Agreement reached with key stakeholders on the unfair dismissal elements of the Employment Rights Bill
ANOTHER MANIFESTO PLEDGE DITCHED?
The UK Government convened a series of constructive conversations between trade unions and business representatives.On the basis of the outcome of these discussions, the Government will now move forward on the issue of unfair dismissal protections in the Employment Rights Bill to ensure it can reach Royal Assent and keep to the Government’s published delivery timeline.
This will mean delivering day one rights to sick pay and paternity leave in April 2026 as well as launching the Fair Work Agency. Reforms to benefit millions of working people, including some of the lowest paid workers, would otherwise be significantly delayed if the Bill does not reach Royal Assent in line with our delivery timetable. Businesses too need time to prepare for what are a series of significant changes.
The discussions concluded that reducing the qualifying period for unfair dismissal from 24 months to 6 months (whilst maintaining existing day one protection against discrimination and automatically unfair grounds for dismissal) is a workable package. It will benefit millions of working people who will gain new rights and offer business and employers much needed clarity.
To further strengthen these protections, the Government has committed to ensure that the unfair dismissal qualifying period can only be varied by primary legislation and that the compensation cap will be lifted.
As a result of these constructive conversations, tabling of the necessary amendments, and a commitment by the Government to a robust process to ensure full, fair and transparent consultation and discussion on the detail and application of the secondary legislation, businesses and unions agree that the Bill can progress.
This will enable the Government to deliver the necessary consultations and implementation in line with its timetable and manifesto commitments to Make Work Pay.
The Government was pleased to facilitate these discussions and to set an example of the benefits of working together, and remains committed to continue engaging with trade unions, business and employers to make working lives better, support businesses and, vitally, deliver economic growth and good job creation.
The Government is particularly aware of the need to support small businesses in the effective adoption of these changes. Constructive dialogue and full consultation with business, employers and unions will continue beyond the passage of the Bill.
The TUC said: ‘Government will reduce the qualifying period for full protection from unfair dismissal from two years to six months. There’ll also be no statutory probation period.
“The Employment Rights Bill is essential to better quality, more secure jobs for millions of workers. The absolute priority now is to get these rights – like day one sick pay – on the statute book so that working people can start benefitting from them from next April.
“Following the government’s announcement, it’s now vital that Peers respect Labour’s manifesto mandate and that this Bill secures Royal Assent as quickly as possible.”
Challenges in jobs market have been “long in the making”, says TUC – as it calls for ambitious policy response
The number of payrolled employees has fallen by 127,000 over the past year, but the pace of recent falls has slowed.
The employment rate rose slightly to 75.2% from 75.1%. The unemployment rate has risen to 4.7% from 4.6%, but this is offset by welcome falls in the inactivity rate to 21.1% from 21.4%.
Youth unemployment is falling and is now 11.6%, down compared to the same period last year (13.3%)
Real wages grew by 1.2% but real and nominal pay growth are both slowing
Commenting on the latest labour market data, which show some tentative improvements alongside ongoing challenges, TUC General Secretary Paul Nowak said: “Fragilities in the jobs market have been long in the making and are another toxic Tory legacy.
“But there are some positive signs. It is welcome that both economic inactivity and youth unemployment are down.
“And the government has started to lay the foundations to reset our economy with significant investment in public services, stronger workers’ rights and improving the support people need to get into work.
“But the government must build on this with a national jobs guarantee for young people. There are still too many young people stuck out of work, education and training.
“We know that real experience of paid work is the best way to turn the tide on long-term worklessness – and that over time this investment will more than pay for itself.”
TUC calls for a national jobs guarantee for young people to build on the government’s Youth Guarantee.
NEW analysis reveals that supporting 300,000 young people through the scheme would pay for itself within a decade and deliver over £8bn of benefits in the years after – at a cost benefit ratio of 2.8 to 1.
Young people let down by 14 years of toxic Tory rule in urgent need of decisive action, TUC says.
