Spring Statement – 26 March 2025

Having set herself ‘iron-clad’ fiscal rules and the goal of holding a single fiscal event each year, the Chancellor was in a difficult position only five months after her first Budget. Growth had been slower and interest rates and inflation higher than the Office for Budget Responsibility (OBR) projected last October, meaning that her main fiscal target was liable to be missed. Despite much press speculation, fresh tax increases were ruled out until the next full Budget, so her focus was turned on controversial spending cuts.

A large slice of the pain was borne by the welfare budget, with well-trailed reductions to Personal Independence Payments (PIPs) and the health-related element of Universal Credit. However, there were a variety of other measures, including administrative and technical tax changes, as well as increased fees for passports and other Home Office services.

Among the key headline items were:

• cuts to sickness and disability benefits producing projected net savings of £4.8 billion a year by 2029/30;
• tax administrative reforms aimed at raising over £1 billion a year;
• a £3.25 billion Transformation Fund to improve public sector productivity;
• confirmation that the Treasury is “looking at options for reforms to Individual Savings Accounts”, with the emphasis on the balance between cash and equities; and
• a projection from the OBR that growth in 2025 would be 1% – half the level projected last October – but that each of the subsequent four years would see higher growth than last autumn’s.

As ever, the Treasury’s publications contained a wide range of detailed proposals and much to digest. Our summary highlights the key aspects likely to affect you. If you have any questions about what you should do next, please get in touch.