the right investment is made to properly fund the roll out of these free childcare hours. We need to ensure that there is a clear and remunerated strategy to attract more educators into the sector, to retain those workers and to offer progression opportunities.

“Without a workforce plan providers will continue to be forced to close, and increasing ratios will add pressure to an underpaid workforce. The CBI estimates that to do what the government is planning costs £8.9 billion not £4 billion, so we need to see the detail as to how this money is being distributed.

“Free childcare from 9 months is brilliant, but only if there are childcare settings to be able to access this care, without the correct funding and enough childcare staff there won’t be.

“We feel really positive about the future though, and many of the parents we work with feel the same.”

STAKEHOLDER REACTION: CROSS CUTTING

Michael R. Bloomberg, Founder, Bloomberg LP and Bloomberg Philanthropies said: “I am a very big believer in the future of the UK’s economy, including for the financial services sector.

“Whatever the daily headlines, the UK has an enormous amount going for it and even more potential. Bloomberg continues to make major investments here and we remain optimistic that the U.K.’s high-tech, high-skilled economy is well-positioned for long-term growth.”

Matthew Fell, Interim Director-General, CBI said: “This Budget is a strong second act in the Chancellor’s plan for stability and growth.

“The CBI called for action on people and productivity and the government has delivered support for both. Measures to help households and businesses will secure the growth we need to boost living standards for all.

“Full capital expensing will keep the UK at the top table for attracting investment and puts us on an essential path to a more productive economy.

“Boosting childcare provision is a big win for businesses struggling to recruit and retain, and parents balancing care and career needs.

“Alongside support for occupational health to help people stay in work, it shows the Chancellor is listening to business on reducing economic inactivity and easing a tight labour market.

“New investment zones focused on economic clusters will drive growth across the country and increased support for quantum is a further step towards making the UK the science and technology superpower it aspires to be.

“Giving the go-ahead to carbon capture and nuclear are important steps that will keep the UK’s green growth story on track. With our closest rivals raising their game on green growth, moving further and faster in the months ahead is key.”

Kate Nicholls, Chief Executive, UKHospitality said: “With hospitality businesses continuing to struggle with vacancies running at 56% higher than pre-pandemic levels, the measures announced today are significant in incentivising people back into work and hopefully alleviating crippling labour shortages. The wider economic forecasts also give us encouragement that consumer confidence and spending are in for an upturn, albeit over time.

“The significant reforms to childcare and the measures to help the over 50s re-enter the workforce are both areas on which UKHospitality has been calling for action and we’re pleased the Chancellor has recognised the help it can offer tackling the enormous vacancies in hospitality.

“Maintaining current levels of energy support to consumers, freezing fuel duty and inflation reducing will help hard-pressed households and increase disposable income, which will be a huge boost for venues in desperate need of trade.

“This will be particularly needed as the sector is still set to see huge energy price increases when current support ends in April, which unfortunately was not addressed. It remains the case that we need to see urgent action on the market failures identified by Ofgem in its non-domestic review update yesterday. The current timeline of further action by the summer is not good enough.

“The reduction in draught duty is positive and we hope this will incentivise more visits to our pubs, restaurants and hotel bars. Addressing draught duty is a good start and I would urge the Government to consider rolling out this type of tax cut across the wider drinks market.

“With duty primarily paid by suppliers, such as breweries, it’s essential that any benefit is passed through to venues to help deliver the Government’s objective of reducing inflation and growing the economy.”

STAKEHOLDER REACTION: EMPLOYMENT

Dr Vishal Sharma, Chair, British Medical Association (BMA) Pensions Committee and Chair of the Consultants Committee said: “Today’s announcement is an incredibly important step forward and the result of year after year of lobbying and campaigning for changes to pension taxation by the BMA.

“The scrapping of the lifetime allowance will be potentially transformative for the NHS as [the majority of] senior doctors will no longer be forced to retire early and can continue to work within the NHS, providing vital patient care.

“The rise in the annual allowance will mean far fewer doctors will receive large punitive pension tax bills and will significantly reduce the perverse incentive to reduce hours due to pension tax. It’s also very welcome the Government has committed to addressing the anomaly of ignoring any negative pension growth and rectifying this will ensure NHS staff can appropriately utilise their full annual allowance.”

