Spring Statement 2025 speech
Spring Statement 2025 speech as delivered by Chancellor Rachel Reeves.
Mr Speaker, [political content redacted].聽
To provide security for working people.聽
And to deliver a decade of national renewal.聽
That work began in July 鈥 and I am proud of what we have delivered in just nine months.聽
Restoring stability to our public finances鈥β犅
鈥 giving the Bank of England the foundation to cut interest rates鈥β犅
鈥 three times since the General Election.聽聽
Rebuilding our public services鈥β
鈥 with record investment in our NHS鈥β
鈥 bringing waiting lists down for 5 months in a row.聽聽聽
And increasing the National Living Wage鈥β
鈥 to give 3 million people a pay rise from next week.聽聽
Now our task is to secure Britain鈥檚 future鈥β
鈥 in a world that is changing before our eyes.聽聽
The threat facing our continent was transformed when Putin invaded Ukraine.聽
It has since escalated further鈥β犅
鈥 and continues to evolve rapidly.聽聽
At the same time, the global economy has become more uncertain鈥β犅
鈥 bringing insecurity at home鈥β
鈥 as trading patterns become more unstable鈥β
鈥 and borrowing costs rise for many major economies.聽聽
Mr Speaker, the job of a responsible government is not simply to watch this change.聽
This moment demands an active government.聽
A government not stepping back, but stepping up.聽聽
A government on the side of working people鈥β犅
鈥 helping Britain to reach its potential.聽聽
We have the strengths to do just that鈥β
鈥 as one of the world鈥檚 largest economies 鈥β
鈥 an ally to trading partners across the globe鈥β犅
鈥 and a hub for global innovation.聽聽
These strengths鈥β
鈥 and the progress we have made so far鈥β
鈥 mean we can act quickly and decisively in a more uncertain world鈥β
鈥 to secure Britain鈥檚 future鈥β
鈥 and to deliver prosperity for working people.聽
Mr Speaker, as I set out at the Budget last year鈥β
鈥 I am today returning to the House to provide an update on our public finances鈥β
鈥 supported by a new forecast from the independent Office for Budget Responsibility鈥β
鈥 ahead of a full Spending Review in June.聽
I will then return to the House in the autumn to deliver a budget鈥β
鈥 in line with our commitment to deliver just one major fiscal event a year.聽
So let me turn now to the OBR鈥檚 forecasts鈥β
鈥 and I want to thank Richard Hughes and his team for their dedicated work.聽
The increased global uncertainty has had two consequences.聽
First, on our public finances.聽
And second, on our economy.聽
I will take each in turn.聽聽
In the autumn, I set out new fiscal rules that would guide this government.聽
These fiscal rules are non-negotiable.聽
They are the embodiment of this government鈥檚 unwavering commitment鈥β
鈥 to bring stability to our economy鈥β
鈥 and to ensure security for working people.聽
[political content redacted]
But we must earn that trust every single day.聽聽
The two fiscal rules that I set out at the Budget were鈥β
First, our 鈥淪tability Rule鈥, which ensures that public spending is under control鈥β
鈥 balancing the current budget by 2029-30鈥β
鈥 so that day-to-day spending is met by tax receipts.聽聽
Second, our 鈥淚nvestment Rule鈥 to drive growth in the economy鈥β
鈥 ensuring that net financial debt falls by the end of the forecast period鈥β犅
鈥 while enabling us to invest alongside business.聽
Turning first to the Stability Rule, the OBR鈥檚 forecast shows that鈥β
鈥 before the steps that I will take in this statement鈥β犅
鈥 the current budget would have been in deficit by 拢4.1bn in 2029-30鈥β
鈥 having been in surplus by 拢9.9bn in the autumn鈥β犅
鈥 as the UK, alongside our international peers like France and Germany鈥β
鈥 has seen the cost of borrowing rise during this period of heightened uncertainty in global markets.聽
As a result of the steps that I am taking today鈥β
鈥 I can confirm that I have restored in full our headroom against the 鈥渟tability rule鈥濃β犅
鈥 moving from a deficit of 拢36.1bn in 2025-26 and 拢13.4bn in 2026-27鈥β
鈥 to a surplus of 拢6.0bn in 2027-28, 拢7.1bn in 2028-29 and a surplus of 拢9.9bn in 2029-30.聽
[political content redacted]
That means that we are continuing to meet the Stability Rule two years early鈥β犅
