Chancellor delivers first Spring Statement

Chancellor of the Exchequer, Rachel Reeves, has delivered her first Spring Statement in office, setting out measures aimed at managing government spending and supporting long-term economic growth.

The Chancellor announced a range of cuts to government spending aimed at meeting the pledged target to bring day-to-day spending in line with income from taxes. Also announced were reforms to unemployment benefits aimed at increasing support for those out of work due to ill health to return to the workplace and addressing rising economic inactivity in particular among young people.

The Chancellor also confirmed a number of previously announced measures, including a boost to defence spending and additional funding to address skills shortages in the construction sector as part of a commitment to deliver accelerate housebuilding.

On taxation, while it had been hoped that measures such as the rise in Employer National Insurance Contributions and other tax rises announced in the October Budget would be delayed, these will go ahead from April 2025, although no other major changes were announced. The Chancellor did, however, confirm additional funding for HMRC to investigate compliance, particularly around offshore non-compliance. HMRC will also launch a US-style informant scheme, that will pay out to rewards for those who report tax evasion and fraud. Accountancy firm Xeinadin, has additional detail in their Spring Statement summary here.

Alongside her statement, the Office of Budget Responsibility (OBR) published updated forecasts for the economy, and confirmed announcements would increase the odds of the government meeting its target to balance expenditure against tax revenue. The OBR anticipates that the economy will grow just 1% in the next year (a downgrade of previous forecasts), and grow by around 1.7-1.9% each year to 2029, which is stronger growth than had been predicted prior to the Chancellor’s Budget in October. OBR assessment of planning reforms also suggested an additional 170,000 new homes would be delivered as a result of the changes, and grow the economy by 0.2% by the end of the decade.