On Wednesday, the TUC called for an ambitious national jobs guarantee for young people currently not in education, employment or training (NEETs).
The UK faces a growing crisis in young people’s labour market participation which spiralled under the Conservatives, the TUC warns.
The TUC says this not only has damaging consequences for young people’s prospects – but for the country as a whole.
The government has “laid the foundations” to turn this around – starting with a youth guarantee programme to ensure every young person aged 18-21 has access to learning, an apprenticeship or support to find a job, which is being trialled in regions up and down the country.
The TUC says this should be built on with a national jobs guarantee, which prioritises young people aged 18-24 who have been not in employment, education or training (NEET) for six months or longer and young people aged 18-24 who are at high risk of becoming long-term NEET.
This would offer young people experience of a real good quality job with a real wage; opportunities to gain new skills; and an employer reference – “game changing” factors for young people approaching the labour market.
National jobs guarantee
While a national jobs guarantee would need upfront investment, TUC modelling estimates that in the long term the cost-benefit ratio would be 2.81, with the scheme paying for itself within a decade.
Setting out potential options for a national jobs guarantee for young people:
100,000 placements in a 2-year period would cost £1.03bn but return £2.9bn.
200,000 placements in a 2-year period would cost £2.06 bn but return £5.8bn.
300,000 placements in a 2-year period would cost £3.1bn but return £8.7bn
The TUC says the national jobs guarantee must be designed to promote good work including by:
Being paid decently, either at the national minimum wage or union negotiated rate for the job
Meeting local labour market needswith additional roles – so that money is only used to create jobs that would not have been created in the absence of a scheme, ensuring jobs guarantee participants don’t replace existing workers.
Delivering quality training that puts workers on a pathway to a Level 3 qualification and ensure the worker gets experience that will enable them to move into permanent work.
Being sustainable, so that the placement could transition into an apprenticeship, or with a guaranteed job interview at the end.
Ensuring quality work which adheres to health and safety law, is accessible and promotes equality, has clear minimum standards for quality and access to a union.
The placements should be allocated proportionately across regions, so there are a greater number of placements in areas where young people face the highest risk of becoming NEET.
Tory legacy
The TUC says the Conservatives failed to support young people throughout the pandemic and ever since, leading to a sharp rise in the number of young people out of work, training and education – leaving yet another toxic Tory legacy for this government to deal with.
Almost a million young people aged 16-24 in the UK are currently not in education, employment or training (NEET), with the total reaching 948,000 in August 2025 – up from 800,000 in 2019.
The TUC says that overall disabled young people are the most affected by this crisis as they’re far more likely to be NEET (28.6%) compared to non-disabled young people (7.1%).
TUC analysis also shows that there is a growing number of young people who are being failed by unsupported or poorly designed opportunities.
Analysis of destination data for 16–18-year-olds who left education in 2022-23 found that a year later 14.8% of them had entered work, education or training but had not completed or continued it. This is up from 12.9% in 2017-18– and is far higher for those on free school meals at 26.8% and SEN young people at 25.9% in 2022-23. The TUC says this shows the need for high quality support in education and workplaces.
Another example of the toxic Tory legacy is the proportion of young women and men who have become NEET since the pandemic.
Overall, while rates among both groups have been growing, young men (from 11.8% in April – June 2019 to 13.1% in April – June 2025) are more likely to be NEET than young women (from 11.3% in April – June 2019 to 12.4% in April – June 2025). Young women however are more likely than young men to be economically inactive – not working nor looking for a job.
Other risk factors identified by the TUC include:
Having a below a Level 2 qualification. This is significant as, according to TUC analysis, 30.9% of 24-year-olds do not have Level 2 English and Maths qualification.
Having unpaid caring responsibilities
The TUC says the government should build on the positive progress in its Make Work Pay agenda to make sure more good jobs and training opportunities are accessible to all young people, particularly disabled young people and young women with caring responsibilities.
TUC General Secretary Paul Nowak said: “Under the Conservatives, young people were failed with many let down by the education system and stuck out of work, education and training.