鈥 building resilience to shocks in this, a more uncertain world.聽聽
The OBR forecast that the 鈥渋nvestment rule鈥 is also met two years early鈥β
鈥 with net financial debt of 82.9% of GDP in 2025-26 and 83.5% in 2026-27鈥β
鈥 before falling from 83.4% in 2027-28, to 83.2% in 2028-29 and 82.7% in 2029-30鈥β犅
鈥 providing headroom of 拢15.1bn in the final year of the forecast鈥β
鈥 broadly unchanged from the autumn.聽聽
[political content redacted]
鈥 debt interest payments now stands at 拢105.2bn this year鈥β
鈥 Mr Speaker, that is more than we allocate on Defence, the Home Office and Justice combined.聽
[political content redacted]
So the responsible choice is to reduce our levels of debt and borrowing in the years ahead鈥β
鈥 so that we can spend more on the priorities of working people. And that is exactly what this government will do.聽
Mr Speaker.聽
I said that our fiscal rules were non-negotiable.聽
And I meant it.聽
I will always deliver economic stability.聽
And I will always put working people first.聽聽
[political content redacted]
I said it at the Budget.聽
And I say it again today.聽
Let me now set out the steps the government has taken.聽聽
At the Budget we protected working people鈥β
鈥 by keeping our promise not to raise their rates of National Insurance, income tax or VAT.聽
At the same time, we began to rebuild our public services鈥β犅
[political content redacted]
Ours were the right choices, the right choices for stability and the right choices for renewal鈥β
鈥 funded by the decisions that we took on tax.聽聽
As I promised in the autumn, this Statement does not contain any further tax increases.聽聽
But when working people are paying their taxes, while still struggling with the cost-of-living鈥β犅
鈥t cannot be right that others are still evading what they rightly owe in tax.聽聽
In the Budget, I delivered the most ambitious package of measures that we have ever seen鈥β
鈥 to cut down on tax evasion鈥β
鈥 raising 拢6.5bn per year by the end of the forecast.聽聽
Today, I go further鈥β
鈥 continuing our investment in cutting-edge technology 鈥β
鈥 investing in the HMRC鈥檚 capacity to crack down on tax avoidance鈥β
鈥 and setting out plans to increase the number of tax fraudsters charged every year by 20%.聽
These changes raise a further 拢1bn鈥β
鈥 taking the total revenue raised from reducing tax evasion under this [political content redacted] government to 拢7.5bn鈥β
鈥 figures verified by the Office for Budget Responsibility鈥β犅
鈥 and I want to thank my Honourable Friend the Exchequer Secretary for his continued work in this area.聽聽
Mr Speaker, last week my Right Honourable Friend the Secretary of State for Work and Pensions, set out this government鈥檚 plans to reform the welfare system.聽聽
[political content redacted]
We believe that if you can work, you should work鈥β
鈥 but if you can鈥檛 work, you should be properly supported.聽聽
This government inherited a broken system.聽聽
More than 1,000 people are qualifying for Personal Independence Payments.聽
And 1 in 8 young people are not in employment, education or training.聽
If we do nothing, we are writing off an entire generation.聽聽
That cannot be right and we will not stand it.聽聽
It is a waste of their potential and it is a waste of their futures and we will change it.聽
As my Right Honourable Friend said in her statement last week鈥β
鈥 the final costings would be subject to the OBR鈥檚 assessment.聽
Today, the OBR have said鈥β
鈥 that they estimate the package will save 拢4.8bn in the welfare budget鈥β
鈥 reflecting their judgements on behavioural effects and wider factors.聽
This also reflects final adjustments to the overall package鈥β
鈥 consistent with the Secretary of State鈥檚 statement last week鈥β
鈥 and the government鈥檚 Pathways to Work Green Paper.聽
The Universal Credit Standard Allowance will increase from 拢92 per week in 2025-26 to 拢106 per week by 2029-30鈥β
鈥 while the Universal Credit Health element will be cut for new claimants by 50% and then frozen.聽聽
On top of this, we are investing 拢1bn to provide guaranteed, personalised employment support to help people back into work鈥β
