Unlike last years Spring budget this was more of a statement of where the economy is and will be expected to be over the next few years. The main points of interest are:
Defence and aid for overseas
- Defence spending is now due to rise by a further £2.2 billion in addition to the planned £2.9 billion next year.
- The longer term plan is to raise it to 2.5% of national income by 2027
- The plan is to fund this by reducing overseas aid from 0.5 to 0.3% and from Treasury’s reserves.
Public Services
- The Administrative costs of government departments have ben targeted to reduce by 15% over the next 5 years.
- This will result in an estimated 10,000 civil service jobs going.
- They plan to bring forward a transformation fund of £3.25 billion of investment to deliver reforms to public services to reduce government running costs and to help fund voluntary exit schemes.
Economic forecasts
- Inflation, expected to hit the government stated target of 2% by 2027, is forecast to average 3.2% this year and then 2.1% in 2026.
- Predicted growth for this year has now been downgraded to 1% from 2% by the OBR (Office for Budget Responsibility). It has then been upgraded for the next four years.
- The OBR also said the changes to the planning system by the government in England will boost the size of the economy by 0.2% by 2030.
Welfare changes
- The standard allowance for universal credit will increase from £92 per week in 2025/26 to £106 per week by 2029/30.
- Incapacity benefits to be frozen for existing claimants from April next year at £97 per week. There will be a top-up payment for those with most severe medical conditions.
- Health related universal credit for new and existing claimants will be frozen until 2030, this is in addition to the details last week that it will be halved from April 2026.
- Those aged 21 or under will no longer be eligible for the top-up of universal credit relating to incapacity benefit
- There will also be a stricter eligibility test for Pips (personal independence payments).
Construction education
- The government announced ten new technical excellence colleges across the country.
- This is related to plans to train up to 60,000 more construction workers, the education secretary announced more than £600m of spending to help do this earlier this week.
Employer National Insurance and Minimum Wage increases
- Nothing new in this statement but just a reminder that these change next month. Please see are Autumn 2024 budget blog from last year for more information.
