There were few new announcements in this Spring Statement, the most significant announcements have been in changes to benefits and welfare. Below sets out the government current fiscal plans and their impact following the spring statement discussed by Alice Pugh.
Benefits and Welfare
There have been significant changes to Personal Independence Payments (PIPs) and Universal Credit with this Spring statement, which will impact households across the country largely from November 2026. The Department of Work and Pensions have completed an impact assessment of anticipated welfare changes finding:
- By 2029-20, 3.2 million families, both current and future recipients, will see cuts, with an average loss of £1,720 per year in real terms.
- Changes to PIP entitlement rules will see 370,000 recipients’ loose entitlement and 430,000 future PIP recipients who do not yet receive PIP they would have been entitled to under the previous rules. The average loss per year will be £4,500.
- The health element of universal credit will also be frozen at £97 a week until 2029-30 for existing claimants and halved for future claimants to £50 a week in 2026-27 and the frozen.
- The DWP also forecasts that as a result of changes to PIP and universal credit it will lead to an additional 250,000 people in relative poverty after housing costs by 2029/30.
- However, rises in universal credit payments will see 3.8 million families £420 better off as a result of rises to universal credit announced in the autumn, after inflation has been taken into account.
Household Bills and Living Standards
No major government announcement happens in isolation. Whilst there were no announcements around tax or wages, there is set to be fiscal policies, as well as bill changes coming into play in April 2025. For instance, there is set to be a number of rises in bills for necessities in a number of areas, including water, energy and council tax, alongside rises in additional costs around car tax, broadband, phone and TV licence bills and stamp duty.
However, minimum and living wage will be increasing from April 2025, with the living wage for those aged over 21 increasing by 77p per hour. Though it should be noted that the continued freeze in income tax will see more people dragged into higher tax brackets by 2028-29, the Office for Budget Responsibility (OBR) forecasts nearly 4 million additional people expected to pay income tax and 3 million more shifted into the higher rate of tax, as a result of the threshold being frozen.
Overall, real disposable household income per person is anticipated to grow in real terms, growing by an average of around 0.5% a year between 2025-26 to 2029-30 in real terms. Comparative to the October forecast by the OBR, this is a growth in anticipated living standards, largely resulting from wage growth.
Public Services
It is anticipated that public sector spending is expected to decline, with government departments being asked to reduce administrative costs by 15% by 2030. With around 10,000 civil service jobs expected to be cut over this period, however, most of these roles are anticipated to be lost through voluntary exist schemes. Though the departmental spending review anticipated to be announced in June, will outline departmental cuts and spending.
This blog was written by Alice Pugh, Policy and Data Analyst City-REDI / WMREDI, University of Birmingham.
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI / WMREDI or the University of Birmingham.