
Afternoon summary
Pensioners and wealthy people could be the target of tax increases at Rachel Reeves’s autumn budget if the drastically worsening economic backdrop fails to improve, the Institute for Fiscal Studies (IFS) has said. But, at a press conference in Paris, Keir Starmer played down the prospect of the government chosing tax rises. (See 2.51pm.)
Lower-income households are on track to become £500 a year poorer by the end of the decade as a result of the UK chancellor’s spring statement, according to analysis by the Resolution Foundation thinktank. See 9.42am for an explanation as to why Reeves is quoting figures that seem to say the opposite.
The number of children living in poverty in the UK has reached the highest level for more than 20 years, government figures have revealed. But in Scotland child poverty rates are falling, and are now 9 points below the UK-wide figure. (See 3.29pm.)
Starmer has described President Trump’s decision to slap a 25% import tax on cars as “very concerning” but said the UK will not be “jumping into a trade war” with the US. (See 2.31pm.)
Starmer has said Vladimir Putin must be given a deadline to make progress on a Ukraine ceasefire.
Updated
The Labour MP Stella Creasy has said she cannot support the government’s plans to cut sickness and disability benefits. In an interview with LBC’s Andrew Marr for his 6pm show tonight, asked if she could defend the cuts, she replied:
No, I cannot. because I don’t recognise the challenge that the Chancellor paints of the economic situation that we’re in …
But because I am concerned at not just what we’ve seen today, that these proposals come when we’ve already got 4.5m families living in poverty [see 10.52am], and it will add to that poverty, that they may be counterproductive to getting the economy moving.
So, the argument that many people like me make, who want this government to succeed and who recognise the challenges they’re facing, is there maybe alternative ways forward that can both address that economic uncertainty and promote social justice.
Asked if she would vote against the plans, Creasy replied:
As it stands, I can’t support these proposals. Increasing poverty is not what any of us came into politics to do, including the government. And I think they’re economically counterproductive.
Sue Gray uses maiden Lords speech to urge politicians to halt 'project chainsaw'-type jibes about civil servants
Sue Gray, Keir Starmer’s former chief of staff, has used her maiden speech in the House of Lords to defend civil servants from attacks by politcians – including Labour ones.
Without naming individuals, she seemed to refer directly to a recent Guardian report saying No 10 was taking a close interest in thinktank plans to reshape the state that were privately being referred to as “project chainsaw”.
Gray, who spent her career as a civil servant before joining Starmer’s team in 2023, told peers she worked with “truly heroic and committed people” when she started in Whitehall. She went on:
Today I see the same sort of brilliance. What these and other civil servants are doing is central to the government’s and the nation’s mission to bring back growth into our economy and security to our society.
That is why I would caution all of us to be careful, not just about our decisions but our language.
When we hear the phrases, ‘blobs’, ‘pen-pushers’, ‘axes’, ‘chainsaws’ and other implements, they hear it too.
John Crace, the Guardian’s sketchwriter, was listening to Rachel Reeves on her morning interview round too. He’s written about it here.
The Runcorn and Helsby byelection will take place on 1 May, coinciding with the local elections, it has been confirmed today.
Ninja sword ban due to become law by summer, Home Office says
A ban on ninja swords campaigned for by the family of a murdered teenager is set to come into force by summer, PA Media reports. PA says:
It will be illegal to possess, sell, make or import the weapon from 1 August as the final part of anti-knife crime measures introduced under Ronan’s Law, named after Ronan Kanda.
His mother, Pooja Kanda, has campaigned for a law change after her 16-year-old son was yards away from his Wolverhampton home when he was murdered with a ninja sword in 2022.
The move to ban the blades was being laid before parliament today and will come into force in the summer once it has gained approval in parliament.
Anyone caught with a ninja sword in private could face six months in prison, set to increase to two years under plans in the crime and policing bill.
The weapons can be handed over in knife-surrender bins or local police stations under a surrender scheme running in July.
No ninja swords bought after Thursday will be eligible for compensation as part of efforts to stop exploitation of the scheme, the Home Office said.
Under Ronan’s Law, the Home Office has also announced a raft of measures including making retailers report bulk or suspicious sales to police, and increasing the jail sentence for selling weapons to children, or illegal blades such as zombie knives, to two years.
Badenoch claims Tories lost last election partly due to their 'technocratic managerialism'
Kemi Badenoch has claimed that the Conservative party lost the last election because of its “technocratic managerialism”.
She used the line in a speech today at a conference run by Anthropy, a leadership organisation.
In the past Badenoch has argued that the Tories lost in 2024 because they “taked right, but governed left”.