鈥 and 拢400m to support the Department for Work and Pensions and our Job Centres to deliver these changes effectively and fairly鈥β
鈥 taking total savings after that for the package to 拢3.4bn.聽
Whilst spending on disability and sickness benefits will continue to raise, these plans聽
mean that welfare spending as a share of GDP will fall between 2026-27 and the end of the forecast period.聽聽
[political content redacted]
We are reforming our welfare system鈥β
鈥 making it more sustainable鈥β
鈥 protecting the most vulnerable鈥β
鈥 and supporting more people back into secure work lifting them out of poverty.鈥兟
Mr Speaker, at the Budget, I fixed the foundations of our economy to deliver on the promise of change.聽
That work has already begun.聽
2 million extra appointments in our NHS.聽
Waiting lists down.聽聽
New breakfast clubs opening across England.聽
The largest settlements in real terms for Scotland, Wales and Northern Ireland in the history of devolution.聽聽
Asylum costs, falling.聽
Promises made, promises kept.聽聽
[political content redacted]
At the Budget鈥β
鈥 alongside providing an increase in funding for this year and next鈥β
鈥 I set the envelope for the Spending Review鈥β
鈥 which we will deliver in June鈥β
led by my RHF the Chief Secretary to the Treasury聽
鈥 to set departmental budgets until 2028-29 for day-to-day spending鈥β
鈥 and until 2029-30 for capital spending.聽聽
Today, I am reflecting two steps that we have taken in our spending plans.聽聽
First, because we are living in an uncertain world鈥β
鈥 as the Prime Minister has set out鈥β
鈥 we will increase defence spending to 2.5% of GDP, reducing overseas aid to 0.3% of Gross National Income.聽
This means we save 拢2.6bn in day-to-day spending in 2029-30鈥β
鈥 to fund our more capital-intensive defence commitments.聽聽
Second, in recent months, we have begun to fundamentally reform the British state鈥β
鈥 driving efficiency and productivity across government鈥β
鈥 to deliver tangible savings鈥β
鈥 and improve services across our country.聽
Earlier this month, the Prime Minister set out our plans to abolish the arms-length body NHS England鈥β
鈥 and ensure that money goes directly to improving the service for patients.聽
My Right Honourable Friend the Health Secretary is driving forward vital reforms to increase NHS productivity鈥β
鈥 bearing down on costly agency spend鈥β
鈥 to save money so that we can improve patient care.聽
And my Right Honourable Friend the Chancellor of the Duchy of Lancaster is taking forward work to significantly reduce the costs of running government鈥β
鈥 by 15%, worth 拢2bn, by the end of the decade.聽
This work shows that we can make our state leaner, and more agile鈥β
鈥 delivering more resources to the frontline鈥β犅
鈥 while ensuring we control day-to-day spending to meet our fiscal rules.聽
Today, I build on that work鈥β
鈥 by bringing forward 拢3.25bn of investment鈥β
鈥 to deliver the reforms that our public services need鈥β犅
鈥 through a new Transformation Fund.聽聽
That is money brought forward now鈥β
鈥 to bring down the costs of running government by the end of the forecast period鈥β犅犅
鈥 by making public services more efficient, more productive and more foucssed on the user.聽
I can confirm today the first allocations from this fund鈥β
鈥 including funding for Voluntary Exit Schemes to reduce the size of the Civil Service鈥β
鈥 pioneering AI tools to modernise the state鈥β
鈥 investment in technology for the Ministry of Justice to deliver probation services more effectively鈥β
鈥 and up-front investment so we can support more children in foster care鈥β
鈥 to give them the best possible start in life鈥β
鈥 and reduce cost pressures in the future.聽
Our work to make government leaner鈥β
鈥 more productive鈥β
鈥 and more efficient鈥β
鈥 will help deliver a further 拢3.5bn of day-to-day savings by 2029-30.聽
Overall, day-to-day spending will be reduced by 拢6.1bn by 2029-30鈥β犅
鈥 and it will now grow by an average of 1.2% a year above inflation鈥β犅
鈥 compared to 1.3% in the Autumn.聽
Mr Speaker, I can confirm to the House that day-to-day spending will increase in real terms, above inflation, in every single year of the forecast.聽聽