STAKEHOLDER REACTION: ENTERPRISE

Steve Bates OBE, CEO, The BioIndustry Association (BIA) said: “This is a huge boost for biotech companies across the UK developing new medicines and improving healthcare for patients.

“Our research-intensive industry is a key growth area for Britain’s economy. The Chancellor is rightly focusing UK taxpayer support to enable life science entrepreneurs to crowd in more private investment, help keep the UK at the cutting-edge of international science, and create new high-value jobs across the UK.”

A GSK spokesperson said: “The UK has a big opportunity in life sciences, to improve patient care and health outcomes, and support economic growth. Today’s Budget recognises this and includes important measures to help realise this opportunity.

“We welcome the new model and funding for the MHRA to accelerate access to innovative treatments and vaccines for patients and improve the attractiveness of the UK for investment in life sciences research. Giving the MHRA the resources and tools to become a leading global regulator is a key part in capitalising on the UK’s potential in life sciences.

“We also welcome the new scheme on R&D tax credits targeted towards the most research intensive SMEs – this should have a positive impact on the wider UK life science ecosystem.”

Tony Hickson, Chief Business Officer, Cancer Research UK and Cancer Research Horizons said: “The government’s decision to revisit the R&D tax credits for SMEs in the Budget is a shot in the arm to oncology start-ups across the UK.

“At a time when they are facing tough economic challenges, early stage companies need this vital support to accelerate discoveries from the lab to the clinic.

“Spin-out companies play a vital role in translating Cancer Research UK-funded research from the lab into life-saving treatments. Today’s decision by the Chancellor is a vote of confidence in the UK’s outstanding life sciences start-up community, creating the opportunities needed to develop new tests, medicines and advances in healthcare for cancer patients.”

Kerry Baldwin, Founder, Managing Partner IQ Capital said: “The Chancellor’s focus on economic growth, science and innovation are the right priorities and venture has a central role to play in building the economy of the future.

“The announcements of the Long term Investment For Technology and Science (‘LIFTS’) and the 10-year extension and further support to British Patient Capital are positive and central to the UK becoming a science and technology superpower.

“The new regime that will allow innovative SMEs to claim greater R&D tax relief is also welcome, especially for R&D intensive companies creating the next wave of scientific breakthroughs in deeptech and life sciences.”

Julian Bellamy, Managing Director, ITV Studios said: “The UK is a world leader in film and TV and the package of measures announced by the government today, particularly the increase in the expenditure credit and the maintenance of the qualifying HETV expenditure threshold at £1m, will help enable the sector to continue to thrive.

“We’re very grateful that the government responded to the concerns of the sector.”

Kate Varah, Executive Director, the National Theatre said: “We are thrilled that the Government has made the vital decision to maintain the higher rate of Theatre Tax Relief.

“In a period where the sector is navigating ongoing financial headwinds, it means the National Theatre and our colleagues in theatres across the UK can continue to make world-class productions of real ambition that delight audiences, provide jobs, stimulate economic growth and cement the UK as a global leader in culture.”

Adrian Wootton OBE, Chief Executive, the British Film Commission said: “Today’s announcement is a real recognition from the Government of the growth and opportunity our UK Film and High-end TV industry presents.

“The UK’s tax reliefs have directly influenced many productions’ decisions to base themselves in the UK, contributing billions of pounds to the economy and hundreds of thousands of jobs across the UK’s nations and regions.

“With increasingly intense international competition, we’re delighted to welcome this package of measures, futureproofing the UK’s film, High-end TV and animation tax credits and our position as a leading global production hub.”

STAKEHOLDER REACTION: COST OF LIVING

Peter Tutton, Head of Policy, StepChange Debt Charity said: “Today’s budget set out vital support targeted at the millions of households facing real financial difficulty following more than a year of this gruelling cost of living squeeze.

“The extension of the Energy Price Guarantee, the end to extra pre-payment meter fees and the extra childcare support announced will make a real difference to struggling households.”

Jack Cousens, Head of Roads Policy, the AA said: “We are pleased the Chancellor has listened to the AA and frozen fuel duty. Not only will this save drivers ‘heavy duty’ pain at the pump, but will help keep the price of goods and services down as they are mainly transported by road.

“Crippling road fuel costs are also a major driver of inflation.”

Maria Booker, Head of Policy, Fair By Design said: “We’re delighted to see the Government ending the prepayment poverty premium. For too long people on prepayment meters have been paying too much for energy.