But today she offered a slightly different take, which may surprise Britons who remember Brexit, Boris Johnson and Liz Truss. She told the audience:
One of the reasons my party is out of office is because we forgot what we were about and opted for a technocratic managerialism that didn’t inspire anyone and didn’t tell a story about who we are and how we make the world a better place.
The Conservative party is now under new leadership and one of the things I want us to do is remember the social value of business and enterprise.
Badenoch said that other politicians gave speeches claiming to support business, only for them to introduce “more regulations” and “rising taxes. She suggested she would be different.
But she also claimed business was at fault too.
One of the biggest threats to free enterprise isn’t just government – it’s the corporatism and compliance culture that has taken over large parts of our economy.
Big business today often spends more time lobbying for regulation than competing in the market. We have an industry built around box-ticking – without real impact.
This is a major shift.
And it’s time to get real: we don’t have time for all of this anymore.
We need businesses laser-like focused on their mission.
In her speech, Badenoch also included at least one line she might regret. In a reference who how she wants business to be at the heart of the Tory policy review, she said:
For too long, politics has been about winning elections, not planning for the future. I want to change that.
On this measure, she is doing quite well; according to recent polling, the Conservatives are not on course to win.
Relative child poverty in Scotland falling, and 9 points lower than UK rate, figures show
Today’s DWP figures show child poverty in the UK going up. (See 10.52am and 2.03pm.) But in Scotland, where devolution allows gives the Scottish government powers (which is is using) to vary tax rates, and some benefit payments, child poverty has fallen, the Scottish government says. Relative child poverty in Scotland is 9 points lower than in the UK as a whole.
In a news release it explains:
Annual statistics published today show that compared with the previous year’s statistics, relative child poverty in 2023-24 reduced from 26% to 22% in Scotland while absolute child poverty fell from 23% to 17%. UK poverty statistics published today show levels of relative child poverty at 31% and absolute child poverty at 26%.
Modelling published today suggests that UK government policies are “holding back” Scotland’s progress. It estimates the UK government could reduce relative child poverty by an additional 100,000 children in 2025-26 if it heeded Scottish government calls to end the two-child limit, replicate the Scottish child payment in universal credit, remove the benefit cap and introduce an essentials guarantee.
Commenting on the figures, Shirley-Anne Somerville, the Scottish government’s social justice secretary, said:
Eradicating child poverty is the Scottish government’s top priority and we are committed to meeting the 2030 targets unanimously agreed by the Scottish parliament.
Our policies are having to work harder than ever to make a difference, against a backdrop of a continuing cost of living crisis, rising energy costs and UK government decision making. However, we know these policies are working.
Statistics published today show that, although we have not met the interim child poverty targets, the proportion of children living in relative poverty has reduced and year-on-year rates are now lower than they have been since 2014-15, while the proportion in absolute poverty has also fallen with the annual figure the lowest in 30 years.
This briefing from the Fraser of Allender Institute has more on Scotland’s child poverty record. It includes this chart.
Starmer says government's record shows it has 'mindset' opposed to raising taxes for ordinary people
Q: Is the IFS right to say there is a good chance that you will have to raise taxes in the autumn? (See 11.57am.)
Starmer said people predicted the government would raise in the spring statement. But it didn’t.
He said he would not write budgets in advance. But he went on:
Obviously, I’m not going to write future budgets. Every prime minister and every chancellor, from every government, always takes that position.
But if you look at the pattern, or the intent, from both the budget and the spring statement, you’ll see that when it’s come to the decisions we’ve had to make, we have not taken a decision to increase tax. And I think that indicates the mindset that we bring to this.
Starmer was referring to taxes for workers. The last budget did put up taxes hugely for businesses, and it raised some taxes affecting the wealthy.
Starmer again ducks question about fishing deal with EU, saying 'negotiation through press conferences' doesn't work
Pressed a second time on whether fish is an issue complicating the UK-EU security pact, Starmer says he does not want to address that because he thinks “negotiation through press conferences” is not a good way to resolve these problems. He says that did not work in the past (during the Brexit process, he means).
Fish is an issue because the UK-EU post-Brexit trade deal involved the UK giving European fleets better-than-expected access to UK waters. But those concessions were time-limited and need to be renegotiated. It has been claimed that President Macron is blocking a UK-EU security deal (that would give British manufactuers the right to pitch for orders from a new €150bn defence fund) until he gets assurances that French fishermen will be protected.
Starmer ducks question about whether UK-EU security pact being held up by failure to agree new deal on fishing
Q: To negotiate a security pact with the EU, you are also going to have to come to a deal over fish. That’s insane, isn’t it?
Starmer says there is a broad consensus in Europe. But he says he’s “going to resist your temptation to start talking about fish”, because he does not want to engage in a running commentary.