“This toxic Tory legacy has hugely damaged young people’s prospects – and for the country as a whole too.
“With the youth guarantee, stronger employment rights, an industrial strategy and apprenticeship reforms, the government has started to turn this around.
“It’s now time for ministers to build on this progress with a national jobs guarantee for young people. We know that real experience of paid work is the best way to turn the tide on rising rates of worklessness – and that over time this investment will more than pay for itself.
“Young people across the country need access to high-quality training and decent, well-paid work – boosting their prospects and the wider economy as a whole.”
NEW polling shows significant support for package of wealth taxes and taxes on financial institutions right across political spectrum
Public welcome wealth taxes as a vital means to fund public services and build a fairer Britain
Implementing wealth taxes improves government’s standing with public and key voters
TUC general secretary says voters want a “grown up” conversation about reforming tax system
New analysis from the union body reveals tens of billions can be raised through a windfall tax on banks
The TUC has today published new polling which shows the public overwhelmingly back a package of taxes on wealth, bank and gambling companies to fund our public services and rebuild Britain.
There is significant support for implementing a package of higher taxes on wealth, gambling and banks to:
Deliver real growth in school budgets so every school has enough money for textbooks, basic repairs and equipment: 78% support these changes, funded by a wealth tax package, while just 13% oppose
Reduce NHS waiting lists so that by 2029 we meet the target of more than 90% of people who need care for a non-urgent condition receiving it within 18 weeks: 82% support these changes, funded by a wealth tax package, while just 12% oppose.
Deliver a major cash boost for local services to improve bin collections, leisure centres and libraries: 77% support these changes, funded by a wealth tax package, while just 15% oppose.
Ensure more investment in community policing, to tackle anti-social behaviour and improve community cohesion: 79% support these changes, funded by a wealth tax package, while just 13% oppose.
Voters across the political spectrum, including Reform-leaning voters, back several different options for raising taxes on the wealthiest and financial institutions:
Raise capital gains tax to the same level as tax on wages from employment: 51% support and 34% oppose. This rises to 68% support among Conservative to Labour switchers in the 2024 general election and 57% support among Labour voters from the 2024 election now leaning to Reform.
A windfall tax on the profits of banks and other financial institutions 66% support and 21% oppose. This rises to 83% among Conservative to Labour switchers in the 2024 general election and 73% among Labour voters from the 2024 election now leaning to Reform.
Higher taxes on online casinos, gambling machines and sports betting 71% support and 19% oppose. This rises to 84% among Conservative to Labour switchers in the 2024 general election and 74% among Labour voters from the 2024 now leaning to Reform.
A 2% annual wealth tax paid by people with assets worth more than £10 million 68% support and 22% oppose. This rises to 79% among Conservative to Labour switchers in the 2024 general election and 75% among Labour voters from 2024 now leaning to Reform.
And as a package of measures, these wealth, gambling and bank taxes have huge popular and cross-party support:
More than 2 in 3 (68%) support this package of measures as a whole – while just 23% oppose
This rises to 84% supporting and 14% oppose among Conservative to Labour switchers from the 2024 general election.
It rises to 74% – with just 22% opposing – among 2024 Labour voters who are now leaning to Reform.
Separate new polling from the union body also shows the government’s standing with the public would improve if they implemented taxes on wealth to fund public services.
The polling shows taxing wealth to deliver better public services:
Boosts the perception that the government is “trying to improve things” from 19% to 34%
Boosts the perception that the government is “delivering change” from 19% to 34%
The TUC says voters will reward the government if they invest in public services and fund it through wealth taxes.
Grown up conversation
The TUC says the public wants a “grown up conversation” about tax – and they fundamentally want a fair system which invests in vital public services to fix broken Britain.
The union body says the findings demonstrate that the public know that tax rises are needed to pay for vital services – and in this context they are overwhelmingly supportive of getting those with the broadest shoulders to pay their fair share.
The public also wants a fairer system. While cutting NHS waiting lists was the top reason for the public being on board with tax rises (chosen by 64%), closing tax loopholes came second (49%).