“Over 4 million people are charged an extra £45 to access energy, an essential service. This is especially shocking in the context of rising energy bills and the cost of living crisis. The extra costs are particularly unfair as many low income consumers use prepayment meters as it helps them budget using cash.”

STAKEHOLDER REACTION: ALCOHOL DUTY

Dr Katherine Severi, Chief Executive, Institute of Alcohol Studies said: “Cuts and freezes to alcohol duty have cost the public purse more than £8 billion over the past 10 years. Today’s announcement by the Chancellor that most alcohol duties will rise by inflation will raise revenue for vital public services.

“We welcome this decision. With alcohol deaths at their highest level on record, now is more important than ever to focus on improving health by tackling cheap alcohol. It’s high time the alcohol industry started paying its way towards the cost of alcohol harm. We urge the Government to continue to prioritise public health by keeping alcohol duty in line with inflation going forward.”

Nik Antona, Chairman, CAMRA said: “The Chancellor has made a welcome move to increase the draught duty rate discount to 11p, which will help pubs compete with the likes of supermarket alcohol.

“However, the lower tax rate is not coming until August, and we must hope that as many pubs as possible will be able to keep their doors open until then. With many parts of the licensed trade struggling to make ends meet, and consumers tightening their belts, hikes in general duty rates are the last thing breweries need, so it’s right that general duty rates have been frozen until the new system is introduced.”

STAKEHOLDER REACTION: LEVELLING UP

Lord Jim O’Neill, Vice-Chair, the Northern Powerhouse Partnership said: “Nearly a decade on from the devolution deal between Greater Manchester and the then Chancellor George Osborne, which helped kickstart the entire Northern Powerhouse project, this feels like a return to the spirit of that period and a new era for metro mayors and local government.

“Single pot settlements and business rate retention will give mayors greater independence and flexibility, allowing them to plan strategically for the long-term. We must open up a clear pathway for other mayoral areas to secure similar powers in the future.

“It will also lay the foundation for us to go further through fiscal devolution and hand more tax powers to accountable local leaders to tackle the productivity gap that has been holding back the North for decades.”

Andy Burnham, Mayor of Greater Manchester said: “This is the seventh devolution deal Greater Manchester has agreed with the government and it is by some way the deepest. This Deal takes devolution in the city-region further and faster than ever before, giving us more ability to improve the lives of people who live and work here.

“I have always been a passionate believer in the power of devolution, and I’ve been in the privileged position of being able to exercise those powers and make a positive difference to people’s lives.

“We’ve worked hard to secure this Deal and have achieved a significant breakthrough by gaining greater control over post-16 technical education, setting us firmly on the path to become the UK’s first technical education city-region; new levers and responsibilities to achieve fully integrated public transport including rail through the Bee Network by 2030; new responsibilities over housing that will allow us to crack down on rogue landlords and control over £150m brownfield funding; and a single block grant that will allow us to go further and faster in growing our economy, reducing inequalities and providing opportunities for all.

“With more power comes the need for great accountability and I welcome the strengthened arrangements announced in the Deal.

“While we didn’t get everything we wanted from the Deal, we will continue to engage with government on those areas in the future. For now, our focus will be on getting ready to take on the new powers and be held to account on the decisions we will be making on behalf of the people of Greater Manchester. Today is a new era for English devolution.”

Andy Street, Mayor of the West Midlands and Chair of the West Midlands Combined Authority (WMCA) said: “This announcement is a major step forward for the West Midlands with significant new powers and funding secured.

“We’re deepening devolution by building on previous deals and further empowering local leadership with the financial autonomy and decision making authority that they are best placed to deploy. No one in Whitehall can understand the West Midlands better than local leaders, and so there is no doubt in my mind that we should be able to shape our own future – which is exactly what this new deal will allow us to do.

“I recently called for an end to the ‘begging bowl culture’ which confined us to regularly submitting bids for various pots of money in competition with other regions. I’m pleased to see that this new devolution deal goes some way to addressing that – giving us guaranteed devolved funding to spend how we choose, akin to what Government departments have currently, and doing away with Whitehall micromanagement.

“Since 2017, we’ve demonstrated a solid track record in building more homes whilst protecting the green belt, improving peoples’ skills to help them find quality work, increasing transport investment sevenfold and tackling the climate emergency. This is why the Government is trusting us and granting us greater responsibility – and accountability – to deliver even more.

