New Labour government: Our perspective
Spring Forecast 2025: A promise of better times ahead? The Spending Review will be the real test
After announcing tax hikes worth £40bn in Autumn 2024, the Chancellor has delivered on her promise to avoid making further fiscal changes this time around. However, the real test for many Anthony Collins’ clients will come with the Spending Review in June 2025.
Having already announced plans to cut health-related welfare benefits, we now know a bit more about who the cuts will affect and how. In particular, the Chancellor said that the ‘health element’ of Universal Credit will be ‘cut by 50%’ and frozen for new claimants. This is a significant blow for vulnerable people and those living with disabilities who are afraid that they might lose their benefits.
Facing news that the OBR’s economic growth forecast has been halved from 2% to 1% this year, the Chancellor explained how the Government is ‘stepping up’ by increasing capital spending in key areas, such as defence and construction. The £2bn announced earlier this week for the 2025/26 Affordable Homes Programme is a welcome funding bridge until June’s Spending Review but it isn’t a long-term solution to meet current social housing needs.
Without a growing economy (and without breaking the Chancellor’s fiscal rules, which she says are ‘non-negotiable’), it will be impossible for Government to allocate sufficient spending to major societal issues such as the shortage of affordable homes and the health and social care crisis. We must hope that planning reforms and the Planning and Infrastructure Bill, combined with an uplift in defence spending and in the construction industry will boost activity and bring economic growth, but we will have to wait and see.
In the meantime, the Government’s Spending Review is just around the corner, and with the risk of serious spending cuts, there is growing concern that an important opportunity to revolutionise local government and deliver the public services that communities really want and need, could be missed.
Peter Hubbard, managing partner