Those living in rural areas, students and benefits claimants expected to be among the most affected by the Chancellor’s incoming savings
On Wednesday, Rachel Reeves will stand up in the House of Commons to deliver her Spring Statement.
The statement was supposed to be a relative non-event because the Government had promised to only hold one annual fiscal event – in which changes to tax and spending are announced.
However, a deterioration in the UK’s growth prospects has meant that the “fiscal headroom” which Reeves set herself in last October’s Budget has disappeared.
It means the Chancellor will now use the Spring Statement to announce spending cuts to stay within her self-imposed fiscal rules which limit borrowing.
Tomorrow’s speech will likely comprise a mix of specific cuts – some of which have already been trailed – and higher-level changes to government spending, the detail of which will need to be worked out in the Spending Review, which concludes in June.
Here are some of the groups likely to be affected by the Spring Statement and the cuts which will flow from it later this year.
1. Welfare recipients
The Government has already announced major reforms to the welfare system designed to trim £5bn from the UK’s benefits bill.
Under the reforms, the eligibility criteria for personal independence payments (PIP) will be tightened up, many of those claiming PIP will face more frequent reassessment, and incapacity benefits under universal credit will be frozen in cash terms.
For new claimants of incapacity benefits under universal credit, the amount will be reduced from £97 to £50 per week in 2026-27.
However, there will be an above-inflation increase in the standard rate of universal credit for all those seeking work.
Under the plans, people aged under 22 years of age will also no longer be able to claim the incapacity benefit top-up to universal credit.
2. Civil servants
The Chancellor has pledged to cut the Government’s running costs by 15 per cent by the end of the decade.
While ministers have tried to avoid putting a specific figure on the number of Civil Service jobs which will be cut, at least 10,000 jobs are expected to go, although the FDA union has warned that up to 50,000 officials could be made redundant.
The reductions are part of plans to save £2bn a year by the end of the decade.
The Prime Minister has insisted that greater adoption of technology and AI across government and the public sector will cut costs while providing citizens with a “better service”.
3. Young people
All government departments have been told to conduct a “zero-based” line-by-line review of their budgets in which they rank current spending according to priority.
It means that all departments will likely have to cut some existing programmes or areas of spend, even if they are receiving an overall increase in their funding.
Health and defence are likely to be most insulated from cuts, while “unprotected” departments such as the Ministry of Justice, the Home Office and the Ministry of Housing, Communities and Local Government are likely to be in the firing line for the biggest reductions.
While schools have received greater protection in the past, insiders have told The i Paper that education is now facing the “worst financial situation for a generation”.
A Whitehall source said of the Department for Education: “There are certainly cuts coming.
“No part of the department has been looking happy.”
The Times reported that Education Secretary Bridget Phillipson has floated ending universal free school meals for infants, ending free period products in schools, and cutting money for music, dance and PE schemes.
4. Rural councils
Angela Rayner’s Ministry of Housing, Communities and Local Government is seen as one of the most vulnerable departments in the Spending Review.
In terms of local government spending, county councils believe they face deeper cuts than other local authorities due to a change in how the government funds councils.
Ministers are currently undertaking a review into the funding formula for councils, and authorities representing more rural areas believe the criteria will be heavily skewed towards levels of deprivation, meaning more money will be funnelled towards urban, Labour-run local authorities.
It could mean cuts for adult and child social care as well as special educational needs provision.