“Today is a milestone day for the West Midlands, and I am delighted we have been able to work together as a team to get this Deeper Devolution Deal over the line.”

A ‘missed opportunity’ for meaningful action

Swinney says Spring Budget falls short on vital lifelines

SCOTLAND’s Deputy First Minister John Swinney has described the UK Government’s Spring Budget statement as “another missed opportunity” to help households, businesses and public services through the cost of living crisis.

He said Chancellor of the Exchequer Jeremy Hunt had failed to deploy the full range of powers available to him to mitigate the impact of soaring energy prices and high inflation.

While welcoming a number of individual measures such as the extension of the energy price guarantee – and with a typical household’s monthly energy bills set to rise by almost half from March to April – Mr Swinney said substantive actions such as restoring the Universal Credit uplift were notably absent.

He also called for the UK Government to inflation-proof the Scottish Government’s budget so it can better co-ordinate spending across Scotland.

Mr Swinney said: “This UK Budget is another missed opportunity to take meaningful action to lift families out of poverty, invest in our public services and help businesses so that our economy can grow.

“Instead, the UK Government should have taken more substantive action to increase the Scottish Government’s budget so we can better align spending and deliver for people and organisations right across Scotland.

“While reversal of the planned increase in the energy price guarantee is welcome, with the end of the energy bills support payments, typical household monthly bills will still rise by more than half from March to April, at a time when wholesale energy costs are falling.

“Rising interest rates combined with reduced support means some people are expected to experience a larger fall in living standards this coming year than they have over the last 12 months.

“An uplift on Universal Credit and extending this to legacy benefits would have made a meaningful difference to households struggling to make ends meet.

“The limited additional money for the Scottish Government’s Budget is welcome but will not go far enough and in the long-term our capital funding will fall in real-terms. Without extra funding, we will have to find money from within the Scottish Budget to invest in public services, provide fair pay rises and help people with the cost of living.

“The Scottish Government is doing what it can with its limited powers to ensure people receive the help they need, but the UK Government’s could have done far more to ease the burden affecting so many, demonstrating yet again why Scotland needs the powers of independence.”

TUC: Budget 2023 – was that it?

Today’s budget saw the Chancellor speak about a high-wage and high-skills economy but do nothing to deliver it (writes TUC’s GEOFF TILY). The UK is still in the longest pay squeeze for more than 200 years. And our public services are still run-down and understaffed.

There was no plan to get wages rising across the economy. Real wages will not return to 2008 levels until 2026. And the elephant in the room was the lack of funding for our public services and the pay rises needed to recruit and retain nurses, carers and teachers.

The Chancellor should have announced measures to boost secure jobs, pay and skills. He should have provided a fully-funded workforce plan across our public services to recruit and retain key workers. And he should have set out an investment plan to rebuild our services – from fixing school buildings that are falling apart to restoring public health services. Apart from some long overdue steps forward on childcare, workers across the economy will have looked at this Budget and thought ‘was that it?’

Pay crisis

Appealing to a “high wage high skills economy”, the Conservatives continue to preside over the longest pay crisis in modern history. On current forecasts real pay will fall by 1.0 per cent in 2023, before beginning to grow again in 2024. But even with this growth, real pay will not return to its 2008 level until 2026 – an 18-year pay squeeze that could outlast the government that has spent the past thirteen years taking no action to address it.

This pay squeeze has hit workers’ pockets hard. If real pay had grown by the pre-2008 rate since 2008, workers would’ve been £233 per week better off in 2022 than they were. This gap is set to widen to £304 per week by 2027.

Graph: Real total average weekly earnings

Beyond pay, the OBR forecasts real household disposable income (RHDI) per person, a measure of living standards, to fall by six per cent between 2021/22 and 2023/24. This is the steepest two-year decline since records began in the 1950s.

Before 2010, RHDI per person had only fallen in five of the 54 years since records began. Between 2010 and 2025, it’s set to fall six times.

Graph: year on year change RHDI per person

Unending growth failure

According to today’s OBR forecast, the Chancellor’s ‘plan for growth’ will deliver growth over the next five years that is only only 0.1 percentage point higher than growth between 2009 and 2019 – widely acknowledged as a decade of stagnation. Even if the forecast is delivered, the conservatives will have presided over the two worst recoveries in a century.