Updated
Starmer says US car tariffs 'very concerning', as he declines to say if he got advance warning of them from Trump
Q: Did President Trump give you any notice of the car tariffs. Are you confident about the UK being exempted?
Starmer says:
I think tariffs are very concerning. There’s no doubt about that. And I’m very clear in my mind that the sector, the industry, does not want a trade war, and that’s why, first and foremost, we’ve got to work with the sector work, with industry, in our response in relation to this.
He says he wants to be “pragmatic and clear-eyed” and he is engaged in intensive talks with the US. He says he hopes they can avoid a trade war.
But he has to act in the national interest. “We will keep all options on the table,” he says.
Starmer does not say if he had advance warning about the tariffs.
Q: Why are you saying people will be £500 a year better off as a result of the spring statement bills are going up by more than that? Are you gaslighting people?
Starmer does not accept that.
He says the £500 a year figure comes from the OBR, not the government.
He says interest rates are going down and wages are going up. And people are benefiting from policies like waiting lists being cut, he says.
Starmer ducks question about whether plan based on hoping Russia might agree to ceasefire is doomed to fail
Q: [From the BBC’s Jeremy Bowen] Isn’t it time to admit that Russia has no interest in a ceasefire, and that a different approach is needed?
Starmer says he does not accept that.
He says he thinks President Trump is serious about wanting peace. And the Ukrainians want peace too, he says.
Q: But what makes you think Putin will give up his long-held views on Ukraine?
Starmer says this is a process. A lasting peace is the right goal, he says. It is what Trump wants, and what the Europeans want.
If they can provide leadership, backed up by operational plans, that is the best chance for peace.
Bowen tried twice to get Starmer to addresss his point about Russia, but both times Starmer refused to engage with Bowen’s point.
Updated
Q: You have been talking about this for almost a month. But only the UK and France have committed to putting troops on the ground. Why aren’t you making more progress?
Starmer insists they are making progress. He says 200 planners attending the planning meeting in London last week.
There was a feeling around the table [at the meeting today] that Europe, taking Europe as a whole, has not been this strong and united for a very long time.
He says Russia is delaying. That is tactic they had tried before.
Q: When will there be progress?
Starmer says he does not want to put a deadline on things, but “we need to see this developing in days and weeks, not months and months”.
Starmer says support in Europe for cooperation to help Ukraine is 'stronger and broader than ever'
Starmer is now taking questions.
Q: The US describe Europeans as pathetically freeloaders. How can you trust them? And will you commit to putting troops on the ground?
Starmer says there were 30 countries at the meeting today, as well as Nato and the EU.
There was a broad consensus that this group of nations is now stronger and broader than it’s ever been.
In terms of military planning, that is going alongside the political process, he says.
He says he has always been clear that a European-led initiative would need US support.
Keir Starmer holds press conference
Keir Starmer is speaking at his press conference in Paris.
In his opening statement, he says Russia has continued to attack energy infrastructure in Ukraine, despite a partial ceasefire agreement that was supposed to stop this.
He says Russia is “filibustering … playing games and then playing for time”.
Leaders at the summit today said they would not let Russia drag this out, he says.
Charities urge government to change policy in response to figures showing child poverty at almost 4.5m
The Child Poverty Action Group has published more figures from the poverty figures out today showing there were almost 4.5 million living in poverty last year. (See 10.52am.)
Today’s statistics also show:
-44% of all children living in poverty are living in a household where someone is disabled
-72% of poor children live in working families
-44% of children in families with 3 or more children are in poverty, far higher than families with 1 child (21%) or 2 children (25%)
-Poor families have fallen deeper into poverty. There are 3.1 million children in deep poverty compared to 2.9 million children last year (i.e. with a household income below 50% of after-housing-costs equivalised median income)
-48% of all children in poverty were in families with a youngest child aged under five
-49% of children in Asian and British Asian families are in poverty, 49% of children in Black/ African/Caribbean and Black British families, and 24% of children in white families
-43% of children in lone parent families were in poverty, higher than the couples rate of 26%
-More children in poverty are growing up in privately rented homes – 1.7 million, a record high, up from 1.1 million in 2010/11
-The three-year average poverty rate has fallen in Scotland from 24% to 23% (one-year from 26% to 22%) and has risen in England from 30% to 31%, in Northern Ireland from 23% to 24%, and in Wales from 29% to 31%
And here is some more reaction from charities, who are urging the government to respond to the figures by changing policy.
Philip Goodwin, chief executive officer at UNICEF UK, said:
The UK has seen the highest increase in child poverty of any OECD and EU country in the past decade and today’s shocking figures show the situation is getting worse. Now record numbers of the UK child population are living below the poverty line, many of whom are under 5 years old …
The prime minister promised action to break the link between background and future success and reduce the number of children living in poverty. But with the cuts announced in yesterday’s spring statement predicted to increase this figure, the government must show it is serious by calling an immediate end to the two-child limit and benefit cap in its child poverty strategy. This one step would lift hundreds of thousands of children out of poverty.
