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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).

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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.

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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.

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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
Image:
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.

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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.

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Major incident declared in Birmingham as ‘17,000 tonnes’ of rubbish piles up

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Major incident declared in Birmingham as '17,000 tonnes' of rubbish piles up

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.

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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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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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‘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”.

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‘Extensive search’ under way for 11-year-old girl who fell into River Thames

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'Extensive search' under way for 11-year-old girl who fell into River Thames

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.”

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Sentencing guidelines for ethnic minority suspects delayed after backlash

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Sentencing guidelines for ethnic minority suspects delayed after backlash

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.

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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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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.

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