Graph: Growth in recovery over the past 100 years

The forecast benefits from reduced concerns about recession. But it’s early days on this – the backdrop to his speech is a steep 3.8% decline in the stock exchange today – reacting to newly exposed dysfunction in the financial sector.

And this poor performance will have real consequences for workers. Unemployment will rise from 1.3 million this year to 1.5 million throughout the rest of the forecast.

Failing to deliver

In our Budget statement we asked the Chancellor to invest in public services and the workers that deliver them, and to put workers before wealth.

We asked the chancellor to boost pay across the economy, but astonishingly he did nothing to address the public sector pay crisis.

There was nothing to boost get us on a path to a a £15 minimum wage as soon as possible, or to set up the fair pay agreements we know we need to drive up fair pay across the economy.

We wanted a plan for strong public services and fair taxation:

Battered by inflation and recruitment crises, the chancellor did not mention public services. He offered none of the new funding desperately needed to recruit the nurses, carers and teachers that our public services rely on.

The Chancellor declined to extend the windfall tax on firms profiting from the gas price crisis, even though Big Oil firms fully doubled their profits last year. At the same time, many employers – from small business to big paper mills – have already faced closure due to spiking energy prices. But the Government has declined to extend its energy bills support package for employers.

Long overdue announcements on childcare follow years of union campaigning. But without improved conditions for childcare workers, recruitments and retention challenges could make delivery impossible.

We wanted workers (not the wealthy) protected from hardship

Pressure from unions and broader civil society has worked – the Government agreed to keep the Energy Bills Guarantee at £2,500 for the average household for a further three months, after which energy prices are expected to fall below this level. The Government also finally ended the unfair premium paid on energy by households on pre-payment meters.

But there is nothing in this budget – and in the Government’s existing commitments – to restrict bills sky-rocketing again. No new funding for upgrades to our leaky, draughty homes. And despite announcements to support nuclear energy and carbon capture and storage, there is nothing to expand the supply of clean energy in the next few years.

In spite of the severity of the cost-of-living crisis and the dramatic weakening of provisions over a decade of austerity, the chancellor did nothing on social security protections (beyond the childcare support in universal credit). Instead he further ramped up the already harsh sanction regime for those looking for work and on low earnings.

The work capability assessment will not be missed. But given the government’s track record, we cannot be sure that the new proposals for disabled people will be any better.

Remarkably, however, to fix a quirk in our system of tax relief on pension contributions that pushes some senior doctors into early retirement, the Chancellor scrapped limits on how much individuals can save for retirement tax free over a lifetime.

This indiscriminate measure, together with increases to annual limits, is projected to hand around £4 billion to the wealthiest savers over the next five years. These tax breaks will make it easier for the rich to use pensions as a vehicle for passing on wealth without paying inheritance tax, but do nothing to help most workers save for retirement. With a quarter of over-50s unlikely to achieve even a minimum retirement income, extra incentives should have targeted low earners.

We wanted a plan for sustainable growth that creates decent jobs

The most expensive line in the budget is the announcement of 100% expensing of qualifying capital investment for the next three years. This is predicted by the OBR to cost an average of £9.1 billion per year – over £27 billion in total. The measure means that companies will be able to deduct 100% of qualifying capital investment against their tax bill in the year of investment.

Measure to encourage UK businesses to raise their stubbornly low rates of investment are certainly needed. However, the question with this proposal is whether it will encourage additionality in business investment – or will simply hand public money to companies for investment that would have taken place anyway. Given the huge predicted costs to the scheme, this question is critical to whether it can be judged a success.

The OBR notes that the super-deduction, which this new measure replaces, raised business investment by less than originally expected, saying: “we overestimated its dynamic benefits”. Given the temporary nature of the new measure, the OBR expects it to bring forward investment that is currently planned and to have a smaller peak impact on investment than its predecessor super-deduction.

The measure must be judged by the additionality it creates in terms of levels of business investment and whether this is a sustainable, rather than temporary, effect.

Rather than simply splurging money, the government should reform how business is regulated to encourage long-term, sustainable growth. We need corporate governance reform to encourage companies to prioritise sustainable, long-term investment and decent jobs over short-term shareholder returns.

This means reforming directors’ duties to remove the priority given to shareholder interests and requiring that worker directors comprise one third of the board at large UK companies. These reforms would encourage sustainable business models based on long-term investment and decent work, and would help to ensure that government investment incentives are well used by businesses, with the benefits shared with those who work for them.