And Silvia Galandini, Oxfam’s domestic poverty lead said:
These latest poverty figures are as damning as they are heartbreaking – almost one in three children are living in poverty across the UK. This is before yesterday’s brutal cuts, where the chancellor chose to remove vital security and safety from those who need it the most instead of taxing the super-rich.
Starmer suggests 'coalition of willing' leaders discussed tightening sanctions on Russia at Paris meeting
Keir Starmer has hinted that he would like to see more sanctions imposed on Russia. In brief comments to reporters at the end of today's “coalition of the willing” summit, he said there was “complete clarity that now is not the time for lifting of sanctions.” He went on:
Quite the contrary, what we discussed is how we can increase sanctions to support the US initiative, to bring Russia to the table through further pressure from this group of countries.
Jakub Krupa has more on this on his Europe live blog.
Starmer is due to hold a formal press conference any minute now.
Libby Brooks is the Guardian’s Scotland correspondent.
There was a very different tone struck at first minister’s questions today, with Holyrood still reeling from the news that Scottish government minister Christina McKelvie has died at the age of 57. (See 12.21pm.)
Members across parties and at all levels of seniority were visibly shell-shocked and emotional following the announcement by McKelvie’s partner, SNP depute Keith Brown, that she had died this morning. The drugs and alcohol minister stepped back from parliamentary duties last summer after revealing that she had secondary breast cancer.
McKelvie, who was first elected in 2007, was held in deep affection and it was notable how many women MSPs described how she had taken them under her wing when they first joined Holyrood.
The usual combative questioning at FMQs was far more muted, though John Swinney had opportunity to take a swipe at yesterday’s spring statement, saying it would make his mission to eradicate child poverty much harder, and highlighting the direct impact that welfare cuts will have on Scottish government finances, with the Fraser of Allander Institute estimating they may amount to a £400m loss to Scotland’s block grant.
IFS says pro-job measures in benefits reform package will only have 'small' poverty reduction impact
Rachel Reeves said in an interview this morning that she was “absolutely certain” that the government’s sickness and disability cuts would not increase overall poverty numbers. That was because they would lead to more people getting jobs, she argued. (See 8.46am.)
But the Institute for Fiscal Studies has cast doubt on this argument. In one of the presentations at the news conference this morning, where it was giving its detailed assessment of the spring statement, it said the pro-job measures in the Pathways to Work green paper would just have a “small” poverty-reduction impact.
Here is the relevant slide from the presentation.
There is an example of how hard it can be to get people off sickness and disability benefits and into work in the Pathways to Work green paper published last week. As an example of a good programme in this area, the green paper cites additional work coach support, saying this can increase people’s chances of getting a job by a third. But the figures show this means 11% of participants finding work, instead of 8% in the control group. Paragraph 226 says:
We have good evidence that when people receive support it has an impact. For example, additional work coach support, where people on the health journey spent more time with a work coach, found that voluntary participants in the LCWRA [limited capability for work-related activity – a universal credit category for people judged too sick to work] group were a third more likely to be in work than a comparison group 12 months later. 11% of participants were in work 12 months later, compared to 8% of the comparison group.
Keir Starmer is expected to hold his press conference in Paris within the next half an hour.
Swinney leads tributes after Scottish government minister Christina McKelvie dies aged 57
Scottish government minister Christina McKelvie has died at the age of 57, PA Media reports. PA says:
McKelvie took medical leave from her role as the alcohol and drugs policy minister last year to seek treatment for secondary breast cancer.
Keith Brown – SNP depute leader and McKelvie’s long-time partner – announced the news in a statement today. He said that McKelvie “lit up every room she was in with her positivity and bright smile” and that he and her sons were “heartbroken”.
First minister John Swinney said he was “devastated” at McKelvie’s death, describing the Hamilton, Larkhall and Stonehouse MSP as “one of the kindest and most generous people I have ever met in my life”.
MSPs openly wept in the Holyrood chamber as tributes were paid to McKelvie.
Swinney posted this on social media.
I am devastated at the passing of Christina McKelvie MSP, Minister for Drugs and Alcohol Policy and one of the kindest and most generous people I have ever met. A force of nature, Christina enhanced the lives of all around her. My deepest sympathy to Keith, Jack and Lewis. pic.twitter.com/tHzb5tOw35
— John Swinney (@JohnSwinney) March 27, 2025
Welfare minister Stephen Timms rejects claim that cuts to sickness and disability benefit being 'rushed'
Stephen Timms, the welfare minister, has rejected claims that the changes to sickness and disability benefits are being rushed.
