Displaying items by tag: welfare cuts

Labour MPs are warning of a brewing rebellion over government plans to deepen cuts to the welfare budget this autumn. Keir Starmer and Rachel Reeves face growing dissent after announcing in March a £5 billion reduction in benefits, with additional cuts reportedly under consideration. The proposals, which include tightening eligibility for personal independence payments (PIP) and cuts to universal credit, have sparked concerns across the party. Backbenchers and activists report rising public anger, especially following poor results in local elections and the Runcorn by-election. Critics warn that further cuts could drive more people into poverty, particularly affecting disabled individuals and communities already struggling with high rates of benefit dependence. Two Labour MPs have vowed to oppose the reforms, emphasising the party’s responsibility to protect society’s most vulnerable. Disability advocates, arguing that the cuts prioritise financial savings over people’s wellbeing, are urging the Government to reconsider. Ministers, however, insist reforms are necessary to sustain the welfare system for the future.

Rachel Reeves' Spring Statement revealed the Office for Budget Responsibility (OBR) has halved the UK's 2025 growth forecast from 2% to 1%. In response, Reeves announced deeper welfare cuts, including freezing the health element of Universal Credit for new claimants until 2030 after a 50% reduction. Cuts to Personal Independence Payments (PIP) eligibility will affect 800,000 people, with an average annual loss of £4,500. These measures are projected to save £4.8 billion by 2030, though 250,000 more people, including 50,000 children, may fall into relative poverty. Defence spending will rise to 2.5% of GDP by 2027 and 3% in the next parliament, funded by a reduction in overseas aid. Departmental budgets will grow by 1.2% above inflation, slightly less than the 1.3% previously forecast, posing significant pressures. Despite criticism from shadow chancellor Mel Stride, Reeves denied this was ‘austerity 2.0’, insisting it would lift families out of poverty.

Rachel Reeves is expected to announce billions of pounds in spending cuts - possibly including welfare - during her spring statement on 26 March. Facing economic challenges and her self-imposed fiscal rules, Reeves cannot borrow for day-to-day spending, leaving cuts as one of her only options. The Treasury is submitting proposals to the Office for Budget Responsibility (OBR) ahead of its economic forecast. Reports suggest that a four-point plan of planning reform, Whitehall cuts, regulation cuts, and welfare cuts will be central to Reeves' strategy. Her fiscal policies require maintaining a £10 billion buffer, yet sluggish growth and rising borrowing costs are forcing difficult decisions. The Government is also bracing for economic impacts from global trade challenges, including Donald Trump’s trade policies. The government faces tough choices between tax hikes or further cuts: the outcome of its decisions will significantly impact public services and financial stability in the coming years.