And the UK’s manufacturing and process industries were sorely lacking any mention in the Budget. Indeed, when the Chancellor outlined his ambition for the use if Levelling Up investments, the example given as a success was Canary Wharf: hardly hopeful for people who work in real economy jobs in held-back regions now.

The headline commitment to increase defence spending lacked any reference to jobs this spending could generate – meaning any industrial benefit is likely to be offshored once again.

And while the Government did confirm its intention to invest into Carbon Capture, Use, and Storage, this does little to secure the future of the rest of the UK’s heavy industries. Industrial strategy – and a proper strategy to navigate the climate transition, protecting jobs and livelihoods along the way – is still lacking.

‘Was that it?‘ – a Budget with no ambition, more of the same at best, and basically ignoring the most pressing problems facing the UK.

Commenting on the Budget, Jonathan Rolande, spokesman for the National Association of Property Buyers said: “If you were hoping the Budget might make it easier to move home – it hasn’t. Jeremy Hunt has left the UK property market to sort itself out, taking no steps to guide it in any direction whatsoever. The ‘baked-in’ unfairness continues.

“Right now not enough homes are being built, mortgages are up, rents are up and rentals are becoming more scarce. It is almost impossible to rent and save a deposit. There is a growing inequality between those with property (or well-off parents) and those without.

“Many feel they have no hope of ever owning their own home with the benefits and stability that brings

“Mr Hunt has, perhaps for financial reasons or for political expediency taken the much longer-term view. Enabling young parents to return to work will feed through into increased borrowing ability. Increasing pension thresholds will allow the Bank of Mum and Dad to offer higher loans and gifts to their children.

“For the short to medium term, opportunities to level the playing field have been missed. He could have rebalanced Stamp Duty to free up property stock, penalised developers who sit on land waiting for price growth, and offered tax breaks for landlords who insulate their tenant’s homes or offer long-term lets. None are especially expensive and each would have an immediate and positive impact on property buyers and society as a whole.

Mr Rolande added: “The impact of the housing crisis is at the heart of many of the issues that vex the government right now. A lack of homes makes people less tolerant of immigration. Poorly insulated homes are bad for the environment and increase inflation. Disenfranchised younger people feel they have a lesser role to play in society. And many put off having children because they can’t afford the right home, and others cannot pursue dreams of a better job because they can’t afford to live in an area where pay and conditions are better.

That’s why it is all the more surprising that a Conservative has not taken the opportunity to create more homeowners, something generally thought to make people more likely to vote blue.

For me, this Budget will be more about what wasn’t done, than what was. Those who were hoping for good news on housing, will now have to wait another long year to find out what crumbs of comfort might be thrown their way.”

Individuals earning over £300,000 are the secret winners of Chancellor Hunt’s budget

Nimesh Shah, CEO at leading tax and advisory firm Blick Rothenberg said, “The secret winners from Jeremy Hunt’s Budget are individuals earning over £300,000.

“Whilst all the pension headlines are around abolishing the lifetime allowance, hidden away in the detail of Jeremy Hunt’s Budget is an increase to the minimum tapered allowance to £10,000, up from £4,000 – this is the minimum level of tax relievable pension contributions.

“The £6,000 increase will be worth an additional £2,700 of tax relief to someone earning over £360,000. Quite perversely, a minority of very high earners will be some of the biggest winners from today’s Budget announcements.”

Gove: Levelling Up invitation to ‘join forces for the common good’

The Secretary of State for Levelling Up Michael Gove has written to the First Ministers of Scotland, Wales and Northern Ireland following the publication of the Levelling Up White Paper.

In the letters the Secretary of State for Levelling Up:

discusses the publication of the Levelling Up White Paper
calls for the First Ministers of Scotland, Wales and Northern Ireland to work with the UK government to overcome shared challenges

The Scottish Government is yet to respond.

LEVELLING UP: REACTION

Responding to the publication of the levelling up white paper, TUC General Secretary Frances O’Grady said: “If we don’t level up at work, we won’t level up the country.

“But the government has failed to provide a serious plan to deliver decent well-paid jobs, in the parts of the UK that need them most.

“Insecure work and low pay are rife in modern Britain. And for far too many families hard work no longer pays.

