Rachel Reeves blamed “increased global uncertainty” as she set out savings of around £14 billion, with sweeping changes to benefits, defence and home-building announced.

The Chancellor said the Office for Budget Responsibility had upgraded their growth forecast “next year and every single year thereafter”, saying: “With GDP growth of 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.

“By the end of the forecast our economy is larger compared to the OBR’s forecast at the time of the budget," she said. 

Ms Reeves added: “Compared to the forecast in the final budget delivered by the party opposite, and after taking account of inflation, the OBR say today that people will be on average over £500 a year better off under this Labour Government.”

Ms Reeves told MPs: “The increased global uncertainty has had two consequences.

“First, on our public finances. And second, on the economy.”

At her budget in October she set out plans which met that goal with £9.9 billion to spare in 2029/30.

Benefits changes 

Ms Reeves told the Commons the government is investing £1 billion to help people back into work.

“We are investing £1 billion to provide guaranteed, personalised employment support to help people back into work and £400 million to support the Department for Work and Pensions to deliver these reforms effectively and fairly, taking total savings from the package to £3.4 billion”, she said.

“Overall, these plans mean that welfare spending as a share of GDP will fall between 2026-27 and the end of the forecast period.

Protesters march towards Parliament Square, London, as Chancellor of the Exchequer Rachel Reeves delivers her spring statement to MPs in the House of Commons, London. Protesters march towards Parliament Square, London, as Chancellor of the Exchequer Rachel Reeves delivers her spring statement to MPs in the House of Commons, London. (Image: Ben Whitley)

“We are reforming our welfare system, making it more sustainable, protecting the most vulnerable and supporting more people back into work.”

This includes last week's announced changes. The savings will largely come from changes to eligibility for the Personal Independence Payment (PIP), but also from a reduction of the health element of Universal Credit, and by combining it with Employment and Support Allowance.

Civil service voluntary redundancies and health spending

Ms Reeves said the Government will make the state “leaner and more agile” as she announced a new Transformation Fund.

This includes “voluntary exit schemes to reduce the size of the civil service”.

She told MPs: “That is money brought forward now to bring down the costs of running Government by the end of the forecast period by making public services more efficient and more productive."

She told the Commons: “Earlier this month, the Prime Minister set out our plans to abolish the arm’s-length body NHS England and ensure that money goes directly to improving the experience for patients.

“The Health Secretary is driving forward vital reforms to increase NHS productivity, bearing down on costly agency spend to save money we can improve patient care. And the Chancellor of the Duchy of Lancaster is taking forward work to significantly reduce the costs of running government by 15%, worth £2 billion, by the end of the decade.

“This work shows that we can make our state leaner, and more agile, delivering more resources to the front line while ensuring we control day-to-day spending to meet our fiscal rules.

“Today, I build on that work by bringing forward £3.25 billion of investment to deliver the reforms that our public services need through a new Transformation Fund.”

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Increased defence spending

The Chancellor has allocated an additional £2.2 billion to the Ministry of Defence’s budget for next year.

She said: “Today I confirm that I will provide an additional £2.2 billion for the Ministry of Defence next year, a further down payment on our plans to deliver 2.5% of GDP. This additional investment is not just about increasing our national security, but increasing our economic security, too.”

She added: “We will take forward our Plan for Barrow, a town at the heart of UK nuclear security, working with (Michelle Scrogham) and providing £200 million, supporting the creation of thousands of jobs.

“We will regenerate Portsmouth naval base, securing its future, as called for by (Stephen Morgan).”

She added: “We will spend a minimum of 10% of the Ministry of Defence’s equipment budget on novel technologies including drones and AI (artificial technology) enabled technology.

“Driving forward advanced manufacturing production in places like Glasgow, Derby and Newport, creating demand for highly-skilled engineers and scientists, and delivering new business opportunities for UK tech firms and start-ups.”

Increased house-building

Ms Reeves talked about previously announced changes to the number of homes built across the country.

“We published changes to the National Planning Policy Framework, driven forward tirelessly by the Deputy Prime Minister, reintroducing mandatory housing targets and bringing “grey belt” land into scope for development," she said.  

"The OBR have today concluded that these reforms will permanently increase the level of real GDP by 0.2% by 2029-30, an additional £6.8bn in our economy and by 0.4% of GDP within the next 10 years an additional £15.1bn in our economy.

“That is the biggest positive growth impact that the OBR have ever reflected in their forecast, for a policy with no fiscal cost. And taken together with our plans to increase capital spending this Government’s policies will increase the level of real GDP by 0.6% in the next 10 years.”

She said: “The planning system that we inherited was far too slow. The OBR have concluded that our reforms will lead to housebuilding reaching a 40-year high of 305,000 by the end of the forecast period.

“And changes to the national planning policy framework alone will help build over 1.3 million homes in the UK over the next five years taking us within touching distance of delivering on our manifesto promise to build 1.5 million homes in England this parliament.”

Possible changes to ISAs and free school meals

There was no mention of a reduction to the £20,000 tax-free annual limit for cash ISAs, or changes to LISAs, or Lifetime ISAs.

Similarly, there were no obvious cuts to the education budget or any introduction of means-testing for free school meals.

No change for the personal allowance

Despite a petition to raise the HMRC income tax personal allowance threshold from £12,570 to £20,000 has received more than 200,000 signatories, no change to the personal allowance was announced. Signatures can still be added here.

The petition to Parliament was started by Alan David Frost, saying: "Raise the income tax personal allowance from £12570 to £20000.

"We think this would help low earners to get off benefits and allow pensioners a decent income.

"We think it is abhorrent to tax pensioners on their State Pension when it is over the personal allowance. We also think raising the personal allowance would lift many low earners out of benefits and inject more cash into the economy creating growth."