‘As the last 14 years have shown us, you cannot cut your way to growth.’
In today’s Spring Statement, Rachel Reeves set out investments in defence, while cutting welfare spending and the costs of running government through civil service reforms.
One focus of Reeves’ budget update was raising revenue by tackling tax avoidance. The chancellor said, under this government, £7.5 billion will be raised by tackling tax avoidance.
Another was Labour’s planning reforms, including reintroducing mandatory housing targets, which the Office for Budget Responsibility (OBR) has said will lead to housebuilding reaching a 40-year high of 305,000 new homes per year by 2029/30. The government also announced an additional £2 billion investment in social and affordable housing earlier this week.
However, Reeves also announced further cuts to welfare benefits. The health element of Universal Credit will be cut by 50% for new claimants by 2029/30 before being frozen. The chancellor said this is to meet Labour’s fiscal rules: balancing the budget so day-to-day costs are covered by revenues and ensuring debt falls as a share of GDP within five years.
Reeves said Labour will also bring forward £3.25 billion of investment to “reduce the costs of running the government by 15% by the end of the decade”. Part of the funding will be for a voluntary exit scheme, to help the government cut around 10,000 civil service jobs.
Here’s how Reeves’ announcements landed with trade unions.
‘Civil servants and the public deserve better than a return to austerity’
Fran Heathcote, general secretary of the Public and Commercial Services union, criticised the chancellor’s plans, stating, “She cannot cut her way to growth.”
“She is persisting with her cuts to the civil service that will both affect our members and the members of the public who rely on the services they provide.”
She also condemned reductions to the welfare budget as “cruel cuts” that will take money away from the most vulnerable in society.
Emphasising the need for fair pay amid 3.2% inflation, she said “civil servants, and the public, deserve better than a return to austerity” and vowed that PCS will continue campaigning against the cuts.
Cuts ‘will cause misery and could cost lives’
The Fire Brigades Union general secretary, Steve Wright, said that the welfare cuts in the spring statement “will cause misery and could cost lives”.
“Working people and hard pressed claimants will face harsh poverty. The brutality of these cutbacks will put vulnerable people in an intolerable situation,” he said.
“It’s a disgrace that a Labour Chancellor would deliver an assault on the welfare state instead of taxing the wealthy to fund public services and increase workers’ pay.”
‘Those with the broadest shoulders must contribute more’
General secretary of the TUC, Paul Nowak, said: “As the last 14 years have shown us, you cannot cut your way to growth.”
He added that taxes in the UK are low compared to the size of the economy, and that “those with the broadest shoulders must continue to contribute more through a fairer tax system”.
On the government’s civil service reforms, Nowak stated: “Any approach to transforming our public services must include clear workforce plans for every part of our public sector, developed in partnership with staff and unions.”
The OBR downgraded the UK’s growth forecast for 2025/26 from 2% to 1%.
In response, Nowak said: “It is time to review both the role of the OBR and how it models the long-term impacts of public investment. Short-term changes in forecasts should not be driving long-term government decision-making.”
‘The chancellor should stop backing herself into a corner with fiscal rules’
UNISON general secretary Christina McAnea, said: “The chancellor’s been left with an unenviable task. The world has changed since the summer. […] With so little wriggle-room, the chancellor should stop backing herself into a corner with fiscal rules and borrow more to invest.”
McAnea added: “Cuts to welfare and attacks on those least able to support themselves are not the right way to deliver a thriving economy, nor good quality public services.
“The Office for Budget Responsibility doesn’t always get things right and forecasts change.”
‘Labour should target the massive concentration of wealth built up by the richest 1%’
Unite’s general secretary, Sharon Graham, said: “Increased defence investment must not come at the expense of our public services and investment in British industry and our industrial infrastructure. Why is the sixth richest economy in the world pitting our safety against our dignity.”
Graham added: “There is another path. Instead of snatching crumbs from workers, pensioners and the disabled, Labour should target the massive concentration of wealth built up by the richest 1%.”
She also said that “If the government pushes down a path of austerity mark two, where yet again workers and communities pay the price, Unite will not stand by and watch it happen. We will do all in our power to fight for the future of jobs, services and our communities.’
Olivia Barber is a reporter at Left Foot Forward
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