And in the Spending Review, apart from the reduction in overseas aid鈥β
鈥 day-to-day spending across government has been fully protected.聽聽聽
I can also confirm our approach to capital investment.聽聽
In the Autumn Budget I announced 拢100bn of additional capital spending鈥β犅
鈥 to crowd in investment from the private sector鈥β
鈥 to fix our crumbling infrastructure鈥β犅
鈥 and to create jobs in every corner of our country.聽
[political content redacted]
Today, I am instead increasing capital spending 鈥β
鈥 by an average of 拢2bn per year compared to the Autumn鈥β犅
鈥 to drive growth in our economy鈥β
鈥 and to deliver in full our vital commitments on defence.聽
This government will ensure that every pound we spend will deliver for the British people鈥β
鈥 by increasing productivity鈥β
鈥 driving growth in our economy鈥β
鈥 and improving our frontline public services.聽聽
Mr Speaker, let me turn now to the impact of increased uncertainty on our economy.聽
To deliver economic stability, we must work closely with the Bank of England鈥β
鈥 supporting the independent Monetary Policy Committee to meet their 2% inflation target.聽聽
There have been three interest rate cuts since the General Election and today鈥檚 data showed that inflation fell in February.聽
[political content redacted]
鈥 the OBR forecast that CPI inflation will average 3.2% this year鈥β
鈥 before falling rapidly to 2.1% in 2026 and meeting the 2% target from 2027 onwards鈥β
鈥 giving families and businesses the security that they need鈥β
鈥 and providing our economy with the stable platform it needs to grow.聽
Mr Speaker鈥β
鈥 earlier this month, the OECD downgraded this year鈥檚 growth forecast for every G7 economy, including the UK.聽
And the OBR have today revised our growth forecast for 2025鈥β
鈥 from 2% in the autumn鈥β
鈥 to 1% today.聽
I am not satisfied with these numbers.聽
That is why we on this side of the house are serious about taking the action needed to grow our economy.聽聽
Backing the builders, not the blockers鈥β犅
鈥 with a third runway at Heathrow Airport鈥β
鈥 and the Planning and Infrastructure Bill.聽聽
Increasing investment鈥β
鈥 with reforms to our pension system鈥β
鈥 and a new National Wealth Fund.聽聽
And tearing down regulatory barriers鈥β
鈥 in every sector of our economy.聽
That is a serious plan for growth.聽
That is a serious plan to improve living standards.聽聽
That is a serious plan to renew our country.聽聽
Mr Speaker, a changing world presents challenges.聽聽
But it also presents new opportunities.聽聽
For new jobs.聽
鈥 and new contracts鈥β
鈥 in our world-class defence industrial centres鈥β
鈥 from Belfast to Deeside, and from Plymouth to Rosyth.聽
In February, the Prime Minister set out our government鈥檚 commitment to increase spending on defence to 2.5% of GDP from April 2027鈥β
The biggest sustained increase in defence spending since the end of the Cold War聽
鈥nd an ambition to spend 3% of GDP on defence in the next parliament.聽
That was the right decision in a more insecure world鈥β
鈥 putting an extra 拢6.4bn into defence spending by 2027.聽
But we have to move quickly in this changing world.聽
And that starts with investment.聽
So today I can confirm that I will provide an additional 拢2.2bn for the Ministry of Defence in the next financial year鈥β
鈥 a further downpayment on our plans to deliver 2.5% of GDP by 2027.聽聽
This additional investment is not just about increasing our national security鈥β犅
鈥 but increasing our economic security, too.聽聽
As defence spending rises, I want the whole country to feel its benefits.聽
So I will set out the immediate steps that we are taking to boost Britain鈥檚 defence industry鈥β
鈥 and to make the UK a defence industrial superpower.聽聽
We will spend a minimum of 10% of the Ministry of Defence鈥檚 equipment budget on novel technologies 鈥β
鈥 including drones and AI enabled technology鈥β
鈥 driving forward advanced manufacturing production in places like Glasgow, in Derby and in Newport鈥β
鈥 creating demand for highly skilled engineers and scientists鈥β
鈥 and delivering new business opportunities for UK tech firms and start-ups.聽聽
