The Spring Statement and Its Impact

27th March 2025

The Chancellor’s Announcements

Rachel Reeves, addressed the UK Parliament on Wednesday to present her Spring Statement, which included some well-trailed policy changes.

During the 30 minutes or so that she spoke, the Chancellor:

• Highlighted current global economic uncertainty and security issues, and the impact on public finances. 
• Confirmed that she was sticking to fiscal rules outlined last year – with cuts being sought to restore ‘fiscal headroom’.
• Outlined poorer predictions for economic growth (1% this year) and a likely uptick in inflation before it falls again.
• Announced significant additional spend for defence; including increased capital expenditure.
• Said that there would be new measures to target tax avoidance and evasion – expected to raise £1bn.

There should be Barnett consequentials from some of the additional spend announced in the run-up to the Chancellor’s Statement.

Social Security

The plans announced and media stories prior to the Statement caused real concern for disabled people and their families, and across the voluntary sector. That concern has deepened following the announcements made by the Chancellor of the Exchequer.

£4.8bn cuts were outlined, but NEF suggests an overall reduction of over £6bn to be achieved by 2029/30.

£1.4bn investment will be invested in employability/employment support.  

The most significant changes:

• A rise in the Universal Credit standard allowance for 6.5 million people – but this will be £1 a week lower than previously suggested.
• The health element of universal credit (limited capability for work) will be halved for new claimants to £50 a week in 2026-27, then frozen.
• In addition, existing claimants will see their entitlement frozen at £97 a week until 2029-30. 
• Young disabled people won’t be eligible for the health element of Universal Credit until they’re 22.
• There will be a tougher PIP assessment and the Work Capability Assessment will be scrapped.

You can learn more about planned changes to PIP and other proposals here from Scope. You can also read the Government’s consultation paper ‘Pathways to Work’ here. For a summary of all relevant information, including the Government’s impact assessment of the proposals, visit Benefits and Work here. This link also provides campaigning ideas so that our sector and local communities can reach out to their local politicians.

NEF shared on X that the Office for Budget Responsibility has been unable to assess how many people will move into employment as a result of the changes to PIP and Universal Credit.  Meanwhile, the Joseph Rowntree Foundation has indicated that the Government’s own impact assessment may understate the effects of the proposals on poverty levels in the UK.

Social security changes have not yet happened

It’s not surprising that disabled people and their families are distressed by the news just now and will be concerned for the future. So, it’s important to note that these are proposed changes and that there is an ongoing consultation and parliamentary process to come.

Across the voluntary sector, organisations are coming together to campaign and challenge the changes, and to respond to the Government’s consultation. Hear how some voluntary sector organisations have responded so far below, including links for further information, advice and support:

The Response from the Sector

• Tressa Burke from Glasgow Disability Alliance on Radio Scotland last week.
• The Poverty Alliance says that there is “no justification“ for social security cuts.
• Child Poverty Action Group response to Spring Statement.
• Carers UK/Carers Scotland on the potential knock on impact of changes on unpaid carers.
• Inclusion Scotland responds, with some insight into the impact in Scotland.

Anyone who is concerned about the potential changes can also find contact details for local welfare rights and financial support organisations here at Gain4u.

The Impact in Scotland

On social security, Universal Credit is accessed by people across Great Britain, so Scottish claimants will be affected.

PIP is almost fully devolved to the Scottish Government, but any reductions in overall PIP spend will feed through to the Scottish budget for social security. It’s unclear at this stage how Scottish Ministers will respond if that happens. The Fraser of Allander Institute provides more detailed information and analysis here. This includes a summary of additional spending from Barnett consequentials for 2025/26, as well as likely effects on future Scottish Government budgets. 

Challenges also remain in meeting the additional costs arising from changes to Employer National Insurance contributions.

Our Response

“Like many of our members, we are deeply dismayed at the planned cuts to social security. These changes will have a devastating effect on people in Glasgow. This is borne out by the Government’s own impact assessment which shows that more people – including children – will be pushed into absolute poverty.

These changes will hinder the city’s ambition to reduce child poverty.   

It’s inevitable that our sector will face increased demand for information and crisis support from individuals and families. This will happen at a time when the sector already faces significant financial challenges.  

In December, we called for a benefits system, that is sufficient, compassionate and which enables people to work where they can – but which also offers a good quality of life for those who can’t. Today’s announcements feel like a step away from instead of towards that vision.” Ian Bruce, CEO of GCVS

Building a stronger voice for the sector

Make sure you’re part of the conversation. If you’re not yet a GCVS Member and want to join, please click here to learn more. Membership is free to organisations with no paid employees, while larger organisations contribute in a tiered system. Plus, you can apply online. For any questions, please contact membership@gcvs.org.uk.