Reeves says poverty figures from spring statement cuts don’t take into account impact of getting people into work

Reeves says poverty figures don’t take account of impact of measures to get more people into work

Rachel Reeves is speaking at her press conference now.

Q: Is pushing 250,000 more people into poverty a price worth paying?

Reeves says the OBR has not taken into account the impact of more people going into work. She says they will be doing some work on this ahead of the budget in the autumn.

And she says the government is investing £1bn on getting more people into work.

And so we’re confident that the changes that we are making and the support that we’re providing to get people into work, will result in more people having fulfilling careers paying decent wages and of course, that’s the best way to lift families out of poverty.

Key events

Treasury minister Darren Jones urged to apologise for ‘pocket money’ comment in discussion over benefit cuts

Darren Jones, the chief secretary to the Treasury, was on Politics Live earlier (the other one, the BBC version) and, asked about the impact assessment saying the disability cuts will push 250,000 more people into poverty, he argued that these figures did not take into account the postive impact of people finding work. (Rachel Reeves used the same argument a few minutes ago – see 5.19pm).

But then, to explain his point, Jones said that if he cut his children’s pocket money by £10 a week, but told them to set a Saturday job, an impact assessment would say they were losing £10 a week – without taking into account the extra cash they would get from the Saturday job.

“If I cut my child’s pocket money by £10 a week and tell them to get a Saturday job…”

Minister Darren Jones on disabled people losing £4,500 a year because of the governments cuts. pic.twitter.com/vvKnJbGuED

— Saul Staniforth (@SaulStaniforth) March 26, 2025

Jones was not saying that Pip was like pocket money, or that disability benefit claimants are like children. But that hasn’t stopped his comment being interpreted as if he were (which on its own is enough to show that he probably should not have said it).

The Liberal Democrats are calling for an apology. Steve Darling, the Lib Dem work and pensions spokesperson, said:

This is incredibly insulting and shows the government just doesn’t understand the challenges facing people with disabilities. Darren Jones owes an apology to the hundreds of thousands of people his government’s decision has pushed into poverty and the millions more whose lives they have made more challenging.

Rachel Reeves will probably need to revisit the government’s manifesto pledges not to increase tax when the autumn Budget comes round, Oxford Economics have predicted.

Their chief economist, Andrew Goodwin, has dubbed today’s spring statement “a can-kicking exercise”, adding:

“The Chancellor has again opted to leave a very slim margin for error against her fiscal rules, which is very risky in an uncertain world.”

Goodwin also warns there is a strong chance the OBR’s forecast for productivity will need to be downgraded at a subsequent fiscal event, which would eat into Reeves’s fiscall headroom.

The National Institute of Economic and Social Research have given their verdict on the spring statement – and are unimpressed by the outcome.

NIESR question whether the spending cuts, which will cause such pain for millions of families, are necessary, given they have not put the UK on a better path:

The Chancellor announced a series of spending reforms to appease her self-imposed fiscal rules. We forecast that the Chancellor is now due to meet her fiscal rules and has restored some – though insufficient – headroom.

Despite this fiscal restructuring, NIESR judges that today’s policy announcements have neither improved the United Kingdom’s trend growth outlook nor placed the public finances on a fundamentally more sustainable path. This calls into question the necessity of the spending cuts that have financed the new fiscal headroom.

Eleni Courea

Eleni Courea is a Guardian political correspondent.

Several MPs challenged Darren Jones, the shadow chief secretary to the Treasury, over the welfare cuts at a parliamentary meeting he hosted after the statement with around two dozen MPs, according to three people present.

One MP said the meeting was “brutal” and that Jones faced “lots of people kicking off over Pip” including one person who threatened to rebel.

Other Labour MPs said the hostile questions came from people who are routinely critical of the government. Peter Lamb, the Labour MP for Crawley, was among those who criticised the cuts.

Reeves defends accepting free Sabrina Carpenter tickets

And this is what Rachel Reeves said at her press conference in response to the free tickets part of the question mentioned earlier. (See 5.19pm.)

Now, it may come as a surprise to some of you, that I’m not personally a Sabrina Carpenter, being a 46-year-old woman, but a member of my family did want to go and see that concert.