We will establish a protected budget of 拢400m within the Ministry of Defence鈥β
鈥 a budget that will rise over time for UK Defence Innovation鈥β
鈥 with a clear mandate to bring innovative technology to the front line at speed.聽
We will reform our broken defence procurement system鈥β
鈥 making it quicker, more agile and more streamlined鈥.聽
鈥 and giving small businesses across the UK better access to Ministry of Defence contracts.聽
Something welcomed by the Federation of Small Businesses.聽
We will take forward our Plan for Barrow, a town at the heart of our nuclear security鈥β
鈥 working with my Honourable Friend the Member for Barrow and Furness鈥β犅
鈥 and providing 拢200m, supporting the creation of thousands of jobs there.聽
We will regenerate Portsmouth naval base, securing its future鈥β犅犅
鈥 as called for by my Honourable Friend the Member for Portsmouth South.聽
We will secure better homes for thousands of military families鈥 the homes that they deserve [political content redacted].聽
鈥 homes for our military families in the constituencies of my Honourable Friends for Plymouth Moor View, Plymouth Sutton & Devonport, York Outer and in Aldershot.聽聽
That is the difference that this [political content redacted] government is making.聽聽
Finally, Mr Speaker, we will provide 拢2bn of increased capacity for UK Export Finance鈥β
鈥 to provide loans for overseas buyers of UK defence goods and services鈥β
Because I want to do more with our defence budget so we can buy and make and sell things here in Britain.聽聽
鈥 giving further opportunities for our world leading defence companies and those who work in them鈥β
鈥 to grow and create jobs here in Britain鈥β
鈥 as military spending rises right across Europe.聽聽
To oversee all of this vital work鈥β
鈥 my Right Honourable Friend the Defence Secretary and I will establish a new Defence Growth Board鈥β
鈥 to maximise the benefits from every pound of taxpayers鈥 money that we spend.聽
And we will put defence at the heart of our modern industrial strategy鈥β
鈥 to drive innovation that can deliver huge benefits back into the British economy.聽
Mr Speaker, that is how we make our country a defence industrial superpower鈥β
鈥 so the skills of the future鈥β
鈥 the jobs of the future鈥β
鈥 and the opportunities of the future鈥β
鈥 can be found right here in the United Kingdom.聽聽
Mr Speaker, [political content redacted] there are no shortcuts to economic growth.聽
It will take long-term decisions.聽聽
It will take hard yards.聽
It will take time for the reforms that we are introducing to be felt in the everyday economy.聽
It is right that the Office for Budget Responsibility consider the evidence鈥β
鈥 and look carefully at measures before recognising a growth impact in their forecast.聽聽
But, Mr Speaker, I can announce to the House鈥β犅
鈥 that the OBR have considered 鈥 and have scored 鈥 one of the central planks of our plan for growth.聽聽
In my first week as Chancellor, I announced that we were pursuing the most ambitious set of planning reforms in decades鈥β
鈥 to get Britain building again.聽
And in December - we published changes to the National Planning Policy Framework鈥β
鈥 driven forward tirelessly by my Right Honourable Friend the Deputy Prime Minister鈥β犅
鈥 reintroducing mandatory housing targets鈥β
鈥 and bringing 鈥済rey belt鈥 land into scope.聽聽
The OBR have today concluded that these reforms will permanently increase the level of real GDP鈥β
鈥 by point 0.2% by 2029-30鈥β
鈥 an additional 拢6.8bn in our economy鈥β
鈥 and by point 0.4% of GDP within 10 years鈥β
鈥 an additional 拢15.1bn in our British economy.聽
Mr Speaker, that is the biggest positive growth impact that the OBR have ever reflected in their forecast, for a policy with no fiscal cost.聽聽
And taken together with our plans to increase capital spending that we set out in the Budget last year鈥β
鈥 this government鈥檚 policies will increase the level of real GDP by point 0.6% in the next ten years.聽聽
Mr Speaker, that is the difference that this [political content redacted] government is making.聽
Policies to grow our economy.