There is also widespread support for a modernised and simplified system – three in four support (73%) such reforms, including 83% Labour to Reform switchers.
The union body says the government must continue to build on the vital investment in public services and infrastructure announced in the Budget.
The country is “crying out for sustained investment” after years of Tory neglect – and faces real risks with growing global uncertainty, decimated public services and living standards hammered.
Windfall tax on banks
New TUC analysis shows that an increase in the bank surcharge – a tax on bank profits – could raise significant funds over the coming years.
In recent years, banks have made significant unexpected profits because of increased interest rates. This has led to higher returns both from net interest (the difference on interest charged to borrowers and paid to savers) and interest paid to banks on reserves they hold at the Bank of England.
As a result, bank profits are now higher than they were in the period before the financial crisis. But under the Conservatives, taxes on banks were slashed. An increase in the bank surcharge could raise between £20-50bn over the next four years:
A 16% surcharge, which is doubling what it originally was before the Conservatives cut it, would deliver £20bn
A 35% surcharge, which would be the same level as the windfall tax the Conservatives imposed on energy companies, would deliver £50bn
Even just reversing the Tory cuts and setting it at 8% – which the TUC says is the “bare minimum” – would raise £8bn over four years.
Profits have risen significantly from pre-pandemic levels and OBR forecasts show that profits will remain high over coming years.
Banks made £37bn of profit in 2023-24, up by 41% from £26.3bn in 2019-20. More recent figures from Positive Money show the big four banks made £45.9bn profits in 2024 and £24.1bn in just the first half of 2025.
TUC General Secretary Paul Nowak said: “After more than a decade of Tory neglect, this country is crying out for investment – in our schools, NHS and local services.
“The public overwhelmingly want investment to deliver better services right across the country – whether it’s cutting NHS waiting lists so patients can get the prompt treatment they need or funding schools so our kids have the right books and resources.
“And they want fair taxes too. People have had it with a system where those with the broadest shoulders don’t pull their weight.
“The public are behind tax reform so that the wealthy, banks and gambling companies pay more – they know this will deliver better services and a fairer society.
“It’s time for a grown-up conversation about tax – that’s what voters want, and it’s what they deserve.”
Retired women have to struggle with £7,600 a year less than men on average.
Women approaching retirement have only built up half as much in a workplace or private pension as men.
More action needs to be taken to close the gap for women set to retire in the years ahead.
The recent revival of the Pension Commission is a much-needed opportunity to ensure that in the future everyone receives a decent retirement income.
The gender pension gap in the UK means that retired women effectively go over four months each year without getting a pension – the equivalent of losing out on £7,600 a year on average.
This means that compared to men, retired women effectively stop receiving pension income from yesterday (Thursday 21 August), the TUC warns.
The income gap between men and women in retirement is now 36.5%, according to research from Prospect union – more than double the level of the gender pay gap (currently 13.1%).
Reasons for the gap
The TUC says that the main drivers of the gender pensions income gap are:
Unpaid caring responsibilities: women are five times more likely than men to be out of paid work to look after children, elderly or disabled family members – missing out on workplace pension contributions as a result. BME and disabled women are among the worst impacted – respectively at seven and nine times more likely than White and non-disabled men to be out of work due to caring responsibilities.
Gender pay gap: across their working lives, women persistently earn less than men and therefore accrue lower pension contributions. In particular, women are three times more likely than men to earn below £10,000 – the threshold for employers to have to put workers into a workplace pension.
State pension: historic differences in state pension have left currently retired women with lower state pensions on average.
Lasting solutions
The TUC has highlighted three key solutions for narrowing the gender pension gap for women retiring in the future:
Addressing the gender pay and employment gaps. This should include improving childcare and social care, continuing to strengthen rights to work flexibly as well as reforming the parental leave system to enable more equitable sharing of caring responsibilities. The Employment Rights Bill – which will introduce a right to request flexible working from day one of employment – and the Parental Leave and Pay Review are important opportunities to achieve changes.
