Spring Statement 2025: relieved but unconvinced - I’m still reeling from Labour's welfare cuts

• The Spring Statement wasn’t as brutal as feared, but it didn’t undo last week’s welfare cuts
• Universal Credit’s health element is being cut by 50% and frozen for new claimants
• The OBR predicts households could be £500 better off per year, but inflation limits the impact
• Overseas aid is being cut to fund a rise in defence spending to 2.5% of GDP
• While today’s news wasn’t as distressing as last week’s, is the damage done?

Rachel Reeves’ Spring Statement today (March 26) came dangerously close to being outright boring - but after last week’s brutal welfare cuts, that was almost a relief.

Ahead of the announcement, many feared the Chancellor would double down on welfare cuts, particularly following controversial reductions to Universal Credit and the tightening of PIP eligibility announced by Liz Kendall last week.

Read more: The key announcements from Rachel Reeves’ Spring Statement - including welfare and income

But while the feared deepening of the Work and Pensions Secretary's reforms didn’t quite materialise, a 50% cut to Universal Credit’s health element and its freeze for new claimants remain devastating for those affected.

Yes, it was also confirmed that the Universal Credit standard allowance will rise from £92 per week in 2025-26 to £106 by 2029-30.

But that won’t make up for the shortfall in support for those who rely on these benefits to maintain even a semblance of independence and dignity.

Small gains, big trade-offs

Elsewhere, it was a largely uneventful Statement. Very few of the key announcements will affect people’s finances on a day-to-day basis - at least, not in the short term.

Yes, Reeves pointed to an OBR projection that households could be, on average, £500 better off per year compared to previous forecasts. But with inflation still biting, that figure doesn’t feel like a game-changer.

This isn’t a windfall - it’s a modest improvement that may take years to be felt in real terms. Very little to excite the average household.

Then there’s the matter of defence spending vs. overseas aid. Cutting aid by 0.3% of gross national income to fund an increase in defence spending to 2.5% of GDP feels like a particularly bold choice when welfare cuts are still fresh in people’s minds.

Labour's left flank and its supports have been vocal about a wealth tax on billionaires, and this statement is unlikely to quiet those calls.

(Photos: Getty Images/Alex Nelson) | Getty Images/Alex Nelson

Investments offer hope, but cuts still loom

That said, there were some sweeteners in the mix - a £2 billion increase in capital spending per year, largely for public services (though, notably, this will “particularly” support defence - hmm).

Investment in skills development, back-to-work schemes, and a crackdown on tax evasion also gives the statement some substance; they may not immediately impact ordinary people’s pockets, but could provide some longer-term economic stability.

Let’s be clear: this doesn’t erase last week’s welfare cuts. It doesn’t change the fact that thousands of people who need financial support will no longer receive it.

It doesn’t undo the anxiety that those cuts sparked for people who rely on the state to help them live with dignity.

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Small wins amid ongoing uncertainty

At the very least, today’s news didn’t push me to the point of panic or tears like last week’s did. But the cracks are still there - Labour just chose not to widen them further.

With inflation still a major concern and welfare and aid cuts looming the real question remains: are we really seeing a path forward?

It’s a question that still lingers as the dust settles on yet another Spring Statement. For now, I’ll take the small wins, but remain cautious. We’ll see what the next few months bring.

Good luck to you, Autumn Budget...

What do you think of Rachel Reeves’ Spring Statement? Do you feel reassured, or are you still worried about the impact of last week’s welfare cuts? Share your thoughts in the comments section.