Spring statement: Rachel Reeves can make decisions on spending cuts without too much fallout for now – but worse could be yet to come
Rachel Reeves will keep her remarks short when she delivers the spring statement on Wednesday.
But the enormity of what she is saying will be lost on no one as the chancellor sets out the grim reality of the country’s finances.
Her economic update to the House of Commons will reveal a deteriorating economic outlook and rising borrowing costs, which has forced her to find spending cuts, which she’s left others to carry the can for (more on that in a bit).
Politics Live: Polling suggests almost everyone is pessimistic
The independent Office of Budget Responsibility (OBR) is expected to forecast that growth for 2025 has halved from 2% to 1%.
That, combined with rising debt repayment costs on government borrowing, has left the chancellor with a black hole in the public finances against the forecasts published at the budget in October.
Back then, Reeves had a £9.9bn cushion against her “iron-clad” fiscal rule that day-to-day spending must be funded through tax receipts not debt by 2029-30.
But that surplus has been wiped out in the ensuing six months – now she finds herself about £4bn in the red, according to those familiar with the forecasts.
That’s really uncomfortable for a chancellor who just months ago executed the biggest tax and spend budget in a generation with the promise that she would get the economy growing again.
At the first progress check, she looks to be failing and has been forced into finding spending cuts to make up the shortfall after ruling out her other two options – further tax rises or more borrowing via a loosening of her self-imposed fiscal rules.
Please use Chrome browser for a more accessible video player
What to expect in the spring statement
‘World has changed’
When Reeves gets up on Wednesday, she will put it differently, saying the “world has changed” and all that means is the government must move “further and faster” to deliver the reforms that will drive growth.
But her opponents will be quick to lay economic woes at her door, arguing that the unexpected £25bn tax hike on employers’ national insurance contributions last October have choked off growth.
But it’s not just opposition from the Conservative benches that the chancellor is facing – it is opposition from within as she sets about cutting government spending to the tune of £15bn to fill that black hole.
Politically, her allies know how awkward it would have been for the chancellor to announce £5bn in welfare cuts to avoid breaking her own fiscal rules, with one acknowledging that those cuts had to be kept separate from the spring statement.
There’s also expected to be more than £5bn of extra cuts from public spending in the forecast period, which could see departments that don’t have protected budgets – education, justice, home – face real-term spending cuts by the end of the decade.
Pic: PA
Not an emergency budget
We won’t see the detail of that until the Spending Review in June.
This is not an emergency budget because the chancellor isn’t embarking on a round of tax raising to fix the public finances.
But these are, however they are framed, emergency spending cuts designed to plug her black hole and that is politically difficult for a government that has promised no return to austerity if some parts of the public sector face deep cuts to stick with fiscal rules.
If that’s the macro picture, what about the “everyday economics” of peoples’ lives?
I’d point out two things here. On Wednesday, we will get to see where those £5bn of welfare cuts will fall as the government publishes the impact assessment that it held back last week.
Read more:
Corbyn brands benefit cuts a ‘disgrace’
Expect different focus from Reeves at spring statement
Up to a million people could be affected by cuts, and the reality of who will be hit will pile on the pressure for Labour MPs already uncomfortable with cuts to health and disability benefits.
Please use Chrome browser for a more accessible video player
Benefits cuts explained
The second point is whether the government remains on course to deliver its key pledge to “put more money in the pockets of working people” during this parliament after the Joseph Rowntree Foundation think-tank produced analysis over the weekend saying living standards for all UK families are set to fall by 2030.
The chancellor told my colleague Trevor Phillips on Sunday that she “rejects” the analysis that the average family could be £1,400 worse off by 2030.
But that doesn’t mean that the forecasts published on Wednesday calculating real household disposable income per head won’t make for grim reading as the economic outlook deteriorates.
Nervousness in Labour
Ask around the party, and there is obvious nervousness about how this might land, with a degree of anxiety about the economic outlook and what that has in store for departmental budgets.
But there is recognition too from many MPs that the government has political space afforded by that whopping majority, to make these decisions on spending cuts without too much fallout – for now.
