Rachel Reeves will unveil further welfare cuts in her spring statement after being told the reforms announced last week will save less than planned, Sky News understands.
The fiscal watchdog put the value of the cuts at £3.4bn, leaving ministers scrambling to find further savings.
Ms Reeves is now expected to announce that universal credit (UC) incapacity benefits for new claimants, which were halved under the original plan, will also be frozen until 2030 rather than rising in line with inflation
As originally reported by The Times, there will also be a small reduction in the basic rate of UC in 2029, with the new measures expected to raise £500m.
A Whitehall source told Sky’s political editor Beth Rigby that it is “hard to tell how MPs will react”, as while the OBR’s assessment means fewer people will be affected by the PIP changes than thought, they “might be unhappy about the chaotic nature of it all”.
Several Labour MPs criticised the measures as pushing more sick and disabled people into poverty, while former Labour leader Jeremy Corbyn called the package a “disgrace” on Tuesday and accused the government of imposing austerity on the country.
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13:10
‘Labour MPs are upset’
Spending cuts expected
Ms Reeves is expected to announce a large package of departmental spending cuts when she gives an update on the economy on Wednesday, potentially putting her on a further collision course with her own MPs.
Having only committed to doing one proper budget each year in the autumn, the spring statement was meant to be a low-key affair.
However, a turbulent economic climate since October means the OBR is widely expected to downgrade its growth forecasts for the UK while the government has borrowed more than previously expected.
This has wiped out the £9.9bn gap in her fiscal headroom Ms Reeves left herself at her budget last year – money she needs to make up if she wants to stick to her self-imposed fiscal rule that day-to-day spending must be funded through tax receipts, not debt, by 2029-30.
In a bid to fend off criticism, she will also announce an extra £2.2bn will be spent on defence over the next year to “deliver security for working people”.
The money is part of the government’s aim to hike defence spending to 2.5% of the UK’s economic output by 2027 – up from the 2.3% where it stands now.
Ms Reeves will insist this plan, set out by the prime minister in February, was the “right decision” against the backdrop of global instability, saying it will put “an extra 6.4bn into the defence budget by 2027”.
“This increase in investment is not just about increasing our national security but increasing our economic security, too,” she will say.
The money is coming from reductions to the international aid budget and Treasury reserves, and will be used to invest in new technology, refurbish homes for military families and upgrade HM Naval Base Portsmouth.
A major incident has been declared in Birmingham over an ongoing bin strike, which has left around 17,000 tonnes of waste on the streets of the city.
Birmingham City Council said the “regrettable” step was taken in response to public health concerns, with picket lines blocking depots and preventing waste vehicles from collecting rubbish.
Members of Unite have been on all-out strike since 11 March in a row over pay, which the union claims will leave some members of staff £8,000 worse off. A series of walkouts have also impacted refuse collections since January.
By declaring a major incident, the council will be able to increase the availability of street cleansing and fly-tip removal with an additional 35 vehicles and crews around the city.
This action will also allow the council to explore what further support is available from neighbouring authorities and the government to assist in the management of the situation.
Council leader John Cotton said it was a “regrettable” step, but the situation was “causing harm and distress” to local people.
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2:51
Birmingham suffers bin crisis
“I respect the right to strike and protest, however actions on the picket line must be lawful and sadly the behaviour of some now means we are seeing a significant impact on residents and the city’s environment,” he said.
Jim McMahon, the minister for local government, said the all-out strike by Unite members is causing “misery and disruption” to residents, as well as posing a “public health risk to the city’s most vulnerable and deprived”.
He said the government “stands ready” to respond to any request for extra resources, but insisted that any deal to end the bin strike must “maintain value for money”.
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5:58
‘They can’t hold the city to ransom’
Mr McMahon told the Commons: “This is causing a public health risk to the city’s most vulnerable and deprived residents. As a result, I am aware that Birmingham has today declared a major incident to give them the mechanisms to better manage the impact on local residents.
“I support that decision, and I will back local leaders.”
The minister added that the government will “not hesitate to give support in any way that Birmingham leaders need”.
