2025 Spring Statement balances the books largely through social security cuts

The Chancellor balanced the books in the 2025 Spring Statement through a combination of social security cuts, offsetting welfare spending and departmental savings, with no new tax rises, according to a Resolution Foundation briefing published on 27 March 2025¹.

Before the measures set out in the statement, the Chancellor was £4.1 billion short of her promise to balance current expenditure with revenues in five years' time¹. The Resolution Foundation says the Government closed that gap through a mix of £8.3 billion in social security cuts, partially offset by a £3.5 billion increase in spending through other welfare decisions, including the cancellation of some inherited cuts, plus £3.6 billion in new squeezes on day-to-day departmental spending¹.

The briefing says the small decline in day-to-day spending follows a near £50 billion rise at the Autumn Budget, and so is not a return to austerity¹. Overall day-to-day departmental spending is projected to rise by 12 per cent in real terms between 2023-24 and 2029-30, while unprotected departments such as Justice and the Home Office are in line for cuts of 4.5 per cent on average in real spend per head over the last four years of the Parliament¹.

On welfare, the briefing says the changes create small cash gains in Universal Credit alongside large cash losses for people receiving health-related benefits. A non-disabled couple on Universal Credit will see their support rise by £370 a year, while a couple on Universal Credit where one is disabled and the other is a full-time carer could lose £10,300 a year from Personal Independence Payment, the Universal Credit carer element and the Universal Credit health cut. All impacts are given for 2029-30 in 2024-25 prices¹.

Source: Resolution Foundation, impacts in 2029-30 at 2024-25 prices¹

On the Government's own figures, 3.2 million families will lose an average of £1,720, and 250,000 extra people will fall into poverty as a direct result, the briefing says¹. It adds that the overall impact of all tax and benefit changes taking effect in this Parliament will reduce the incomes of the second-poorest fifth of households by 1.5 per cent, compared with a 0.6 per cent fall for the richest fifth, with poorer, disabled households taking the biggest hit¹.

The briefing also notes that the Office for Budget Responsibility halved its growth forecast for 2025, leaving Britain on track for its third consecutive year with less than 1 per cent growth in per capita GDP, something it says has not happened in over 30 years¹. Forecasts for growth between 2026 and 2029 were revised up to an average of 1.8 per cent a year, which the briefing describes as well above the Bank of England and all other independent external forecasters¹.

Why it matters for households

The welfare changes affect people claiming health-related benefits and Universal Credit, with the largest losses falling on households where one person is disabled and another provides full-time care¹. The cash gains for some Universal Credit claimants are small by comparison with the losses for others¹. The Resolution Foundation says transitional protections are needed to prevent sharp income shocks, and that 250,000 extra people will fall into poverty on the Government's own figures¹. The income effects described are modelled for 2029-30 at 2024-25 prices, so they describe the eventual shape of the changes rather than amounts payable now¹. The briefing also says the decision to avoid fresh tax rises in the spring will make them harder to avoid in the autumn, which has not been confirmed by the Government¹.

What happens next

The briefing sets out no dated implementation timetable for the welfare changes beyond the 2029-30 modelling horizon¹. It states that the decision to duck fresh tax rises this spring will only make them harder to avoid in the autumn¹. No further scheduled fiscal event is given¹.

For how announcements of this kind reach household finances, see Budgets and fiscal statements. Related coverage sits under regulation and policy and rates and the economy.