[political content redacted]
The OBR have concluded that our reforms will lead to housebuilding reaching a forty-year high鈥β
鈥β of 305,000 a year by the end of the forecast period.聽聽
And changes to the National Planning Policy Framework alone鈥β
鈥 will help build over 1.3 million homes in the UK over the next five years鈥β
鈥 taking us within touching distance鈥β犅
鈥 of delivering our manifesto promise to build 1.5 million homes in England in this parliament.聽
[political content redacted]
The impact on our economy goes further still.聽聽
[political content redacted]
We need economic growth.聽聽
So I can today confirm鈥β
鈥 that the effect of our growth policies鈥β
鈥 including our planning reforms鈥β
鈥 means an additional 拢3.4 billion to support our public finances and our public services by 2029-30.聽
The proceeds of growth.聽
[political content redacted]
Mr Speaker, earlier this week鈥β犅
鈥 we provided an additional 拢2bn of investment in social and affordable homes next year鈥β
鈥 delivering up to 18,000 new homes鈥β
鈥 and allowing local areas to bid for new developments across our country鈥β
鈥 including sites in Thanet, in Sunderland and in Swindon.聽聽
More security for families across our country.聽
[political content redacted]
And to build these new homes鈥β
鈥 we need people with the right skills.聽
Earlier this week, my Right Honourable Friend the Education Secretary announced more than 拢600m鈥β
鈥 to train up 60,000 more construction workers鈥β犅
鈥 including with 10 new Technical Excellence colleges across every region of our country鈥β
鈥 giving working people the chance to fulfil their potential.聽聽
New opportunities for our young people.聽
[political content redacted]
Mr Speaker, all this is just the start.聽聽
The Planning and Infrastructure Bill passed its second reading on Monday.聽
[political content redacted]
Once this Bill completes its passage鈥β
鈥 it will help deliver the homes and infrastructure our country badly needs.聽
[political content redacted]聽
And today, I can confirm to the House鈥β
鈥 that the OBR have upgraded their growth forecast next year鈥β
鈥 and every single year thereafter鈥β犅
鈥 with GDP growth of 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.聽聽
Mr Speaker,聽
By the end of the forecast鈥β
鈥 our economy is larger compared to the OBR鈥檚 forecast at the time of the Budget.
[political content redacted]
But Mr Speaker, this isn鈥檛 just about lines on a graph.聽
It is about improving people鈥檚 lives.聽
Working people are still feeling the pinch after a cost of living crisis [political content redacted] that saw prices spiral.聽
So I am pleased that the OBR confirm today 鈥β
鈥 that Real Household Disposable Income鈥β犅
鈥 will now grow this year at almost twice the rate expected in the autumn.聽聽
[political content redacted]
鈥 and after taking into account inflation鈥β
鈥 the OBR say today鈥β
鈥 that people will be on average over 拢500 a year better off under this [political content redacted] government.聽
That will mean more money in the pockets of working people. Higher living standards.聽
[political content redacted]
Mr Speaker, the world is changing.聽
We can see that鈥β
鈥 and we can feel it.聽
A changing world demands a government that is on the side of working people.聽
Acting in their interest.聽
Acting in the national interest.聽聽
Not retreating from challenges.聽聽
Not stepping back.聽聽
But a government with the courage to step up鈥β犅
鈥 to secure Britain鈥檚 future鈥β犅
鈥 and to seize the opportunities that are out there before us.聽
I am impatient for change, the British people are impatient for change, [political content redacted].
And we are beginning to see change happen.聽聽
Our Plan for Change is working.聽
Defence spending is rising.聽
Waiting lists are falling.聽
Wages are up.聽聽
Interest rates are cut.聽
[political content redacted]
And today, Mr Speaker鈥β
鈥 the OBR confirm鈥β
鈥 that our plan to get Britain building鈥β
鈥 will drive growth in our economy鈥β
鈥 and put more money in people鈥檚 pockets.聽
There are no quick fixes.聽
But we have taken the right choices.聽聽
[political content redacted]
Delivering security for our country and security for working people.聽聽
That is what drives this government.聽
That is what drives me as Chancellor.聽
And that is what drives the choices that I have set out today.聽聽
And I commend this statement to the House.