Rachel Reeves has refused to rule out further cuts or future tax hikes, as she faces criticism from members of her own party following her spring statement.
The Chancellor did not deny more measures could be announced at her next budget in response to speculation she will be forced to find more money to balance the books.
“I’m not going to write four years of budgets, I’ve just delivered a spring statement today,” she said.
Delivering her spring statement on Wednesday, the chancellor unveiled a £14bn package to repair the UK economy that included cuts to welfare, prompting criticism from Labour MPs who urged her to reverse cuts amid warnings they will lead to increased poverty.
Labour MP Debbie Abrahams, who chairs the Work and Pensions Committee, told the Commons: “All the evidence is pointing to the fact that the cuts to health and disability benefits will lead to increased poverty, including severe poverty, and worsened health conditions as well.
“How will making people sicker and poorer help in terms of driving our economy up and people into jobs?”
What would you like to see from Rachel Reeves’ spring statement? Join The Independent Debate
Rachel Reeves’ spring statement is fast approaching, and on Wednesday, people across the UK will learn how her announcements will impact their finances, sparking renewed debate about the future of living standards in the country.
A new forecast from the Joseph Rowntree Foundation suggests that average disposable incomes could fall by 3 per cent by 2030, with the lowest earners affected the most.
The chancellor has hinted at spending cuts to address a £20bn gap in public finances while ruling out tax rises as a solution.
What should the chancellor’s top priority be? Vote in our poll below and share your thoughts in the comments:
Ban on outdoor smoking in hospitality settings not being considered, says minister
Extending an outdoor smoking ban to hospitality settings is not being considered “at this time”, a health minister told the Commons.
The government distanced itself from plans to ban smoking in the gardens of pubs, bars and restaurants last year, following concerns raised by the hospitality sector.
Smoking outside schools, children’s playgrounds and hospitals will be prohibited under the Tobacco and Vapes Bill.
The Bill also aims to create a smoke-free generation with anyone born after January 1 2009 to be prevented from legally smoking, by gradually raising the age at which tobacco can be bought.
A total ban on vape advertising and sponsorship, including displays seen by children and young people such as on buses, in cinemas and in shop windows, is also included in the Bill, bringing them in line with tobacco restrictions.
Speaking at the Bill’s report stage, health minister Ashley Dalton urged MPs not to listen to the “tobacco industry’s arguments and myths about how people should be free to make their own choices”.
She added: “Smoking kills two-thirds of its users, three-quarters of people wish they’d never started smoking, and the majority want to quit. That’s not freedom of choice, the tobacco industry took away their choice with addiction, usually at a young age.
“In relation to smoke-free places, we’ve been clear, in England we intend to consult on extending smoke-free outdoor places to outside schools, children’s playgrounds and hospitals – but not outdoor hospitality settings, at this time.”
Trump announces 25% tariffs on vehicle imports in fresh blow to Reeves
Donald Trump has announced 25 per cent tariffs on all motor vehicle imports to the United States, in a move that will inflict another blow on the UK economy.
During a press conference in the Oval Office, the US president announced that cars and light trucks imported into the US would be subject to the levy in the latest escalation of the Trump administration’s far-reaching trade war.
“What we’re going to be doing is a 25% tariff for all cars that are not made in the United States,” Trump said.
The announcement raises fears of greater economic pain in the UK, whose largest vehicle export market is the US, having exported £6.4bn in motor vehicles to the United States in 2023, according to the Office of National Statistics.
Read more here:
Comment: Rachel Reeves’s sticking-plaster solutions won’t fix the economy
She had come to the Commons to announce policy changes because “the world has changed”. But the whole point of fixing the foundations was to strengthen the public finances so that they could withstand unexpected pressures.
The chancellor was coy, in any case, about the way in which the world had changed. She mentioned Vladimir Putin’s invasion of Ukraine, but that really got going three years ago. So she said vaguely that it had “since escalated further”, which is a strange way of saying that, in the past five months, Donald Trump has threatened to pull the plug on the Ukrainians.
The Independent’s chief political commentator John Rentoul writes:
Trump tariffs could cut growth and wipe out Chancellor’s headroom, OBR warns
Donald Trump’s threatened tariffs could wipe out Rachel Reeves’s headroom and knock a percentage point off GDP, the Office for Budget Responsibility has said.
The US president has repeatedly threatened to impose wide-ranging tariffs on foreign goods that could amount to 20 per cent on British goods and come into effect next week.
In its economic forecast published on Wednesday, the OBR said the most “severe” scenario, in which the UK and other nations retaliated to the imposition of tariffs, would see GDP 0.6 per cent lower than forecast this year and 1 per cent lower next year.
