FURTHER cuts to welfare spending, and an increase in the defence budget, were announced by the Chancellor, Rachel Reeves, in the Spring Statement, on Wednesday afternoon.
The Department for Work and Pensions released analysis of the benefits reforms which suggested that 3.2 million families would lose out by 2030. Some of these currently receive support, while others were projected to do so in the next five years. The average loss was expected to be £1720 per family per year, the analysis said.
A greater number of families — 3.8 million — were projected to benefit from the changes, but by a smaller average amount of £420 per year.
Ms Reeves’s decision to deepen the cuts came after analysis by the Office of Budget Responsibility (OBR) suggested that the changes to the welfare system announced last week would save £3.4 billion rather than the £5 billion initially projected (News, 19 March).
The Government was, therefore, taking further steps, she said, including cuts to the health element of Universal Credit. At the same time, standard Universal Credit payments were set to increase at a rate above inflation, the Chancellor said.
The Government’s priority was to get people into work, she said, but, “if you can’t work, you should be appropriately supported.”
The chief executive of Christians Against Poverty (CAP), Stewart McCulloch, however, said that he was concerned that the Government’s actions “will push more people with vulnerabilities into deeper poverty and debt. . .
“We welcome efforts to help people back into work and the planned increase to the basic rate of Universal Credit, but we are deeply concerned about the Government’s decision to freeze the Universal Credit health element for existing claimants and reduce it to £50 per week and then freeze it for new claimants until 2030.”
Ms Reeves also announced that the growth forecast had been revised down from two per cent to one per cent for 2025, but, in the longer term, the OBR was expecting higher levels of growth.
After her statement, however, the former Archbishop of Canterbury Lord Williams said that “growth alone” would not build a just society, and called for a wealth tax to “address the soaring inequality that is so deeply damaging to our collective morale and trust”.
Sarah Edwards, the executive director of the Christian charity the JustMoney Movement, said that the Spring Statement reflected “wrong-headed priorities”.
“Cuts to support for the most vulnerable are morally wrong, and won’t create the strong, flourishing communities we want to live in,” she said. “We should tax extreme wealth to raise revenue from those who can most afford it, to help pay for safety nets for those who are struggling, properly funded public services, and invest in an economy that serves people and planet.”
CAP also expressed concern that the Government’s plans would push more vulnerable people into deeper poverty and debt.
“At CAP, we are meeting face to face with families on low incomes who are facing enormous personal financial pressure,” Mr McCulloch said. “Our local church debt coaches . . . are visiting people who are living in cold homes, skipping meals and often isolated from their community as a result of living in poverty and debt. Many of these people are now feeling anxious and fearful that the income they rely on may be reduced in future as a result of welfare cuts.”
The executive director of the Debt Justice coalition, Heidi Chow, also criticised the Government’s plans. She described the further cuts as “an act of cruelty and cowardice” that would only exacerbate the growing UK debt crisis.
“There is nothing in this budget for the millions of people who are over-indebted because of the high cost of living and stagnating incomes,” she said. “We need the Government to provide increased protections for people in severe debt and access to fair options for writing down debt.”
Ms Reeves confirmed that defence spending would increase to 2.5 per cent of GDP, in part funded by a cut in the amount spent on overseas aid, from 0.5 to 0.3 per cent of GDP.
The Archbishop of York and other bishops criticised the cut to aid spending when it was first announced a month ago (News, 25 February). With the exception of international aid, day-to-day government spending would still increase above inflation every year, Ms Reeves said, while keeping to the Government’s self-imposed fiscal rules.
The Shadow Chancellor, Mel Stride, characterised the decision to make further cuts to welfare as moving “from incompetence to chaos”.
The previous Conservative Government had been implementing welfare cuts, and would have continued if re-elected, he said, but Labour was limited by internal disagreements on welfare reform.
