Chancellor Rachel Reeves Makes Further Benefit Cuts

LONDON, United Kingdom - 26 March 2025

In her Spring Statement delivered to Parliament today, Chancellor of the Exchequer Rachel Reeves announced additional spending cuts, citing "global uncertainty" and a significant reduction in the UK's economic growth forecast. The Office for Budget Responsibility (OBR) has halved the 2025 growth projection from 2% to 1%, prompting the government to implement measures aimed at stabilising public finances. 

A central component of the Chancellor's plan involves substantial reductions in welfare spending. The government intends to decrease Universal Credit entitlements and implement a freeze on key payments until 2030. Incapacity benefits are set to be reduced from £97 to £50 per week. These measures are projected to affect approximately 3.2 million families and potentially push an additional 250,000 individuals, including 50,000 children, into poverty. ​

In addition to welfare adjustments, the Chancellor announced plans to reduce the civil service headcount by 10,000 positions, aiming to achieve cost savings across government departments. 

Chancellor Reeves attributed these austerity measures to the need for fiscal responsibility amid rising borrowing costs and sluggish economic growth. She emphasised the importance of the government "living within its means" to ensure long-term economic stability. The OBR identified a £14 billion shortfall due to lower growth and higher debt interest payments, necessitating these spending cuts. ​

The announced cuts have drawn criticism from various quarters. Opposition parties and some members within the Labour Party have expressed concern that these measures resemble previous austerity policies and may disproportionately impact vulnerable populations. The Guardian editorial board described the plan as "austerity in disguise," highlighting fears that the cuts could exacerbate poverty and inequality. ​

The public response has been marked by apprehension, particularly among those reliant on welfare support. Many individuals have voiced concerns about the potential for increased financial hardship as a result of the benefit reductions. ​

Image: HM Treasury/Flickr

Licence.