He was speaking in the Commons in response to an urgent question from Steve Darling, the Lib Dem work and pensions spokesperson, who said that any changes to the benefits system should be introduced in a “caring and compassionate” way, and not “rushed”.
Timms replied:
I very much agree with him that this all needs to be done in a managed and compassionate way. That is exactly how we’re doing it.
I don’t agree with him that it’s being rushed. The changes won’t happen for over 18 months until November 2026, that’s when the change will take effect and they won’t affect current recipients of personal independence payments until their first award review after November 2026 and typically review periods are three years, so this is definitely not being rushed, it’ll happen in a properly planned, staged and careful way.
Institute for Fiscal Studies says there's good chance Reeves will have to raise taxes in autumn
The Institute for Fiscal Studies has also released its considered verdict on the spring statement this morning. Like most thinktanks, it was also commenting yesterday, but the full number-crunching analysis takes a while.
Here are some of the key points from the opening presentation by Paul Johnson, the IFS’s director.
Johnson said that there is a good chance that Rachel Reeves will have to raise taxes in the autumn. And he claimed speculation about what taxes might rise could be economically damaging. He explained:
There is a good chance that economic and fiscal forecasts will deteriorate significantly between now and an autumn budget. If so, she will need to come back for more; which will likely mean raising taxes even further. That risks months of speculation over what those tax rises might be – a raid on pensions, a wealth tax on the richest, another hike to capital gains tax? I mention those not to commend them, far from it, but to exemplify the kinds of taxes regarding which mere speculation about increases can cause economic harm. With no sense of a tax strategy, we have no idea which way the chancellor might turn.
Reeves did not accept this when this point was put to her in interviews this morning. (See 8.07am.)
He said that Reeves’ obsession with ensuring she had exactly the same fiscal headroom as she did in the autumn budget was getting in the way of rational policy making.
We had £9.9bn of headroom in October. We have £9.9bn of headroom today. Astonishingly the numbers are within a mere £2m of one another. It is hard to believe this is a fluke. The Treasury has clearly worked overtime to ensure that precisely the same fiscal headroom remains today as was projected in October. This is not sensible.
He said that, while the sickness and disability benefit cuts announced last week were “defensible” (because costs were rising so much), the decision to announce an extra £500m in cuts yesterday, just to make sure the fiscal headroom figure did not change, was a mistake.
Whilst unquestionably tough for those on the receiving end, those original cuts were defensible as a response to problems manifested by huge increases in numbers of claimants, and in spending. One could make a defence of them unrelated to the details of any particular fiscal rule. Coming back a week later with just a slightly bigger cut because that’s what’s needed to return the fiscal headroom to precisely where it was a few months ago risks undermining that case and discrediting attempts at genuine reform to the benefit system. If it was right last week to announce a halving of the health component of universal credit, it is hard to see why this week it is right to do more than that by halving it and then freezing it in cash terms.
He said having little fiscal headroom, and then applying the fiscal rules rigidly, was “not conducive to a sensible policymaking process”.
It is the combination of “iron-clad” pass/fail numerical fiscal rules and next to no headroom against them that is causing so many problems, leaving fiscal policy completely exposed to economic developments outside the government’s control. That is not conducive to a sensible policymaking process. This is not the OBR’s fault. It is the product of the chancellor’s choices.
He said future government spending was “even more front-loaded than before”.
Spending growth is now set to be 2.5% in 2025-26, 1.8% in 2026-27 and 1.0% in each of the subsequent three years. One should always be sceptical of plans to be prudent, but only in the future. Front-loaded or not, the problem for the chancellor is that keeping to these growth rates overall will inevitably mean cuts for some departments in the years to come.
Nearly 4m hours of raw sewage dumped in England’s waters last year
Almost 4m hours of raw sewage was discharged into rivers and coastal waters in England last year, with waterways that have the highest environmental protections subjected to days of pollution, Sandra Laville and Michael Goodier report.
Scottish government will 'look at every lever' available to avoid benefit cuts, finance secretary says
Shona Robison, the Scottish finance secretary, has said that the Scottish government will “look at every lever” it can pull to avoid cutting benefits.
Speaking on BBC Radio Scotland this morning, she said:
We have invested in social security, things like the Scottish child payment for example, which is keeping thousands of children out of poverty.
We’re in the business of keeping people out of poverty, not pushing children particularly into poverty.
So we have made decisions over the years to prioritise the spend on our most vulnerable.
In terms of going forward, the announcements yesterday are going to have a major impact on our budgets in the coming years and what we will be doing is to look at every lever we can use to avoid having to replicate the decision the UK Labour government have made.
