WELFARE PAIN
Rachel Reeves’ Spring Statement reveals MORE benefit cuts in bid to balance nation’s finances
Plus watch our video on the benefit cuts
RACHEL Reeves has unveiled more benefit cuts in the Spring Statement today.
Speaking the Commons today the Chancellor has confirmed further cuts to the welfare system to help shore up the nation's finances.
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Rachel Reeves has now confirmed the government the Universal Credit Health element will be cut by 50% and then frozen for new claimants until 2030.
This means that the £416.19 a month incapacity amount for those who have limited capability for work and work-related activity will be cut in half to £208.10 (equivalent to £50 per week) and then frozen at that level for all new claimants.
The changes take effect from April 2026.
The Chancellor also increased the Universal Credit standard allowance for new and existing claims above inflation from April 2026, reaching CPI + 5% from April 2029.
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This means the standard allowance weekly rate for a single person aged 25 and over will increase from £92 in 2025-26 to £106 in 2029-30.
It comes after the government last week announced plans to restrict eligibility for personal independent payments (PIP) alongside a number of changes to the benefit system.
The shake-up was supposed to help save the £5billion, but the Office for Budget Responsibility said the move would only help secure £3.5billion.
She said: “The OBR (Office for Budget Responsibility) have said that they estimate the package will save £4.8 billion in the welfare budget, reflecting their judgments on behavioural effects and wider factors.
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"This also reflects final adjustments to the overall package, consistent with the Secretary of State’s statement last week and the Government’s Pathways to Work Green Paper."
Key announcements in the Spring Statement:
- No new tax rises: The Chancellor ruled out further tax hikes and pledged to crack down on tax avoidance, aiming to raise an extra £1bn.
- Growth downgraded for 2025: The OBR halved its GDP growth forecast for next year from 2% to just 1%.
- Growth boost from planning reforms: New housing policies expected to raise GDP by 0.6 per cent over the next decade.
- Housebuilding surge: 1.3 million homes expected over five years, with construction hitting a 40-year high.
- £2.2bn extra for defence: Additional funding confirmed to help meet the 2.5 per cent of GDP defence target.
- £400m Defence Innovation Fund: Backing new tech like drones and AI for the front line.
- Welfare shake-up: Targeted employment support and welfare reform to reduce benefit spending.
- Civil service cuts: New voluntary exit schemes and AI tools to shrink Government.
When Benefits Overpower Inheritance: A Mother’s Heart-Wrenching Decision
It comes just days after sweeping package of cuts to the UK's welfare system was announced.
Reeves is expected to raise about £500million by 2030 from these cuts.
As part of changes, the government announced plans to restrict eligibility for Personal Independent Payments (PIP) alongside other changes to the welfare system.
The government has been looking for ways to shore up the UK's finances following the leadership of the previous Conservative government and also get Brits back to work.
An impact assessment will also be published today which is expected to say the poorest households across Britain will be the hardest hit.
These measures join a number of other cuts to the UK's welfare system.
OTHER CHANGES TO BENEFITS SYSTEM
The Chancellor confirmed a raft of changes to the benefits system today.
The changes outlined last week when the Department for Work and Pensions (DWP) released its Pathways to Work green paper, but today were confirmed by the government in the Spring Statement.
The government has said it will merge jobseekers' allowance and employment support allowance, where people who have worked get more than those who have not.
Meanwhile a new eligibility criterion will be introduced for the daily living component of PIP.
To receive the £105 per week support, claimants must achieve a minimum score of four points in at least one of the daily living activities evaluated during the assessment to be eligible.
Currently, it is possible to qualify for the daily living component with a lower overall score spread across multiple activities.
This change means individuals with lower needs in daily living activities could no longer be eligible for the aid.
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The government said that this change will impact some current claimants and is considering how to best support them, including options for transitional protection.
They are also consulting on further support measures and a review of the PIP assessment process.
What does this Spring Statement mean for Rachel Reeves?
By Ryan Sabey, Deputy Political Editor
RACHEL Reeves is trying shift any blame away from herself and the Labour government as it grapples with the sluggish economy.
The Chancellor is telling MPs that the “world had changed” meaning she has to take drastic action when it comes to spending and welfare.
The trouble for Ms Reeves and Sir Keir Starmer is that they put growth as their “number one” mission and that, to put it mildly, is stalling.
The independent watchdog say growth forecasts has halved for this year and the financial headroom wiped out - hence the savings to be made elsewhere.
But for Ms Reeves all this puts her in a very tight spot insisting she will stick to her iron clad rules - with her looking to find up to £15 billion of savings.
The Tories and commentators are aiming their fire over how she hasn’t helped herself as growth has fallen.
They point out that she was the person who decided to go on a £40 billion tax raid at October’s Budget - with £25 billion of it falling on the shoulders of business.
The upcoming Donald Trump-led tariff war ledcould easily throw the government off course again unless a limited trade deal can be struck.
Rachel Reeves will be pushing every leaver possible to get that over the line before it kicks in next week to give her some breathing space.
But we could be back at square one come the autumn with the Budget to balance the books - with speculation there could be tax rises and Whitehall departments scratching around for more savings.
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