I’m not in a position now that I can easily just go and sit in at the concert, and some of the things that I might have been able to do in my everyday life in the past are not so easy now.

And so I had advice that it would be better to be in a box. The owners of the O2 had a box, tickets that are not available to buy, and they said that I could go in there, and that was better for security reasons.

I do recognise that people think that that’s a bit odd, but that’s the reason why I did that rather than just being in normal seats, which, to be honest, for me and my family, would have been a lot nicer and a lot easier.

Reeves has two children.

Many people will sympathise with Reeves’ explanation – although she did not say why she did not offer a payment to cover the notional costs of the ticket, which would stopped this turning into a controversy.

Rachel Reeves at her press conference. Photograph: Ben Stansall/PA

Government targeting tax avoidance schemes

Among today’s flurry of news, the government has also launched a consultation on new measure to clamp down on tax avoidance schemes.

The proposals would give HMRC new powers and stronger sanctions to disrupt the business model which the promoters of tax avoidance schemes rely on.

The proposal falls into four parts:

expanding the scope of the Disclosure of Tax Avoidance Schemes (DOTAS) regime.
introducing a Universal Stop Notice and Promoter Action Notice
tackling controlling minds and those behind the promotion of avoidance schemes through new highly targeted obligations and stronger information powers
exploring options to tackle legal professionals designing or contributing to the promotion of avoidance schemes

More here.

Tax campaigner Dan Niedle reckons that this could be the toughest ever suite of anti-tax avoidance proposals introduced in the UK.

Niedle explains that the government would be able to issue a “promoter action notice” to third parties (such as banks, employment services or social media networks) who facilitate a scheme. It would also become a criminal offence to not report a tax avoidance scheme to HMRC.

Reeves claims her policies will reduce poverty figures, not increase them, once pro-job measures kick in

Q: Do you regret accepting free tickets worth £600 for a Sabrina Carpenter ticket when you are taking decisions that will plunge 250,000 people into poverty?

Reeves said the poverty projection was based on an assumption involving “no one going into work who was previously out of work”. She goes on:

And yet we’re putting £1bn in for targeted employment support to get people back to work. So I’m confident that our plans, far from increasing poverty, will actually result in more people having fulfilling work, paying a decent wage to lift themselves and their families out of poverty.

This is a firmer version of the answer given earlier. (See 4.53pm.)

In effect, she is saying that the DWP projection is unreliable.

Rachel Reeves at her press conference. Photograph: Andy Rain/EPA

Q: Are you worried the OBR might revise down its growth forecasts because of the measures in the employment rights bill?

Reeves said the OBR forecast today did not include any scoring from the employment rights bill.

And she said the bill would result in working people having more money in their pockets, and more security, which would be good for growth, she suggested.

Q: How damaging would a global trade war to be to your plans?

Reeves says the OBR has set out various scenarios in its report today. (See 1.49pm.)

But she says the last time Donald Trump was president, trade between the UK and the US increased. She says the UK will continue to make the case for free trade.

Q: Aren’t you going to have to come back for tax rises in the autumn?

Reeves says the October budget was a “once-in-a-generation” budget, needed to wipe the slate clean. “We’ll never have to do a budget like that again,” she says.

She says she will not write future budgets in advance. But she says people can see from what she did today how determined the government is to live within its means.

Q: What do you say to people who says your obsession with your fiscal rules is punishing the most vulnerable?

Reeves replies:

There’s nothing progressive and there’s nothing Labour about losing control of the public finances. That’s what the previous government did, and that saw mortgage rates rents go through the roof.

Reeves plays down prospect of digital services tax being watered down to help US tech firms

Q: Can you justify giving a £1bn tax cut to global tech firms?

Reeves replies:

In terms of tax policy, it’s up to the UK government to set tax policy for the UK economy, including digital services tax.

Now the digital services tax was supposed to be temporary until there was a global agreement as part of pillar one and pillar two of the OECD agreement, but we believe that companies should pay tax in the countries in which they operate, which is why we introduced the digital services tax in the first place, and our views on that have not changed.

Reeves says poverty figures don’t take account of impact of measures to get more people into work

Rachel Reeves is speaking at her press conference now.

Q: Is pushing 250,000 more people into poverty a price worth paying?