Under devolution, the Scottish government can now diverge from Westminster policy in some areas in relation to benefits. But much welfare policy is still determined in London and, according to the Fraser of Allander Institute, a thinktank, the spring statement decisions will lead to the Scottish government’s budget being “around £900m worse off on the current side in 2029-30 than previously projected”.
Child poverty reached almost 4.5m last year, highest level for more than 20 years, figures show
The number of children living in poverty in the UK has reached the highest level for more than 20 years, PA Media reports. PA says:
The official figure comes a day after government estimates suggested welfare cuts will plunge thousands more children below the poverty line by the end of the decade.
There were 4.45 million children estimated to be in households in relative low income, after housing costs, in the year to March 2024, data published by the Department for Work and Pensions shows.
The latest figure is the highest since comparable records for the UK began in 2002/03.
It rose from an estimated 4.33 million in the year to March 2023.
A household is considered to be in relative poverty if it is below 60% of the median income after housing costs.
The Child Poverty Action Group said the number of children living in poverty in April 2024 was 100,000 higher than the previous year. But the total could rise to 4.8 million by the end of this parliament if the government does not scrap the two-child benefit cap, it said.
Alison Garnham, chief executive of the CPAG, said:
Today’s grim statistics are a stark warning that government’s own commitment to reduce child poverty will crash and burn unless it takes urgent action. The government’s child poverty strategy must invest in children’s life chances, starting by scrapping the two- child limit.
The government has a taskforce working on a strategy to reduce child poverty, and it is due to be published later in the spring.
While Rachel Reeves has been defending the spring statement, Keir Starmer has been in Paris for the “coalition of the willing” summit for leaders willing to contribute to the defence of Ukraine in the event of a peace settlement. Jakub Krupa is covering it on his Europe live blog.
Here are some of the best pictures.
Reeves says 'trade wars are no good for anyone' as US imposes 25% tariffs on car imports
One of the peculiarities of Rachel Reeves’ spring statement speech yesterday was that she was blaming global economic trends for the downturn in the public finances, but yet (in line with the standard government approach) she would not say anything critical about President Trump, who is the cause of all this turmoil.
In her interview with Sky News this morning, Reeves did not criticise the president directly, but she did say trade wars were bad for everyone.
Asked about the new US 25% tariffs on car imports, she said:
We’re not at the moment in a position where we want to do anything to escalate these trade wars.
Trade wars are no good for anyone. It will end up with higher prices for consumers pushing up inflation after we’ve worked so hard to get a grip of inflation, and at the same time, will make it harder for British companies to export.
Reeves also said talks were continuing with the US about securing “a better trading relationship”.
There will be two urgent questions in the Commons after 10.30pm. First, a work and pensions minister will respond to a question from the Lib Dem spokesperson Steve Darling about the impact of the Pip cuts on people getting the carer’s allowance. And then a business minister will respond to question from the Tory MP Martin Vickers about the future of Scunthorpe steelworks.
Poorer households to lose around £500 per year by end of decade, thinktank says - and why Reeves is saying the opposite
In her Today programme interview Rachel Reeves was asked about the Resolution Foundation’s spring statement analysis published this morning. (See 8.33am.)
This is what it says in its summary about how the government’s measures will cost poorer families around £500.
This is still early days for this government, but it could fairly be judged not just by this spring statement alone, but in the round – considering all the choices it has taken so far affecting family finances, including at the 2024 autumn budget. Taking everything together, the burden of adjustment looks less slanted – but poorer, disabled households are still set to take the biggest hit. More generally, a combined squeeze that reduces incomes by around 1.5% in the lower-middle reaches of the spectrum declines to only 0.5% at the very top.
Factoring those distributional decisions into the general outlook for growth and income makes for particularly grim reading. Across the poorer half of the country, the five years up to 2029 will see after-housing-costs incomes drop by around £500. In data going back to the early 1960s, larger drops for low-to-middle income families have only been seen twice before – in the sharp recession of the early 1990s, and then again in the immediate wake of the credit crunch. Disproportionate income reductions for sick and disabled people in poorer households are not going to help with any of these trends.
The Resolution Foundation uses its own disposable household income figures that are different from the real household disposable incomes (RHDI) used by the OBR. One difference is that it focuses on non-pensioner households. In its report it says:
Real income of the person one tenth of the way up the income distribution (‘p10’) or one fifth of the way up (‘p20’) is projected to be lower in 2029-30 than in 2023-24, by 5% and 1% respectively. In contrast, although even higher-income households may have lower incomes on this measure by 2029-30 than in 2024-25, they would nonetheless be better off than in 2023-24 given the strong growth in 2024-25.
Here is the chart illustrating this.