“With the country facing a cost-of-living crisis, working families need action now to improve jobs and boost pay packets – especially after more than a decade of lost pay.

“Ministers should have announced a plan to get real wages rising – starting with a proper pay rise for all our key workers and the introduction of fair pay deals for low-paid industries.

“And they should have delivered the long-awaited employment bill to ban zero hours contracts – as well as new, meaningful investment in skills and good green jobs of the future.

“Without a plan to deliver decent work up and down the country, millions will struggle on, on low wages, and with poor health and prospects.”

Recent polling published by the TUC found the British public’s number one priority for levelling up is more and better jobs.

The TUC polling, conducted by YouGov, reveals that the most popular priority for levelling up, chosen by one in two Britons, is increasing the number and quality of jobs available.

Increasing the number and quality of jobs is popular across the political spectrum. Half (49 per cent) of those who voted Conservative in the 2019 general election picked it as their top priority, along with more than half of Labour voters (56 per cent) and Lib Dem voters (54 per cent).

Matthew Fell, CBI Chief Policy Director, said: “The Levelling Up White Paper is a serious assessment of the regional inequalities which have hamstrung the UK’s economic potential for generations.

“It offers a blueprint for how government can be rewired and an encouraging basis for how the private sector can bring the investment and innovation to start overcoming those deep-rooted challenges, and power long term prosperity for every community, wherever they live.

“The picture it paints of a reinvigorated 2030 UK can inspire public and private sector partners to unite on shared missions for improving health, wealth, growth and opportunity across the country.

“Crucially, it accepts the CBI view that business-driven economic clusters – enabling every region and nation to build its own unique competitiveness proposition – can be a catalyst which brings levelling up ambitions to life.”

University of Birmingham’s John Bryson on the Levelling Up announcement: “The UK has always suffered from uneven development and this is reflected in all measures of well-being – from salaries to place-based differences in mortality rates and morbidity.

“There is no country on this planet that does not suffer from some form of uneven place-based outcomes. The implication is that any attempt to remove place-based uneven outcomes will and must fail. The policy outcome might mean some alteration in the extent or degree of unevenness, but unevenness will continue to persist.

“No political party will be able to develop effective solutions to create a level playing field. Nevertheless, this does not mean that policies should not be designed to support and facilitate some form of more even development. However, the outcome will still be the persistence of uneven outcomes.

“The key to any levelling-up agenda is to accept that every place is different and that there are multiple alternative place-based pathways; London can never become Newcastle and Newcastle can never become London.

“The levelling-up agenda needs to be positioned around a debate that is not based on closing the gap between the richer and poorer part of the country, but instead must be framed around facilitating place-based responsible inclusive prosperity.

“This must be the focus as any policy targeted at economic growth can never be sustainable. The levelling-up policy initiative ultimately must be designed to encourage inclusive carbon-light lifestyles. One implication is that levelling-up might also require some degree of levelling-down.”

Campbell Robb, Nacro chief executive said: “We know tackling poverty and inequality is key to levelling up. For over 50 years Nacro has been embedded in communities helping some of our nation’s most vulnerable people through our housing, education, and justice services.

“We see a huge amount of unmet need in our country. We need radical change to the systems that support people and significant funding to address this need, not just ambitions and slogans.

“Until there is right support, opportunity, and funding in place for everyone to succeed regardless of the circumstances, we cannot truly claim to be levelling up”

Torsten Bell, Chief Executive of the Resolution Foundation, said: “We now know what levelling up is – George Osborne plus New Labour.

“The White Paper is all about combining the devolution of the former Conservative Chancellor, with the bigger and more activist state focused on deprived areas of the last Labour government.

“There is a strong case for both. Whether they can be delivered very much remains to be seen.”

Responding to the publication of Government’s Levelling Up the United Kingdom White Paper, Social Mobility Commission Chair Katharine Birbalsingh and Deputy Chair Alun Francis said: “We welcome the publication of the Levelling Up White Paper, and the fact that it gives a clear framework to address disparities between regions and communities.

“These communities are full of talented individuals and we must do everything we can to empower them to thrive. Each of the missions the paper sets out are hugely important, and it is crucial that checks and balances are in place to ensure that local government bodies, both existing and new, are held to account for their delivery.

