ANNOUNCEMENTS
The net effect of the Chancellor’s Spring Statement was to raise a projected £14 billion in 2029/30. However, Rachel Reeves did not only talk about spending reductions in her speech. The Chancellor also revealed fresh investment initiatives. For example:
The overall capital spending total for the Parliament was increased by £13 billion, with the extra funds to be directed at growth-focused areas such as infrastructure, housing and defence innovation.
The creation of a new £3.25 billion Transformation Fund to support the reform of public services. Examples of the expenditure include £8 million for new technology for the probation service, £25 million for the fostering system and £150 million for “government employee exit schemes”.
The main revenue raising measures, many of which had been trailed in recent days, included:
Government spending
The pace of annual growth in government spending for 2025/26–2029/30 will be reduced by 0.1% in real terms to 1.2%. Government departments will reduce their administrative budgets by 15% by the end of the decade, creating projected savings of £2.2 billion a year.
Welfare measures
Personal Independence Payment (PIP) reform From November 2026 for new claimants, and for existing claimants at their next award review following that date, a tougher qualification basis will apply. Claimants will need to score a minimum of four points in at least one activity to qualify for a daily living award. This change, alongside increased capacity for processing award reviews from April 2026, is projected to produce savings of over £4.5 billion by 2029/30.
Abandonment of Work Capability Assessment changes The descriptor reforms to the Work Capability Assessment (WCA) announced at Autumn Statement 2023 that were due to take effect this year will be cancelled, at a cost of £1,645 million in 2029/30. From April 2026 WCA assessments will restart, generating savings of £355 million by 2029/30.
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