Lower-income households set to be £500 poorer after chancellor’s spring statement – thinktank
Lower income households are set to be £500 poorer due to benefit cuts and a weak economic outlook, a thinktank has found.
Living standards are on track to fall over the next five years for the poorest half of households, according to the Resolution Foundation’s analysis of Wednesday’s spring statement.
It said a fall of this scale had only been exceeded historically by the early 1990s recession and the 2008 financial crisis and fallout.
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How has the economy changed?
Its analysis was released against the backdrop of a backlash against the chancellor, with Labour MPs among those joining charities in warning that her decision to target welfare spending to bolster the public finances was a mistake.
In its latest assessment of the economy that accompanied her speech, the Office for Budget Responsibility declared that real household disposable income per person was expected to grow from next year to 2029-30, led by stronger wage growth as inflation started to fall.
But the country’s independent fiscal watchdog said a global trade war could reduce economic output by 1%, leaving Rachel Reeves’s small headroom – cash set aside that was created by her spending cuts – at risk of being wiped out for a second time.
She was speaking just hours before Donald Trump revealed plans to target all car imports to the US with 25% tariffs.
Paul Johnson, director of the Institute for Fiscal Studies think-tank, said: “If you are going to have ‘iron-clad’ fiscal rules then leaving yourself next to no headroom against them leaves you at the mercy of events.”
He warned that Ms Reeves could find herself soon at the centre of renewed tax hike speculation ahead of the autumn budget.
Poorest households worst hit
The overall impact of all tax and benefit changes taking effect in this Parliament will reduce the incomes of the second poorest fifth of households by 1.5%, compared to a 0.6% fall for the richest fifth, the foundation found.
The £4.8bn of welfare savings announced by Rachel Reeves will actually result in £8.1bn in cuts, it said.
“After accounting for the £1.9bn boost to the standard rate of universal credit, and the ‘gain’ from not going ahead with scored-but-never-implemented changes to the Work Capability Assessment, cuts to ill-health, disability and carer’s benefits rise to £8.1bn in 2029/30, and will continue to grow over time,” it calculated.
The changes to benefits mean there are “huge holes” in the welfare safety net, and the foundation called for transitional protections to prevent such sharp income shocks.
Ruth Curtice, the chief executive of the Resolution Foundation, said: “High debt servicing costs, weak tax receipts, and the need to reassure jittery markets meant the chancellor had to announce tax rises or spending cuts in her spring statement.
“She chose to focus the bulk of her consolidation on welfare cuts. These cuts have been justified on the basis of getting people into work, but it is questionable how much of a jobs boost they’ll deliver.
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“After all, the bulk of the cuts are to disability benefits which aren’t related to work, and the cuts take effect from 2026, three years before the government’s employment support programme kicks into gear.
“While the OBR’s [Office for Budget Responsibility] outlook for growth today got gloomier, it is far more optimistic about Britain’s medium-term economic prospects.
“The chancellor will hope that reality catches up with the OBR, rather than the OBR falling back to reality, otherwise more tough choices await.”
Ms Curtice added: “The outlook for living standards remains bleak. Britain’s poor economic performance, combined with policies that bear down hardest on those on modest incomes, mean that 10 million working-age households across the bottom half of the income distribution are on track to get £500 a year poorer over the course of the Parliament.”
The television production company founded by broadcaster Jake Humphrey and former racing driver David Coulthard is in talks with potential buyers about a sale.
Sky News has learnt that Whisper Group, which was established in 2010 and won a BAFTA for its coverage of the Women’s Euros in 2022, is working with advisers on a deal.
The company is said to be open to a range of options, including the sale of a majority or minority stake to either financial investors or a strategic buyer.
Corporate financiers at KPMG are orchestrating talks with potential bidders.
Whisper is already 30%-owned by Sony Pictures Television, which acquired the stake in 2020.
It replaced Channel 4’s Indie Growth Fund as an investor in the business.
A majority of the shares in Whisper are owned by its founders and management team.
Lioness Millie Bright celebrates England’s win at the Women’s Euros 2022, the coverage of which was produced by Whisper. File pic: Reuters
The company is best-known for its sports productions, and is responsible for Channel 4’s Formula One coverage as well as international cricket, boxing and the Paralympics.
Whisper employs about 300 people, and has operations in London, Cardiff, Manchester and Riyadh.
Its chief executive, Sunil Patel, co-founded the producer alongside Mr Coulthard and Mr Humphrey.
