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The National (Scotland)
The National (Scotland)
National
Alasdair Ferguson

Rachel Reeves set to announce further benefit cuts in Spring Statement

RACHEL Reeves is expected to announce further cuts in her Spring Statement on Wednesday, with more funding for the welfare budget expected to be axed.  

The news of the Chancellor planning further cuts in the Spring Budget came after the Office for Budget Responsibility (OBR) rejected her estimate of savings from the changes announced last week. 

Reeves had hoped to shift the focus from the benefits cuts, which angered some Labour backbenchers and were heavily criticised by charities, by promising to “secure Britain’s future” with a £2.2bn increase to defence spending. 

However, it has been reported that the final estimates from the OBR suggested the changes announced by Liz Kendall, Secretary of State for Work and Pensions, which included tightening the criteria for the personal independence payment (Pip), would not save the £5bn needed to meet Reeves’s self-imposed fiscal rules. 

The watchdog’s assessment is that changes to disability and incapacity benefits will save £3.4 billion in 2029/30 rather than the more than £5 billion claimed by ministers. 

The Chancellor is expected to announce an additional £500 million in benefits cuts to make up part of the £1.6bn shortfall, with the rest of the gap filled by spending cuts elsewhere, The Times reported. 

It was also reported that Reeves is already braced for a backlash over the additional welfare cuts as her team are prepared to publish impact assessments alongside Wednesday’s statement, which will show the full impact of the cuts.  

Universal credit incapacity benefits for new claimants will now be frozen until 2030 rather than increased in line with inflation and there will also be a small reduction in the basic rate in 2029, it has also been reported. 

Some Labour frontbenchers had previously suggested they could quit over a proposed freeze to Pip, which was not included in Kendall’s package. 

Ahead of Reeves' statement on Wednesday official figures showed inflation fell in February

(Image: Jordan Pettitt/PA Wire)

The rate of Consumer Prices Index (CPI) inflation fell to 2.8% in February from 3% in January, the Office for National Statistics (ONS) said. 

The OBR is widely expected to slash its forecast for economic growth, following similar recent revisions by the Bank of England and the Organisation for Economic Co-operation and Development (OECD). 

The UK Government has also borrowed more than previously expected, with the cost of those loans rising – in part due to global turbulence. 

In her spring statement, the Chancellor will tell MPs that a “more insecure world” requires a greater focus on national security, with a promise to increase defence spending by £2.2bn from April as part of the previously announced plan for the biggest boost in military funding since the Cold War funded by cutting the aid budget. 

She will say: “This moment demands an active government stepping up to secure Britain’s future. A government on the side of working people. 

“To grasp the opportunities that we now have and help Britain reach its full potential, we need to go further and faster to kickstart growth, protect national security and make people better off through our plan for change.” 

Reeves will also tell MPs she is “proud” of her record in office – despite the sluggish economic growth figures which have heaped pressure on her.

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