And here is the passage from the report explaining the headline £500 figure.
As ever, the outlook depends on many factors and is by no means set in stone, but any significant decline in incomes for the poorest in society would be historically notable. Figure 21 shows how real household incomes have grown for the poorest half of the non-pensioner population over every (rolling) five-year period since the 1960s. Over the next five years, the average equivalised income of the bottom half is projected to decline by 3%, or £500. And this scale of fall has only been (narrowly) worse during the early 1990s recession (1989 to 1994-95) and the financial crisis (2007-08 to 2012-13).
Here is figure 21.
Reeves yesterday told MPs almost the opposite. She said: “The OBR says today that households will be on average more than £500 a year better off under this Labour government.”
Why are the figures so different? Because the OBR and the Resolution Foundation are measuring disposable income in different ways. This is what the Resolution Foundation says about why its measure implies a more negative outcome.
In small part this is due to our focus on non-pensioners; but also because ‘non-labour income’ is growing disproportionately within the OBR’s RHDI projections (as the labour share is assumed to fall back), and this income may be either entirely excluded from our analysis (in the case of ‘imputed rents’); under-represented (e.g. rental income); or because it is important for average income but less so for low-to-middle income households (e.g. for many elements of investment income).
The OBR in part accepts this. This is what it says, for example, about the “imputed rent” part of its calculation.
Planning reforms boost incomes, offsetting some of the hit, as higher productivity raises wages and a larger housing stock means more compensation for housing services. Yet three quarters of the extra income from housing services comes as ‘imputed rent’ – what homeowners would receive if they rented out their home. This makes the boost less tangible for households.
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Reeves says she won't accept free concert tickets again
In an interview with ITV’s Good Morning Britain, Rachel Reeves, the chancellor, said she would not accept free tickets for concerts again in the future.
Asked about the controversy about her decision to accept two corporate tickets for a Sabrina Carpenter concert at the O2, she repeated the line that she used at her press conference yesterday – that a family member wanted to attend the concert (presumably one of her children, but she did not say that), and that she accepted tickets for a corporate box because security concerns meant it was not deemed safe for her to get normal tickets for the auditorium.
Asked why she did not pay for the tickets, which have been described as being worth £600, Reeves said that tickets like this were not available for sale.
She went on: “I don’t have any intention of doing this again.”
Asked if she was admitting she made a mistake, she replied:
I’m just saying I wouldn’t do it again. I felt I was doing the right thing. But I do understand perceptions.
Reeves says she's 'absolutely certain' welfare changes will not push more people into poverty
Rachel Reeves was on Sky News earlier. Asked about the DWP analysis saying the benefit cuts will push another 250,000 people into poverty, Reeves said this would not happen, because that analysis did not take account of the impact of more people getting into work. She made this argument at her press conference yesterday, but was even stronger in her words this morning.
She said:
I am absolutely certain that our reforms, instead of pushing people into poverty, are going to get people into work.
And we know that if you move from welfare into work, you are much less likely to be in poverty.
That is our ambition, making people better off, not making people worse off, and also the welfare state will always be there for people who genuinely need it.
Robinson ended with a broad-brush question.
You came into the job promising change – one word on the Labour manifesto. Was it our mistake not to understand that change under Keir Starmer and Rachel Reeves, meant cuts for benefits for the poorest, cuts to pensioners’ winter fuel allowance, cuts to overseas aid, a squeeze on public spending, a huge new tax rise on jobs, large scale redundancies amongst public officials, and big increases in the council tax. Is that what change meant.
And Reeves replied with a broad-brush answer defending her record.
NHS waiting lists down for five months, rolling out free breakfast clubs in primary schools, the national living wage going up by £1,400 pounds from next week, 2.5% of GDP spent on defence, including £2.2bn pounds invested next year, record housebuilding, the highest level of housebuilding for 40 years. That’s the change that we promised, that’s the change that we are delivering.
Q: What are you going to do about the US car tariffs?
Reeves says there are negotiations with the US under way.
Q: You have a tiny amount of headroom. So you might be back for more tax rises or spending cuts.
Reeves says there are always risks.
But she says her policies will promote growth.
She repeats the point she made in her statement yesterday about the OBR saying families will be £500 a year better off by the end of this parliament.
Q: The Resolution Foundation says lower income families will be £500 a year worse off.
Reeves says the OBR had plenty of time to consider the plans properly, implying its verdict is more reliable.
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Reeves says Darren Jones was 'clumsy' in pocket money comment about benefit cuts
Q: Was Darren Jones right to say disability benefits were like pocket money?
Reeves says Jones was “clumsy in his analogy” and he was right to apologise.
Q: Why does a Labour government think 370,000 disabled people should lose £4,500 per year?