Reforming the occupational pension system so that people on low pay don’t miss out on employer’s pension contribution. This should include phasing out the £10,000 automatic-enrolment earnings threshold that excludes many women from workplace pensions and paying pension contributions from the first pound of earnings.
Ensuring the pension system better recognises the value of unpaid caring and addresses the penalty faced by those who take time out of paid work because of caring responsibilities. This should include introducing a Carer’s Credit in addition to existing National Insurance credits for carers, to replace lost workplace pension contributions. This would mean carers qualify for extra state pension to replace some of the workplace pension they miss out on building up.
The Pension Commission
Last month, the Government revived the Pension Commission, which will bring together unions, employer and independent experts to look into the causes of the gap, among other issues.
It aims to reach a consensus on long-term changes needed to ensure that millions of people benefit from a more secure retirement – including women.
And where consensus already exists – like calculating pension contributions from the first pound of earnings and bringing more young workers into auto-enrolment – the government should press ahead quickly.
This is a much needed opportunity to ensure that everyone receives a decent retirement income and the gender pension gap is closed.
TUC General Secretary Paul Nowak said: “Everyone deserves dignity and security in retirement. But right now, too many retired women have been left without enough to get by.
“We must make sure that these inequalities are addressed for future generations.
“That’s why reviving the Pensions Commission – bringing together unions, employers and independent experts – is a vital step forward.
“We now have a chance to make sure everyone, including women, receive the decent retirement income that all workers need.”
Prospect Senior Deputy General Secretary Sue Ferns OBE said: “The Gender Pension Gap is very slowly moving in the right direction but without a more concerted effort millions of women will continue to suffer from unequal earnings in retirement for much of the rest of this century.
“The first step was the success of Prospect’s campaign for the government to recognise and measure the Gender Pension Gap. The next step is for government to show the way as an employer and take real action to close the gap by adopting trailblazing reforms across all public sector pension schemes.
“That the gender pay gap sits at 14% is unacceptable, for the gender pension gap to be more than twice that is nothing short of disgraceful and shames a society that doesn’t take action.”
Union body accuses Conservative and Lib Dem Peers of “doing the bidding of bad bosses” by voting to keep workers on zero hours contracts and allowing employers to sack workers unfairly
TUC urges government to “stand firm” as the Employment Rights Bill is set for parliamentary ping pong
The TUC has told Conservative and Lib Dem Peers to “get out of the way” and “stop trying to block” stronger rights for millions of workers.
The union body is urging the government to “stand firm” in the face of cynical attacks on the Employment Rights Bill, with the Bill set for parliamentary ping pong after Peers tried to dilute key workers’ rights in the Lords last week.
The TUC says the Tories and Lib Dems are doing the bidding of bad bosses by voting to keep workers on zero hours contracts and allowing employers six months to sack workers unfairly.
Conservative and Lib Dem Peers also voted to attack teaching assistants’ pay and exempt voluntary work on heritage railways from restrictions on employment of children.
The Bill will return to the House of Commons in September for MPs to consider the Lords’ amendments. The two houses will continue to vote on amendments in a process known as “ping-pong” until a way forward is agreed.
The TUC points out that a significant number of the Conservative Peers trying to block stronger rights for workers are Hereditary Peers.
Many of the amendments to the Bill seek to overturn the Labour government’s manifesto commitments, something the House of Lords has traditionally avoided.
Defying their own voters
The TUC says Conservative and Lib Dem peers are defying their parties’ own voters – and the public at large – by attempting to water down the Bill.
A recent TUC mega poll revealed huge support across the country and across the political spectrum – including Conservative voters – over key policies in the Bill.
According to the polling, every Conservative and Lib Dem seat has overwhelming support for banning zero hours contracts and statutory sick pay from day one.
The TUC says this shows “how out of touch” the Peers are.
TUC General Secretary Paul Nowak said: “It’s time for Tory and Lib Dem Peers to get out of the way and stop trying to block stronger rights for millions of workers.