Because while Wednesday will be bad, worse could be yet to come.
Staring down the barrel
The chancellor is staring down the barrel of a possible global trade war that will only serve to create more economic uncertainty, even if the UK is spared from the worst tariffs by President Donald Trump.
The national insurance hike is also set to kick in next month, with employers across the piece sounding the warnings around investment, jobs and growth.
Six months ago, Reeves said she wouldn’t be coming back for more after she announced £40bn in tax rises in that massive first budget.
Six months on she is coming back for more, this time in the form of spending cuts. And in six months’ time, she may well have to come back for more in the form of tax rises or deeper cuts.
The spring statement was meant to be a run-of-the-mill economic update, but it has morphed into much more.
The chancellor now has to make the hard sell from a very hard place, that could soon become even tougher still.
UK
Specialist teams and online investigators deployed across England and Wales to tackle ‘national emergency’ of violence against women and girls
Specialist investigation teams for rape and sexual offences are to be created across England and Wales as the Home Secretary declares violence against women and girls a “national emergency”.
Shabana Mahmood said the dedicated units will be in place across every force by 2029 as part of Labour’s violence against women and girls (VAWG) strategy due to be launched later this week.
The use of Domestic Abuse Protection Orders (DAPOs), which had been trialled in several areas, will also be rolled out across England and Wales. They are designed to target abusers by imposing curfews, electronic tags and exclusion zones.
The orders cover all forms of domestic abuse, including economic abuse, coercive and controlling behaviour, stalking and ‘honour’-based abuse. Breaching the terms can carry a prison term of up to 5 years.
Please use Chrome browser for a more accessible video player
Govt ‘thinking again’ on abuse strategy
Nearly £2m will also be spent funding a network of officers to target offenders operating within the online space.
Teams will use covert and intelligence techniques to tackle violence against women and girls via apps and websites.
A similar undercover network funded by the Home Office to examine child sexual abuse has arrested over 1,700 perpetrators.
Abuse is ‘national emergency’
Home Secretary Shabana Mahmood said in a statement: “This government has declared violence against women and girls a national emergency.
“For too long, these crimes have been considered a fact of life. That’s not good enough. We will halve it in a decade.
“Today we announce a range of measures to bear down on abusers, stopping them in their tracks. Rapists, sex offenders and abusers will have nowhere to hide.”
Please use Chrome browser for a more accessible video player
Angiolini Inquiry: Recommendations are ‘not difficult’
The target to halve violence against women and girls in a decade is a Labour manifesto pledge.
The government said the measures build on existing policy, including facial recognition technology to identify offenders, improving protections for stalking victims, making strangulation a criminal offence and establishing domestic abuse specialists in 999 control rooms.
Read more from Sky News:
Demands for violence and abuse reforms
Women still feel unsafe on streets
Minister ‘clarifies’ violence strategy
Labour has ‘failed women’
But the Conservatives said Labour had “failed women” and “broken its promises” by delaying the publication of the violence against women and girls strategy.
Shadow Home Secretary, Chris Philp, said that Labour “shrinks from uncomfortable truths, voting against tougher sentences and presiding over falling sex-offender convictions. At every turn, Labour has failed women.”
There have been no migrant arrivals in small boats crossing the Channel for 28 days, according to Home Office figures.
The last recorded arrivals were on 14 November, making it the longest uninterrupted run since autumn 2018 after no reported arrivals on Friday.
However, a number of Border Force vessels were active in the English Channel on Saturday morning, indicating that there may be arrivals today.
So far, 39,292 people have crossed to the UK aboard small boats this year – already more than any other year except 2022.
The record that year was set at 45,774 arrivals.
It comes as the government has stepped up efforts in recent months to deter people from risking their lives crossing the Channel – but measures are not expected to have an impact until next year.
Debris of a small boat used by people thought to be migrants to cross the Channel lays amongst the sand dunes in Gravelines, France. Pic: PA
December is normally one of the quietest for Channel crossings, with a combination of poor visibility, low temperatures, less daylight and stormy weather making the perilous journey more difficult.
