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'Gaslit and underwhelmed': Welfare cuts & slow growth - what we learned from the Spring Statement
26 March 2025, 23:30 | Updated: 27 March 2025, 05:33
Gaslit and underwhelmed was how I described my first thoughts to the Chancellor’s spring statement on Wednesday afternoon.
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After a few hours to digest it, I think I’ll stand by that hot take.
Gaslit, because the Chancellor’s sunny disposition and insistence that growth is on the way, debt is going to fall, and everything’s going to be alright, just doesn’t quite fit with what we’re seeing elsewhere.
Growth is on the floor, businesses are making cuts, and consumer confidence is in the bin.
Many lights are flashing red on the economic dashboard right now.
But, Rachel Reeves felt like the dog in that meme, sitting in a burning building having a cup of tea saying, “this is fine”.
Watch Again: Iain Dale's exclusive interview with Rachel Reeves
Of course, no one is expecting Labour to fix everything overnight.
The Tories left a hell of a lot of mess to clear up, and change takes time.
Covid hit the economy like a sledgehammer, and our £100bn a year debt interest is just proof that it’ll be generations before we recover.
But after 14 years under the Tories, people are desperate for some hope that the end of the cost-of-living crisis, and this feeling that everything is broken these days, is in sight.
Britain’s ready to turn the corner.
Though Rachel Reeves may want us to think so, economically, I’m not sure we’re there yet.
Underwhelmed, because despite what we know about the Treasury not liking surprises, I was hoping for a little baby rabbit.
I fear that by trying to please everyone, by trying to get the balance right, this government will end up pleasing no one, and not being bold enough to deliver that change that the country is crying out for.
Yes, it was not meant to be a full-fat budget with a string of tax and spend changes.
But as always, there could have been more. A lot more.
Natasha Clark: 3 things that stood out from the Chancellor’s press conference
So, what did we learn from the spring statement?
No rabbits
Aside from the gloomy financial figures, we had nothing really new from the Treasury or Chancellor.
Almost everything was briefed out, or reported in advance, leaving little for the markets to be spooked by at all.
A hangover from the Liz Truss mini-budget, it might be that the days of the fiscal statement surprise are over.
Growth is supposedly coming – but not yet
The stakes were high for the Chancellor, who has based her entire political future on growing the economy.
That growth is still hanging in the balance.
Forecasts for this year’s growth were cut in half, but the picture is looking more optimistic in the years after that, with the figures revised up.
As we know, OBR forecasts go up and down like a yo-yo - they’re hanging on a hope and a prayer that things don’t go wrong, in a world where so much has done.
I am proud of what we have delivered in just nine months, says Rachel Reeves
The pain’s not over yet
Inflation is going to tick up again to 3.7 per cent – meaning the pounds in our pockets just won’t go as far as they did before.
And according to Martin Lewis, that promised £500 better off we’ll all feel at the end of the parliament will only come when the Chancellor unfreezes the income tax brackets… still TBC.
While I applaud throwing the book at bold growth measures like planning reform, and any progress is better than nothing, I can’t help feel, is this all we can do?
Just £3bn shaved from the welfare budget by 2029? Just a few extra billion here or there cut off borrowing?
Is that the best we got?
Are we stuck in an economic doom loop?
It’s enough to make Joe Public take a second glance at Nigel Farage.
Will Washington dictate our tax policy?
In the uncertain world we live in, tariffs could wipe out all the Chancellor’s headroom.
And that could be the case as early as next week, when tariffs hit on April 2.
It’s clear the Chancellor doesn’t want to put the digital services tax on the table – and thinks the US should pay it.
But it’s also evident from conversations in government, that it is very much on the cards in a bid to try and do a deal to stop those crippling charges from whacking us in the wallet.
The idea that Washington – or any nation – could reverse such a tax in this way is remarkable.
We’ll not have long to wait to find out whether that’s the case.
Britain will build loads of homes – but the government still might miss its targets
Thousands of homes will help get to some of that growth, and will be hugely welcomed by the millions of families living in insecure housing or unable to get on the housing ladder.
However, admitting just eight months into government that you’re not on track to meet your own 1.5million home target, was a stark admission from the Chancellor.
She’ll be hoping that the £600m extra for skills, and training more of our own workforce, will help to boost that further, but the jury’s still out.
And at the moment, they’re set to be 200,000 short of that magical 1.5million.
Comparing cutting benefits to pocket money may risk a backlash
Speaking with Iain Dale on Wednesday evening, the Chancellor backed her deputy Darren Jones, who earlier in the day appeared to compare cutting pocket money for kids and telling them to get a Saturday job, to cutting benefits.
He was making the point that the OBR’s impact assessment of the cuts will look at how much worse they are off, but it won’t consider how much better off they’ll be in work.
THAT has gone down so badly among the people on my X account this evening.
The left – already up in arms about cuts to welfare – are furious.
And even Tories have their head in their hands, saying there’s no way they would have got away with such clumsy language.
Reeves told LBC that she does not believe the claims that 250,000 people could be pushed into poverty are accurate.
We’ll see how many of the Labour MPs agree with her when these measures come to the Commons.
Already we’re seeing fury from the likes of Clive Lewis and Rachel Maskell. Who else will follow if a rebellion hits the lobbies?
Hitting the sweet spot
What’s clear from Reeves’ performance is that she thinks she is genuinely getting the balance right.
Despite attacks from the left, right, voters and business, the Chancellor’s doubled down on basically every decision she’s made since stepping into No11.
I asked her if she agreed with Angela Rayner that they’ve got the sweet spot on tax.
She told me that we should treat other people’s money with the same respect we’d show our own – in a suggestion that throwing more taxes around wouldn’t be the answer.
And she said that despite all the gloom and the warnings about the health of Britain's economy, she doesn’t have any regrets.
I’d like someone to ask her that question in another six months, after the next Budget, and where we’ll know whether her plans are actually working or not.
Planning changes will deliver biggest ever positive OBR growth impact, says Rachel Reeves
If the world has changed, why hasn’t Rachel?
The message was – things have changed.
Donald Trump is in the White House.
The world’s more unstable than ever. We’re at a tipping point for AI and digital. We’re facing an aging population, a global migration crisis and a million and one things need to be fixed.
We need a government to step up, not step back.
It begs the question why the Chancellor feels the need to stick so rigidly to her plans, at the same time as telling us it’s all different now.
A defence spending boost is hugely welcome. But is it enough? Will it touch the sides?
Will this welfare crackdown stop the ballooning bill from threatening the finances? Can we cut waiting lists?
If the world’s really changed so much, why aren’t we changing radically too?
Do we need to look at a wealth tax, the triple lock, a defence levy? Should those fiscal rules really stay?
Boris Johnson won an 80-seat majority and didn’t do much with it, paralysed by indecision, threats of rebellion, and the outbreak of a pandemic.
Reeves clearly feels like burning the house down would risk a political price that she and the Labour party just can’t pay.
It turns out, there are some things than even a Tony Blair-sized landslide can’t give you.