“They are doing the bidding of bad bosses by voting to keep workers on zero hours contracts, allowing bosses to sack workers unfairly and attacking teaching assistants’ pay.
“The sight of Hereditary Peers voting to block stronger workers’ rights belongs in another century. It’s plain wrong.
“Banning zero-hours contracts and protecting workers from unfair dismissal are common-sense protections that the vast majority of the people, including Tory and Lib Dem voters, want to see become law.
“These Peers are not just out of touch, they are actively defying their own voters – and the public at large. The government must stand firm in the face of cynical attacks and deliver the Employment Rights Bill in full.”
The Government’s manifesto commitment to deliver a genuine living wage for working people took a step closer today as it set out new considerations for the Low Pay Commission when recommending next year’s National Living Wage and National Minimum Wage.
Discriminatory age bands to be removed as new Low Pay Commission remit delivers progress towards a single wage rate for adults.
Government places cost of living at the heart of the remit a year on from its first inclusion, meaning more money is being put into the pockets of hardworking people – delivering the Plan for Change.
Low Pay Commission to continue longstanding approach of assessing the impact of wage reforms on different sectors, ensuring recommendations support both economic growth and fair pay.
The Westminster Government’s manifesto commitment to deliver a genuine living wage for working people took a step closer today (5 August) as it set out new considerations for the Low Pay Commission (LPC) when recommending next year’s National Living Wage and National Minimum Wage.
Around 3 million workers benefitted from last year’s decision to include the cost of living in the LPC’s remit for the first time. This led to a record cash increase in the Minimum Wage for apprentices and those under 18, and a £1,400 annual boost for full-time workers on the National Living Wage from April.
Higher wages for the lowest-paid workers not only provide greater financial security for families but also mean more money in the pockets of working people to spend on the things they need – supporting businesses and driving economic growth across the country as part of the Plan for Change.
With younger workers being held back by discriminatory age bands, the updated LPC remit will drive forward the Government’s commitment to delivering a single adult pay band.
The LPC will consult with employers, trade unions and workers on narrowing the gap between the 18–20-year-old rate of the National Minimum Wage and the National Living Wage and will put forward recommendations on achieving a single adult rate in the years ahead.
The remit will also ensure that the LPC continues to actively consider the cost of living in its recommendations for National Living Wage rates to apply from April 2026.
Business Secretary Jonathan Reynolds said: “Low pay drags down living standards for our workers and in turn hurts our high streets and local businesses.
“This Government’s Plan for Change will put money back in people’s pockets, with this new remit marking the next step in considering how we ensure a fair deal for our lowest paid workers while maintaining a competitive economy that boosts businesses and their employees alike.”
Deputy Prime Minister Angela Rayner said: “We promised to make low pay a thing of the past, and deliver a wage people can live on, and that is exactly what this government is determined to deliver.
“We have already taken bold action to Make Work Pay with more than 3 million workers seeing a huge boost in their pay following our increase to National Minimum and Living Wage.
“This remit is the next milestone in our plan to get more money in working people’s pockets, raise living standards in every part of the UK, and get our economy growing.”
Chancellor of the Exchequer Rachel Reeves said: “We are delivering on our promise to make sure every worker receives a fair wage.
“Fair pay which supports working families is integral to our Plan for Change, because when working people are properly rewarded with more money in their pockets, businesses thrive and our entire economy benefits.
“To ensure the right balance is struck between the needs of workers, business affordability, and the wider economy, the LPC is being asked to consult on several issues before recommending the new rates.”
Baroness Philippa Stroud, Chair of the LPC, said: “We are pleased to receive our remit from the Government. Already, since the beginning of the year, we have spent significant time speaking with workers and employers, to understand the pressures in the economy and the effects of the most recent increases in the minimum wage.We have held a successful call for evidence and received detailed submissions from all sides.
“Our recommendations on the minimum wage are always finely balanced. More than ever, it is important that we draw on first-hand evidence from those affected by our decisions.
