Details of the Spring Statement 2025 have been announced by Chancellor Rachel Reeves, providing an update since the Autumn Budget. She began by confirming that the government’s task is to secure Britain’s future in a time of global economic uncertainty and deliver prosperity for working people.
An increase in capital spending by £2bn per year compared with autumn has been confirmed. This will be used to stimulate growth in the economy and meet essential defence commitments.
To deliver economic stability, the government will work closely with the Bank of England and support the Monetary Policy Committee to meet the inflation target of 2%. The latest inflation figures released by the Office for National Statistics confirmed that the rate fell from 3% to 2.8% in the year to February. Intimating that the 2% target will be reached by 2027, Rachel Reeves confirmed this will provide the economy with the stable platform it needs to grow.
Here, we’ve detailed the changes stated in the Spring Statement so that you can see at a glance how they may affect you.
Welfare
Welfare reforms were originally thought to save £5bn by 2029/30. However, the Office for Budget Responsibility has assessed that the benefit cuts would save a much lower figure of £3.4bn. With an emphasis on working if you can and being supported if you can’t, various measures were detailed as part of the welfare budget. £1bn is to be invested in personalised employment support to help people back into secure work and out of poverty. £400m is to be provided to the Department for Work and Pensions and job centres to help deliver these changes.
Universal Credit
The standard allowance for Universal Credit will be increased. This will take it from £92 per week in 2025/26 to £106 per week by 2029/30. The health element of Universal Credit, however, will be reduced by 50% and frozen for new claimants.
Tax evasion
A further crackdown on tax evasion has been confirmed. Plans will be set in motion by the Treasury for an increase of 20% of tax fraudsters to be charged each year. The reduction in tax evasion will raise £7.5bn in revenue.
Defence
An increase in defence spending to 2.5% of the GDP from April 2027 has been confirmed. This will be achieved by reducing overseas aid to 0.3% of the gross national income. This will save £2.6bn in day-to-day spending in 2029/30. In a bid to move quickly in a ‘changing world’, an additional £2.2bn has been pledged to the Ministry of Defence (MOD) in the next financial year.
At least 10% of this budget will be spent on new technologies, such as drones and AI-enabled technology. Advanced manufacturing production will commence in some areas, providing business opportunities and an increased demand for skilled jobs.
The increase in defence spending will also focus on UK tech firms and start-ups for defence innovation, giving small businesses across the UK better access to defence contacts with the MOD, naval base upgrades, providing better homes for military families and the provision of loans for overseas buyers of UK defence goods and services. A new Defence Growth Board will be formed to oversee these changes.
Civil Service
To save £2bn per year, job cuts are to be made within the Civil Service. No figure was given for the number of jobs to be cut. However, it is expected that HR and other administrative roles will be affected.
Public services
Another issue raised highlighted the need to improve frontline public services. A £3.25bn investment will be used to make public services more efficient, productive and focused on the user. The funds will be used for Voluntary Exit Schemes regarding the Civil Service reduction in size, pioneering AI tools to modernise the state, technology investments for the Ministry of Justice to deliver probation services more effectively and upfront investment to support more children in foster care.
Housing
With a focus on getting Britain building again, planning reforms will help to build over 1.3 million homes in the UK over the next 5 years. This target, though, this is short of the manifesto pledge of 1.5 million homes. Reintroducing mandatory housing targets, the OBR confirmed that 305,000 homes will be built annually by the end of the period.
A grant of £2bn has already been allocated to build 18,000 new social and affordable homes. To meet the full home-building target, people with the right skills are needed to build the homes. As such, £600m is being invested to train 60,000 new construction workers. This budget includes 10 technical excellence colleges to be created in every region.
Get advice from our experts following the Spring Statement 2025
Are you concerned as to how any of the changes announced in the Spring Statement 2025 may impact your mortgage affordability? Give us a call on 01322 907 000. Our mortgage and protection brokers can check your current mortgage deal and guide you accordingly. For pension advice, we can arrange a consultation with a specialist financial organisation we collaborate with.