The Chancellor will on Wednesday reveal the Government’s spending plans in the Spring Statement.
Rachel Reeves is expected to reveal significant cuts to the Civil Service as well as unveil further details of the cuts to benefits and disability welfare payments.
Low growth figures, combined with higher-than-expected borrowing, is predicted to put pressure on Ms Reeves to slash Government spending.
Follow The Standard’s Spring Statement live blog to be kept up to date
Here’s what you can expect from the announcement:
Taxes
The Government has signalled this will not be a "tax and spend" event.
National Insurance payments for businesses were hiked in the Budget last year and the Chancellor decided not to stretch out the freeze on the thresholds at which workers begin paying different rates of income tax.
Ms Reeves has suggested that she will not raise or lower taxes in her Spring Statement.
Benefits
Sweeping cuts to benefits payments were announced earlier this month by the Work and Pensions Secretary as the Government seeks to slash Britain’s welfare bill.
But Ms Reeves is understood to be planning to slash Britain’s welfare bill by another £500million after the Office for Budget Responsibility (OBR) rejected the Government's assessment that the package of previous measures will save £5billion.
The OBR said the cuts would only save £3.4billion, leaving the Government scrambling to find further savings.
The Chancellor is expected to announced on Wednesday that Universal Credit (UC) incapacity benefits for new claimants, which were halved under the previous plan, will be frozen until 2030 rather than rising in line with inflation and there will also reportedly be a reduction in the basic rate of the benefit in 2029.
Sir Keir Starmer insisted there is a “moral and economic” case to cut benefits payments, particularly for those claiming disability, and get people back into work.
The move has been criticised by charities and backbench Labour MPs, who have argued the Government is trying to balance the books by taking money from the most vulnerable in society.
The impact and further details of the measures will be revealed on Wednesday when the assessment of the cuts is published.
Britain’s health and disability bill currently sits at £65billion, but is expected to balloon to £100billion over the next four years without reform.
Civil Service Spending
The Chancellor is already facing a war with unions following reports she plans to cuts the Civil Service’s running costs by 15%.
She has signalled this could result in 10,000 public sector workers losing their jobs, but there have been suggestions it could result in as many as 50,000 employees being cut.
Ms Reeves has asked Whitehall departments to come up with areas they could make significant savings and as part of the fiscal rules she has set herself has vowed not to borrow to fund day-to-day spending,
Cabinet minister Pat McFadden has written to Government departments calling for £2billion of savings by the end of the decade.
“We are, by the end of this Parliament, making a commitment that we will cut the costs of running government by 15%,” Ms Reeves told the BBC.
Details of the departments most likely to be hit will be laid out in her statement.
Growth
Economic growth was made the Government’s “number one priority” by the Prime Minister when Labour came to power.
But with the Office for Budget Responsibility expected to downgrade predictions for growth in the UK economy 2% for this year to around just 1%, Ms Reeves will likely attempt to argue that the global outlook is to blame.
US President Donald Trump’s decision to hit British steel and aluminium imports with 25% tariffs, with suggestions that further taxes on cars, semiconductors and pharmaceutical goods deliver from the UK could coming in next month, will be a major blow.
Businesses have already been attacked the Government over the decision to raise National Insurance payments for employers saying it will hit the UK’s growth prospects.