“I look forward to working with the rest of the Commission over the autumn to reach a shared view on this evidence and deliver our advice to the Government in October”
TUC General Secretary, Paul Nowak said: “Boosting the minimum wage isn’t just good for workers – it’s good for business too. When low-paid workers have more money in their pockets they spend it locally – supporting shops, cafés and high streets.
“That’s why the government is right to set out its ambition to raise the floor of the minimum wage and end the outdated and unfair youth rates.
“The minimum wage has been one of the big success stories of the last 25 years – lifting pay at the bottom and proving the doom-and-gloom merchants wrong. But it’s important that it keep rising so that it better reflects what it actually costs to get by in Britain today.
“A bolder, more ambitious minimum wage isn’t a risk. It’s the next step in building a fairer, stronger economy where hard work is properly rewarded.”
Palestinian civilians are being killed as they seek food, water, and shelter at Israeli-controlled aid distribution points.
I have been horrified by Israel’s continued assault on Gaza and the mounting death toll of innocent civilians.
Now respected international agencies are warning that Israel’s blockade of aid is causing mass starvation. And the violence shows no sign of abating.
Trade unions have always stood in solidarity with people under occupation, and for peace built on human rights, equality, and international law.
It is our duty as trade unionists to call out the horrors that are happening right in front of our eyes.
Please write to your MP and ask they use their voice to recognise the state of Palestine, deliver a ceasefire, end the illegal occupation and support the journey towards peace and justice.
More than 21 months of strikes on Gaza and its people has caused untold devastation, bloodshed and suffering.
In April I visited the occupied West Bank and witnessed first-hand the human and labour rights abuses being experienced by Palestinian workers on a daily basis.
The TUC has called on the UK Government to use every diplomatic, political and economic tool available to help deliver an immediate and permanent ceasefire, end the illegal occupation and start a meaningful political peace process that respects the right to self-determination.
While we welcome this month’s joint statement from foreign ministers – urging an end to the assault and for urgent aid access – statements alone are not enough.
Words must be matched with action. And there’s no time to wait.
That’s why we are calling on the Government to take immediate action to:
Recognise the state of Palestine now
Suspend the UK-Israel trade deal
Ban imports from the illegal settlement
End all licenses for arms traded with Israel, in line with international law
Sanctions on individuals promoting and committing war crimes
Recognising the state of Palestine is not a symbolic gesture. It is a necessary and practical step towards a viable two-state solution that delivers equal rights and democracy– this is the only credible path to a just and lasting peace, ending decades of occupation, violence, and displacement.
On Monday, the UN will hold a conference in New York on the two-state solution.
This is an opportunity for our Government to agree to clear and immediate action on Palestine.
Whilst these discussions take place overseas, we must use our voices as trade unionists to call on our Government to act.
Minister for the Middle East Hamish Falconer made a statement to the House of Commons on Gaza Yesterday
Mr Speaker,
Yesterday, alongside partners, the UK convened a meeting of the UN Security Council in response to the intolerable civilian suffering and humanitarian need in Gaza.
As I told this House yesterday, Israel’s denial of aid is appalling.
Tonnes of food are currently sitting rotting at the Gaza/Israel border, blocked from reaching people who are starving.
Israeli Ministers have said Israel’s decision to block this aid is a “pressure lever”.
This is cruel and it is indefensible.
Overnight yet more Palestinians have been killed in Israeli strikes.
This must end.
The message yesterday was clear.
The world wants Israel to stop and change course immediately.
With our allies we are telling the Government of Israel: lift the block on aid entering Gaza now. Enable the UN and all humanitarians to save lives, now. We need an immediate ceasefire, now.
Humanitarian aid must never be used as a political tool or military tactic. And the UK will not support any aid mechanism that seeks to deliver political or military objectives or puts vulnerable civilians at risk.
“The only thing children are seeing coming into Gaza are bombs and missiles.” – UNICEF Spokesperson @1james_elder
The International Court of Justice case on genocide is ongoing.Mr Speaker, We support the ICJ. We support its independence.