Reeves says she wants to ensure sick and disabled peopel can work if they want. There are thousands of people who have been written off. The last Labour government, through the New Deal, got people into work. She wants people to be better off, she says.
Robinson plays a clip from someone with a brain injury who will be £900 a month worth on, and who says he might be made homeless as a result.
Q: What would you say to him?
Reeves says the man will stay on his benefits until he is reassessed. And then he will see a trained assessors. The people with the most severe injuries will keep their benefits, and may be paid more.
But she says the government is also putting in targeted support to get people into work.
Q: But you are cutting benefits for the disabled overall. Hundreds of thousands of peopel will lose out. The OBR says this is the biggest cut to carer’s allowance for decades. Why are people losing that?
Reeves says in the budget last year she increased carer’s allowance.
She says all the evidence shows that, with support, more people can get into work.
And even with these measures the welfare bill will continue to rise, she says.
Q: You did not mention Trump by name, but he is the reason the world has changed. But do you accept you had an impact too – your budget decisions were bad for business confidence?
Reeves says the OBR said three-quarters of the reduction in the headroom was due to global borrowing costs rising.
Q: Are you saying the £25bn tax rises in the budget had no impact?
Reeves says tax changes have consequences.
But if she had not filled the black hole in the public finances, they would not have been on a firm footing. The Bank of England would not have cut interest rates. And the UK would not have attracted as much investment.
And the NHS would not be cutting waitings lists as it is now.
Reeves interviewed on Today programme
Nick Robinson is interviewing Rachel Reeves on the Today programme now.
Q: You promised just one budget a year, but yesterday you had to announce drastic cuts. What’s gone wrong?
Reeves says she does not think anyone would claim the welfare system is working well. Those plans are about reforming the system.
But the world has also changed since the autumn, she says. That eroded her fiscal headroom. She says she will never take risks with the public finances.
Reeves says UK not planning retaliatory tariffs against US 'at the moment'
Rachel Reeves, the chancellor, has said the UK is not planning “at the moment” to introduce retaliatory tariffs on the US, after Donald Trump imposed a new trade tax on car imports.
Speaking on Sky News, she said:
We’re not at the moment at a position where we want to do anything to escalate these trade wars.
Trade wars are no good for anyone. It will end up with higher prices for consumers, pushing up inflation after we’ve worked so hard to get a grip of inflation, and at the same time will make it harder for British companies to export.
We are looking to secure a better trading relationship with the United States. I recognise that the week ahead is important. There are further talks going on today, so let’s see where we get to in the next few days.
Graeme Wearden is covering all the reaction to Trump’s car tariffs announcement on his business live blog.
Reeves says she does not accept tax rises in autumn inevitable as she defends spring statement
Good morning. Day two after a budget-type event is when the most insightful analysis tends to come out, and this morning the two heavyweight public spending thinktanks, the Resolution Foundation and the Institute for Fiscal Studies, are delivering their considered verdicts. And Rachel Reeves is doing interviews now defending her decisions.
Here is our overnight splash about the spring statement.
Many commentators have said further tax rises are likely in the autumn. But Reeves is refusing to accept this.
In an interview with Times Radio, Kate McCann put it to Reeves:
You’re going to have to come back for more. You’re going to have to come back for more cuts or tax rises in the autumn. That’s the truth, isn’t it?
And Reeves replied: “No, it’s not.”
Asked if she was ruling out tax rises, Reeves would not go that far, but she explained why she thought they would not be necessary.
What I’m saying is that there are loads of things that this government are doing that are contributing to growth. And the Office of Budget Responsibility said yesterday that the planning reforms, the national policy planning framework, which enables us to build, for example, on grey belt land, enables building to happen more quickly, will add £6.8bn to the size of our economy by the end of this parliament. And we’ll add £3.4bn to our public finances.
That shows if we go further and faster on delivering economic growth with our planning reforms, with our pensions reforms, with our regulatory reforms, we can both grow the economy and have more money for our public services. And that is what I’m focused on.
Reeves is about to be interviewed on the Today programme.
Here is the agenda for the day.
Morning: Keir Starmer arrives in Paris for talks with other leaders about Ukraine.
9am: Richard Hughes, chair of the Office for Budget Responsibility, speaks at a Resolution Foundation event about the spring statement.
9.30am: The Department for Work and Pensions releases annual poverty figures.
10.30am: Paul Johnson, director of the Institute for Fiscal Studies, and his colleagues speak at an IFS briefing on the spring statement.
11am: Jonathan Reynolds, business secretary, speaks at a Chatham House conference on trade.
11.30am: Downing Street holds a lobby briefing.
Around 12.30pm (UK time): Starmer holds a press conference in Paris.
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