This scenario would also “almost entirely eliminate” the Chancellor’s £9.9 billion headroom against her fiscal rules, potentially forcing her to implement further spending cuts or tax rises.
An alternative scenario, in which the UK does not retaliate, would see a smaller reduction in growth, with GDP 0.4 per cent lower than expected this year and 0.6 per cent lower next year.
But it is unclear whether this forecast means the Chancellor will resist pressure to retaliate against any American tariffs.
Talks between the UK and US on avoiding tariffs remain ongoing, with Trade Secretary Jonathan Reynolds visiting Washington last week to discuss an “economic deal”.
But Mr Reynolds was unable to secure an exemption for the UK from steel tariffs imposed by Mr Trump earlier in March.
The OBR added that even a more limited regime in which the US only increased tariffs on Chinese, Canadian and Mexican goods could see the UK economy 0.2 per cent smaller than expected next year.
Sketch: Battle-tank Reeves crushes the Tories – but her own side are yet to be steamrollered
There’s something of a battle-tank about Rachel Reeves, so it was no surprise that she started her big day posting a picture of herself posing by an actual armoured car and flanked by soldiers in khaki.
Gears crunching, helmet hair rigid, the chancellor’s verbal caterpillar tracks soon flattened another chunk of the welfare budget. “Economic security is non-negotiable,” she intoned, Dalek-like. Exterminate!
Reeves’ military imagery alluded to one of her key messages, which she repeated all day long, that “the world is changing”. This is the Treasury’s latest excuse for the economy not growing in the way that Labour promised, but it also sounds uncomfortably similar to “events, dear boy events”, which was the answer famously given by Harold Macmillan when asked why governments lose elections.
Joe Murphy writes:
Reeves disagrees with Treasury deputy
Rachel Reeves said comparing efforts to get people into work with encouraging children to get a Saturday job is “not the right analogy”, after her deputy likened benefits to pocket money.
Asked about the remarks made by chief secretary to the Treasury Darren Jones, the Chancellor told LBC: “My children and the chief secretary’s children are too young, but if you have a 16-year-old and you say, ‘you know what I’m not going to give you so much pocket money. I want you to go out to work’, and then the OBR does an impact assessment and says you’re child is going to be worse off – well, they’re going to be worse off if they don’t go and get themselves a Saturday job.
“But if they do go and get themselves a Saturday job, they’ll probably be better off and they probably might enjoy it as well.
“Now, that’s not the right analogy, but there are lots of people who have a disability that are desperate to work and, with the appropriate support, and with an employer that is sympathetic and can find work that is appropriate, I know that there are many more disabled people who can work and want to work.
“And if they go to work, they’ll be earning more money, more money for them and their families, but also contributing to the national economy too.”
Government faces further defeat on business rates reforms
The government faced a further defeat on its business rates reforms as peers insisted that it conducts a review into the effect of the £500,000 threshold on businesses whose rateable value is close to that figure.
The House of Lords supported by 277 votes to 162, majority 115, an amendment to the Non-Domestic Rating (Multipliers and Private Schools) Bill that would ensure this review takes place within six months of the Bill passing.
Reeves’ benefit cuts to plunge 250,000 people into poverty, government admits
Rachel Reeves’ benefits cuts will push an estimated quarter of a million people, including 50,000 children, into poverty by the end of this decade, according to the government’s own impact assessment.
It also reveals that 3.2 million families will lose out, on average by £1,720 a year.
Read the full story here:
Workers’ rights plans could have ‘negative’ impact, watchdog suggests
Labour’s plan for workers’ rights could have a “negative” impact on employment, a member of the budget watchdog has said.
The Office for Budget Responsibility (OBR) has said they have not yet been able to take account of the Employment Rights Bill in their forecasting as there is not enough detail available on the policy.
However, in their forecast released on Wednesday, they say that regulations which “affect the flexibility of businesses and labour markets” are likely to have “material and probably net negative, economic impacts on employment, prices, and productivity”.
Professor David Miles, a member of the OBR’s budget responsibility committee, said that measures which reduce an employer’s flexibility could have a negative impact.
The proposed law is currently making its way through Parliament, and contains proposals such as a right to guaranteed hours and new restrictions on so-called “fire and rehire” processes.
In their economic and fiscal outlook released on Wednesday, the OBR said: “We are yet to reflect the impact of the Government’s Employment Rights Bill in the forecast,” adding that there is not yet sufficient detail or clarity about policy parameters” for them to be able to make a useful assessment.
They go on to say: “Employment regulation policies that affect the flexibility of businesses and labour markets or the quantity and quality of work will likely have material and probably net negative economic impacts on employment, prices and productivity.”
They added that they will incorporate a “central estimate” of the policy in their next forecast, expected in the autumn.
Source: independent.co.uk