The ICJ issued a set of provisional measures in this case and we support those measures.
Israel has an obligation to implement them.
It is the UK government’s long-standing position that any formal determination as to whether genocide has occurred is a matter for a competent court, and not for governments or non-judicial bodies.
The UK is fully committed to upholding our responsibilities under domestic and international law.
And we have at all times acted in a manner consistent with our legal obligations, including under the Genocide Convention.
The devastation from this conflict must end.
Our complete focus is on lifting Israeli restrictions on aid, On freeing the hostages held by Hamas, On protecting civilians, And on restoring the ceasefire.
We will work urgently with our allies and partners on further pressure to make Israel change course.
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.
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.
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
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 recentblogs.
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.
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
There are moments that will stay with you for the rest of your life. For millions of people across our country, that was five years ago today, Sunday 23 March (writes TUC’s Natahn Oswin).
‘From this evening, I must give the British people a very simple instruction – you must stay at home’ – Prime Minister Boris Johnson
The essential workers who kept the country running
‘From this evening, I must give the British people a very simple instruction – you must stay at home’ – Prime Minister Boris Johnson.
But for many this simply wasn’t possible – due to their jobs being so essential to the country they were declared key workers and kept going into work, risking their lives and livelihoods to keep our society running.
They were the people we stood outside our doorsteps for every Thursday, clapping, banging pots and generally attempting to show our appreciation for what they kept on facing.
Honoring the NHS and social care heroes
It wasn’t just nurses and doctors, it was physios and cleaners in our hospitals, porters and midwives. So many NHS staff faced unimaginable scenarios and kept going, as best they could, to save as many lives as possible.
Meanwhile, social care – a workforce often underappreciated, grappling with zero hour contracts and minimum wages – battled to stem the tide and protect vulnerable residents from the virus, now labelled Covid-19.
The hidden struggles of key workers during Covid-19
Transport workers continued to make our national infrastructure run and many lost their lives ensuring NHS workers and social care staff could make it into their workplace.
Education staff tried their utmost to look after children and protect them whilst facing off against a government who simply did not care about their welfare, with Gavin Williamson and Boris Johnson rejecting calls for masks in schools because they were in “no surrender mode” towards trade unions.
Food manufacturing workers, textiles workers, retail staff, refuse collectors, fire staff, police staff, civil servants and many, many more played a vital role.
Many watched as colleagues lost their lives to the pandemic.
The emotional and mental health impact of the Pandemic
The consequences for many have been severe.
I vividly remember a friend who served in our NHS during the pandemic breaking down in tears during a remembrance service, “I hadn’t realised how little I had processed it all” she said.
For many the emotional scars of the trauma they experienced as key workers will last a lifetime, the mental health impact is hard to calculate and the continuing effects of Long Covid are devastating for millions of people.
They knowingly marched into danger, often terrified, but with heads held high to tackle the biggest crisis our country, and the world, has faced since World War II.
It is a debt we can never truly repay, but that does not mean we should not try.
Why we must improve workers’ rights and protections
A decent level of statutory sick pay from day one, banning exploitative zero hour contracts and tackling the scourge of poverty pay would ensure that a future pandemic could not thrive when people are faced with the impossible choice of going into work ill or being able to feed their families, boosting our national resilience.
The dangers of underfunding public services
The pandemic was a stark reminder of how crucial public services are, revealing the dangers of underinvestment – the UK went into the pandemic unprepared and our public services were under-resourced.
Lessons from the pandemic: the need for insourcing
Recognising the risks of outsourcing is another key lesson which this government is already getting to grips with. A fragmented social care system failed thousands of care recipients and care workers.
Insourcing public services like social care will rebuild the state and allow resources to be redirected to frontline delivery, rather than corporate profits.
Join the fight for justice: share your Covid-19 experience
Long Covid should be recognised as an industrial disease.
We want to hear about your experiences of the pandemic to make sure the Inquiry knows the challenges working people faced and hope you will fill in our survey to make sure the Inquiry hears your voice.