“The Commission has been clear that social mobility must be a core objective of levelling up. We are pleased to see that equipping young people with the tools they need to succeed in life is at the heart of this strategy, and that it includes measures that can contribute to social mobility through every stage of a young person’s journey, from early childhood through education, training and employment.

“The missions are aspirational and pose the right questions, but are also hugely ambitious. The test will be in the detail and the implementation – not just boosting skills, but which skills will be taught and how; not just aiming for essential literacy and numeracy, but defining the most effective ways to achieve them.

“Ultimately, levelling up will be judged on how well it creates opportunities in places they did not exist before. A key test will be how we help those with the fewest opportunities find decent work – this is not just about stories of rags-to-riches. More still needs to be done to stimulate the creation of much-needed quality private sector jobs in the most deprived areas.

“As the Social Mobility Commission we stand ready to work with the government to flesh out that detail, advise on the best ways to make these missions a reality, and ensure that levelling up empowers people up and down the country to stand on their own two feet.”

Finally, after months of delays, the levelling up White Paper is out! So was it worth the wait?

Levelling Up White Paper leaves low paid workers behind

As the TUC has argued, you can’t level up without levelling up at work. In-work poverty, driven by the prevalence of low-paid and insecure work, is sky-high in every region and nation of the UK. This reflects the fact that low-paid sectors, such as retail and social care, are major employers in every area of the country (writes TUC’s JANET WILLIAMSON).

And more and better jobs is the public’s top priority for levelling up, with recent polling for the TUC conducted by YouGov finding that increasing the number and quality of jobs is seen as a priority for levelling up by one in two people from right across the political spectrum. Does the White Paper deliver this?

The White Paper sets out 12 missions – or aims – spanning living standards, R&D, transport, digital connectivity, education, skills, health, well-being, pride in place, housing, crime and local leadership. There is not a specific mission on work, but the living standards mission is “By 2030, pay, employment and productivity will have risen in every area of the UK, with each containing a globally competitive city, and the gap between the top performing and other areas closing.”

So, what is the plan for achieving this?

In a nutshell, it is to grow the private sector and improve its ability to create new and better paid jobs. There are five strategies to support this aim, all of which fall under a typical ‘industrial strategy’ umbrella: improving SME’s access to finance; boosting institutional investment, including from the Local Government Pension Scheme (LGPS) and the recently established National Infrastructure Bank; attracting foreign direct investment and using trade policy, in particular freeports, to boost investment; improving the diffusion of technologies and innovation; and supporting and growing the manufacturing sector.

There are some important questions to be answered in relation to some of these strategies; for example, it is vital that the LGPS is invested in the long-term interests of its members, without its funds being diverted towards other purposes. And each deserves proper examination in its own right.

But what they have in common is that all of them aim to create a better distribution of well-paid and highly skilled jobs around the country. This is needed – but what about the jobs that people are already in? There is no plan to address inequality within the labour market and nothing to level up work that is low paid and insecure.

The experience of London shows that the prevalence of high-paid jobs does not automatically lead to rising incomes for the wider community. Indeed, London has the highest rate of in-work poverty in the country, with people in low-paying service sector jobs priced out of housing and local amenities.

To level up, we must tackle low pay and insecurity head on, and focus on those sectors that need it most.

We need to strengthen the floor of employment protection for all workers by raising the minimum wage and tackling zero hours contracts. And the government should lead by example, giving public sector workers a proper pay rise and reversing the devastating cuts that public services have suffered in the last decade. Decent jobs should be a requirement of all government procurement, so that the power of government is used to drive up employment standards.

But we also need to change the way our economy works to hardwire decent work into business models and economic growth. Relying on the private sector to level up without changing how it works will fail. We need corporate governance reform to rebalance corporate priorities and give working people a fair share of the wealth they create. And we need a new skills settlement to give working people access to lifelong learning accounts and a right to retrain.

Levelling up at work means addressing the imbalance of power in the workplace

Working people need stronger rights to organise collectively in unions and bargain with their employer. Collective bargaining promotes higher pay, better training, safer and more flexible workplaces and greater equality – exactly what we need to level up at work. Unions should have access to workplaces to tell people about the benefits of unions, following the New Zealand model.

And to level up we must tackle entrenched low pay and poor conditions within sectors head on, bringing unions and employers together to set sectoral Fair Pay Agreements for low paid sectors, starting with social care.

Creating new and better jobs is important; but this Levelling Up White Paper has left those in low paid, insecure work behind.