He said: “If local leaders on the ground in Birmingham feel that tackling these issues goes beyond the resources available to them and they request national support, then of course we stand ready to respond to any such request.”
Members of the Unite union met with Birmingham City Council last Thursday, but talks have so far failed.
Unite says the dispute will not end unless the “hugely damaging” cuts to bin collectors’ wages are reversed.
But Birmingham City Council says the aim of the restructuring is to create a “modern, sustainable and consistently reliable waste collection service”.
An “extensive search” is under way to find an 11-year-old girl after she fell into the River Thames in east London.
The Metropolitan Police said it was called at around 1.15pm on Monday to reports the girl had entered the river near Barge House Causeway, near London City Airport.
All emergency services are forming a “large-scale response” to the incident.
The girl’s next of kin have been made aware and are being supported by officers.
The London Ambulance Service was also called at a similar time, after receiving a report of a person in the water at Lowestoft Mews, which is close to the airport.
“We sent resources to the scene, including an ambulance crew, an advanced paramedic, an incident response officer and members of our hazardous area response team,” a spokesperson said.
“Our crews assisted our emergency services partners at the scene but were later stood down.”
London Fire Brigade Deputy Assistant Commissioner Joseph Kenny added that “firefighters responded to reports of a person in the River Thames near Lowestoft Mews, Newham”.
He said crews from East Ham, Barking, Ilford and Bexley fire stations were sent to the scene alongside other emergency services.
“The brigade also deployed its drone team and fire boat as part of its response, with crews carrying out a systematic search of the area,” he added.
“The brigade was first called about the incident at 1.23pm. Search operations for firefighters were concluded at 3.49pm when responsibility for the incident was left with the police.”
This breaking news story is being updated and more details will be published shortly.
Controversial sentencing guidelines that were due to come into force on Tuesday have been delayed after a political backlash.
The Sentencing Council, the independent body that sets out sentencing guidance to courts in England and Wales, was due to bring in new rules around how judges should determine punishment for people from ethnic minority backgrounds.
The new guidance states that a pre-sentence report – the results of which are taken into account when considering a criminal’s sentence – will “usually be necessary” before handing out punishment for someone from an ethnic, cultural or faith minority, alongside other groups such as young adults aged 18 to 25, women and pregnant women.
Shabana Mahmood, the justice secretary, had said the proposed guidance was “unacceptable” and amounted to “differential treatment before the law” as she urged the council to reverse it.
When the Sentencing Council initially refused her request, Ms Mahmood threatened to legislate to overturn the guidance if necessary.
She confirmed this evening that she would introduce legislation on Tuesday to block these guidelines coming into effect.
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7:26
Robert Jenrick has hit out at what he says is
The Sentencing Council has now delayed the “in force date of the guideline pending such legislation taking effect”.
It said in a statement that the council “remains of the view that its guideline, imposition of community and custodial sentences, as drafted is necessary and appropriate”.
However, in a meeting between the chairman Lord Justice Davis and Ms Mahmood on Monday, the minister “indicated her intention to introduce legislation imminently that would have the effect of rendering the section on ‘cohorts’ in the guideline unlawful”.
The council said it is unable to introduce a guideline when there is a draft bill due for introduction that would make it unlawful.
Ms Mahmood said: “This differential treatment is unacceptable – equality before the law is the backbone of public confidence in our justice system. I will change the law to ensure fairness for all in our courts.”
The Sentencing Council also attracted criticism from shadow justice secretary Robert Jenrick, who said its updated guidance was an example of “two-tier justice” that would lead to “blatant bias” against Christians and straight white men.
He also argued that it would make “a custodial sentence less likely for those from an ethnic minority, cultural minority, and/or faith minority community” – something the council denied.
The council previously rejected calls from the government to abandon the guidelines, which ask judges to consider offenders’ racial, cultural and religious background when deciding a sentence.
Lord Davis denied that pre-sentence reports reduced the prospect of a jail sentence.
However, he said the council would provide “some clarification of the language” to avoid confusion.