The most arrivals recorded in the month of December is 3,254, in 2024.
Deputy Prime Minister David Lammy met with ministers from other European countries this week as discussions over possible reform to the European Convention on Human Rights (ECHR) continue.
Please use Chrome browser for a more accessible video player
France agrees to start intercepting small boats
The issue of small boat arrivals – a very small percentage of overall UK immigration – has become a salient issue in British politics in recent years.
Last month, French maritime police announced they would soon be able to intercept boats in the English Channel.
The King has shared in a television address that, thanks to early diagnosis, his cancer treatment can be reduced in the new year.
In a televised address, Charles said his “good news” was “thanks to early diagnosis, effective intervention and adherence to doctors’ orders”.
“This milestone is both a personal blessing and a testimony to the remarkable advances that have been made in cancer care in recent years,” he added.
“Testimony that I hope may give encouragement to the 50% of us who will be diagnosed with the illness at some point in our lives.”
The King announced in February 2024 that he had been diagnosed with cancer and was beginning treatment.
The monarch postponed all public-facing engagements, but continued with his duties as head of state behind palace walls, conducting audiences and Privy Council meetings.
He returned to public duties in April last year and visited University College Hospital Macmillan Cancer Centre in central London with the Queen and discussed his “shock” at being diagnosed when he spoke to a fellow cancer patient.
Sources suggested last December his treatment would continue in 2025 and was “moving in a positive direction”.
The King began returning to public duties in April last year. File pic: PA
The King has chosen not to reveal what kind of cancer he has been treated for. Palace sources have partly put that down to the fact that he doesn’t want one type of cancer to appear more significant or attract more attention than others.
In a statement after the speech aired, a Buckingham Palace spokesperson said: “His Majesty has responded exceptionally well to treatment and his doctors advise that ongoing measures will now move into a precautionary phase.”
Sir Keir Starmer praised the video message as “a powerful message,” and said: “I know I speak for the entire country when I say how glad I am that his cancer treatment will be reduced in the new year.
“Early cancer screening saves lives.”
Please use Chrome browser for a more accessible video player
Watch: King Charles gives update on treatment
Early detection can give ‘the precious gift of hope’
His message on Friday was broadcast at 8pm in support of Stand Up To Cancer, a joint campaign by Cancer Research UK and Channel 4.
In an appeal to people to get screened for the disease early, the King said: “I know from my own experience that a cancer diagnosis can feel overwhelming.
“Yet I also know that early detection is the key that can transform treatment journeys, giving invaluable time to medical teams – and, to their patients, the precious gift of hope. These are gifts we can all help deliver.”
Charles noted that “at least nine million people in our country are not up to date with the cancer screenings available to them,” adding: “That is at least nine million opportunities for early diagnosis being missed.
“The statistics speak with stark clarity. To take just one example: When bowel cancer is caught at the earliest stage, around nine in ten people survive for at least five years.
“When diagnosed late, that falls to just one in ten. Early diagnosis quite simply saves lives.”
Minor inconvenience of screening ‘a small price to pay’
The King acknowledged that people often avoid screening “because they imagine it may be frightening, embarrassing or uncomfortable”. But, he added: “If and when they do finally take up their invitation, they are glad they took part.
“A few moments of minor inconvenience are a small price to pay for the reassurance that comes for most people when they are either told either they don’t need further tests, or, for some, are given the chance to enable early detection, with the life-saving intervention that can follow.”
Read more from Sky News:
Christmas tree chopped down hours after lights switch-on
More photos from Epstein’s estate released
Taylor Swift breaks down in tears over Southport attacks
Giving his “most heartfelt thanks” to doctors, nurses, researchers and charity workers, the King added: “As I have observed before, the darkest moments of illness can be illuminated by the greatest compassion. But compassion must be paired with action.
“This December, as we gather to reflect on the year past, I pray that we can each pledge, as part of our resolutions for the year ahead, to play our part in helping to catch cancer early.
“Your life – or the life of someone you love – may depend upon it.”
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment3 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024