It is said to be plotting further expansion in sport in the form of bigger events and rightsholders, as well as in events, where its clients include Red Bull.
Whisper is also focused on growing its presence in the US, where it currently works with Tom Brady’s Religion of Sport, and the Middle East, where it is partnered with Neom and Saudi Pro League teams.
Outside of sports rights, it has produced documentaries about Ben Stokes, the England Test cricket captain, and Sven-Goran Eriksson, the late England football manager.
It has also diversified into entertainment programming, producing the Wheel of Fortune gameshow hosted by Graham Norton.
Its most recent accounts disclosed a £4.3m pre-tax profit for the year to March 31, 2024.
“Whisper has successful diversified into factual, entertainment and events to complement the wider blend of work across its sports broadcast contracts,” it said in a statement accompanying the accounts.
“It has been another successful year for contract wins, with a series of renewals with key clients and a new range of significant projects which will help ensure visibility over the next few years.”
The sale process comes as ITV holds talks about a merger of its Studios arm with RedBird IMI-owned All3Media, one of Britain’s biggest production companies.
A combination of the two businesses could be announced during the spring, according to banking sources.
This weekend, a spokesman for Whisper declined to comment.
Business
Port giant DP World ‘discredited’ by former minister despite £1bn investment in London Gateway
The chairman of P&O Ferries’ parent company DP World has told Sky News he went ahead with a £1bn investment in the UK despite feeling “discredited” by criticism from a cabinet minister.
P&O was widely criticised in 2022 when more than 700 seafarers were summarily fired and replaced by largely overseas workers without consultation.
Last October, the issue threatened DP World’s planned expansion of London Gateway, its deepwater port on the Thames Estuary, when the then transport secretary, Louise Haigh, described P&O as a “rogue operator”.
Her comments came as DP World was in the final stages of negotiating a £1bn investment in the port, due to be announced at the government’s investment summit.
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In response, DP World pulled the announcement and only relented following a personal intervention by the prime minister to keep his showpiece event on course.
DP World chairman Sultan Ahmed Bin Sulayem
Speaking exclusively to Sky News, Sultan Ahmed Bin Sulayem said the criticism was unexpected given the scale of his planned investment in the UK.
‘Water under the bridge’
“There was a misunderstanding. Someone, unfortunately, said something that was not what we expected.
“We were going to invest in infrastructure, a huge investment, and then we get the person in charge to basically discredit us. But it’s water under the bridge.”
Bin Sulayem confirmed that he had spoken with the prime minister and received “reassurances” that Ms Haigh was expressing a personal view. She subsequently resigned after admitting a fraud offence.
The chairman also defended P&O’s conduct, saying that having received no state support during the pandemic, the cuts were necessary to save the company.
“We had a choice. We either close down the company and 3,000 people or more lose their jobs, or we try to survive by letting 700 or so go. And we felt that was right,” he said.
“Maybe we didn’t follow the procedures, but most importantly, we compensated every employee with more than what the law said.”
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Rebuilding relations
DP World’s London Gateway container port in Stanford-le-Hope, Essex. File pic: PA
Bin Sulayem was speaking on a flying visit to the UK intended to rebuild relations with the government, meeting investment minister Poppy Gustaffsen at London Gateway to discuss an expansion that will make the port Britain’s largest by volume and offering encouraging words about the UK’s attractiveness to investors.
“We believe in the UK economy, in its strength, and we believe the economic fundamentals are strong. That’s why we invested,” he said.
“The UK has the best stock market in the world. You have English law, and you have the best universities in Oxford and Cambridge. If we look to the future, it will be the economy of the brain, not the economy of the hand.
“The world economy doesn’t want labourers, it wants brains. People want engineers. They want free thinkers. They want innovators. That is what’s here, and that’s why we invested in London Gateway.”
Sky’s Paul Kelso with Bin Sulayem
Tariff trade trouble
With ports and logistics operations in more than 70 countries handling around 10% of global trade, DP World’s chairman has a unique insight into global trade and the likely impact of the tariff war sparked by Donald Trump.
While confident that trade will find a way to navigate the disruption, he warned America’s trading partners to take the president seriously.
“I think psychologically it will [have an impact], but in reality it will not, because trade is resilient. I think of it like water coming from the mountain in the rain, nobody can stop it. If you can’t sell a product in one place, you can sell it somewhere else.
“Trump is a deal maker. He is making threats because that’s the way he negotiates. He comes with impossible demands because he wants people to come to the table.
“But he’s serious. He will do what he’s threatening if nobody makes a deal.”
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