Reeves says the OBR has not taken into account the impact of more people going into work. She says they will be doing some work on this ahead of the budget in the autumn.

And she says the government is investing £1bn on getting more people into work.

And so we’re confident that the changes that we are making and the support that we’re providing to get people into work, will result in more people having fulfilling careers paying decent wages and of course, that’s the best way to lift families out of poverty.

The average interest rates on UK mortgages is set to rise over the next few years, the OBR warns, as more people are forced to remortgage at higher rates.

The fiscal watchdog estimates that average interest rates on the stock of mortgages are expected to rise from around 3.7% in 2024 to a peak of 4.7% in 2028, then stay around that level until the end of the forecast.

That’s despite the Bank of England being expected to keep lowering interest rates this year.

The problem, as the OBR explains, is that many borrowers use fixed-rate mortgages, so haven’t yet been exposed to higher rates. It says:

The high proportion of fixed-rate mortgages (around 85 per cent) means increases in Bank Rate feed through slowly to the stock of mortgages.

The Bank of England estimates around one-third of those on fixed rate mortgages have not refixed since rates started to rise in mid-2021, so the full impact of higher interest rates has not yet been passed on.

As for interest rates: given around one-third are still to refix their mortgage since higher rates kicked in since mid-2021. The OBR expect rates to peak at 4.7% in 2028 where they will then linger till the end of the forecast. This will come as a blow to many looking for a… pic.twitter.com/ovMQPM1X6Y

— Emma Fildes (@emmafildes) March 26, 2025

Save the Children claims this could be the first Labour government to oversee a rise in child poverty. It has posted these on social media.

It is a political choice to plunge 50,000 more children into poverty by the end of this parliament, as a result of the health and disability benefit cuts. This news will be devastating for families across the country struggling to make ends meet.

The UK Government committed to tackling child poverty, and right now it is rising. At the moment, this will be the first Labour Government likely to oversee a significant rise in the number of children in poverty.

We must see support for these children in the upcoming child poverty strategy, and the full scrapping of the two-child limit and benefit cap to prevent even more children being denied the childhood they deserve.

(This may be true of the post-war period, but probably isn’t if you include the second Ramsay MacDonald government, which covered the aftermath of the Wall Street crash.)

Here are comments on the spring statement from three more thinktanks.

From Paul Kissack, chief executive at the Joseph Rowntree Foundation

The chancellor said today that she would not do anything to put household finances in danger, yet the government’s own assessment shows that their cuts to health related benefits risk pushing 250,000 people into poverty, including 50,000 children. This will harm people, deepening the hardship they already face.

The chancellor also said the world has changed, and today’s announcements places the burden of that changing world on the shoulders of those least able to bear the load – the 3.2 million families left worse off by these cuts.

With living standards for the poorest under continuing assault, the government needs to protect people from harm with the same zeal as it attempts to build its reputation for fiscal competence.

From Tom Pollard, head of social policy at New Economics Foundation

Today’s assessment confirms that ill and disabled people will see cuts to benefits amounting to around £6.5bn a year by 2029-30. Yet the Department for Work and Pensions and the OBR between them have not yet been able to forecast any impact on employment outcomes.

The government’s narrative to justify benefit cuts for ill and disabled people has completely fallen apart – it is clearer than ever that the real driver has been pressure to meet an arbitrary savings target.

Resorting to the failed playbook of cuts and conditionality will push people into poverty and poorer health rather than helping them into work.

From Ed Davies, policy director at the Centre for Social Justice

The government is in danger in getting caught in a spider’s web of its own making. The knee-jerk panicky measures we are seeing in welfare – to prop up our flatlining economy – just before record tax rises hit – don’t feel like a plan. I feel sorry for Liz Kendall, as her efforts to get people off benefits and back into work are about to become much harder as employers reel from the impending rise in national insurance.

The chancellor was right to say that repairing the welfare system requires “hard yards” and “long-term decisions” but by tinkering with it in the hunt for short-term cash she is not helping those on benefits or the taxpayers funding them.

READ SOURCE

Reeves says poverty figures from spring statement cuts don’t take into account impact of getting people into work – live

Reeves says poverty figures don’t take account of impact of measures to get more people into work

Treasury minister Darren Jones urged to apologise for ‘pocket money’ comment in discussion over benefit cuts

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