Spring Statement 2025: On-the-day factual briefing

This briefing covers the Spring Statement 2025, which was delivered on 26 March 2025. The full set of documents is available on the Treasury website.

The Chancellor announced that:

• The OBR forecasts the economy to grow by 1.0 per cent in 2025, slower than expected in October. Growth is forecast to accelerate to 1.9 per cent in 2026. (Page 9, paragraph 1.12)
• The RDEL [resource departmental expenditure limits or day-to-day spending] envelope will grow at 1.2 per cent in real terms per year from 2025-26 to 2029-30. (Page 34, paragraph 3.7)
• Government departments will reduce their administrative budgets by 15 per cent by the end of the decade. Savings on back-office functions will total at least £2.2 billion per year by the end of this period, and ensure that front line services are prioritised. (Page 34, paragraph 3.9)
• The government will set out its plans for spending and key public sector reforms at the Spending Review, which will conclude on 11 June 2025. The Spending Review will set out plans for day-to-day spending for four years to 2028–29, and for capital spending for five years to 2029–30 alongside a 10 Year Infrastructure Strategy. Going forward, the government has committed to holding a Spending Review every two years, setting departmental budgets for a minimum of three years. (Page 26, paragraph 2.49)

The Chancellor announced that at the Budget last autumn, the government set out a commitment to reforming the business rates system to support the High Street and boost investment and published a discussion paper on priority areas for reform. In summer, the government will publish an interim report that sets out a clear direction of travel for the business rates system, with further policy detail to follow at the Budget this autumn. (Page 28, paragraph 2.63)

The Chancellor announced that:

• The government will invest an additional £2 billion in social and affordable housing in 2026–27, as a down payment on this government’s housing ambitions. This is a bridge to a new programme, and in June the government will follow this with further announcements on wider long-term investment into social and affordable housing through the Spending Review, to give social housing providers the stability and confidence they are calling for. (Page 29, paragraph 2.69)
• Ahead of the Spending Review, this announcement is intended to give providers greater certainty in the short-term and give them confidence to continue investing in their development pipelines. This investment will deliver up to 18,000 new homes, and will help unlock development on sites that are ready to go in areas such as Manchester and Liverpool. (Page 29, paragraph 2.70)

The Chancellor announced that the government is also confirming the creation of a £3.25 billion Transformation Fund to support the fundamental reform of public services, seize the opportunities of digital technology and Artificial Intelligence (AI), and transform frontline delivery to release savings for taxpayers over the long-term. The Spring Statement confirms the first allocations from the Transformation Fund, which will invest in vital public services and accelerate the modernisation of the state. The government will: 

• Take the next step to reform the children’s social care system through providing an additional £25 million for the fostering system. This will include funding the recruitment of a further 400 new fostering households, providing children with stability and addressing cost pressures on local government.
• Support the management of offenders in the community, by providing £8 million for new technology so probation officers can focus on reducing reoffending, rather than filling out forms.
• Provide £42 million for three pioneering DSIT-led Frontier AI Exemplars. These Exemplars will test and deploy AI applications to make government operations more efficient and effective, and improve outcomes for citizens by reducing unnecessary bureaucracy.
• Provide £150 million for government employee exit schemes. This will support a leaner and more efficient Civil Service, helping to reduce administration costs by 15 per cent by the end of the decade. (Page 25, paragraph 2.43)

The Chancellor announced that:

• The government will invest in additional employment, health and skills support from 2026–27 to help people start or stay in work, and not fall into long-term economic inactivity, scaling up to £1 billion a year by 2029–30. This will provide employment and health support to anyone receiving out of work benefits with a work-limiting health condition. This investment will build on existing support from WorkWell, Connect to Work and the Get Britain Working trailblazers. (Page 23, paragraph 2.32)
• Boosting skills in construction is a crucial part of delivering on this government’s plans to build 1.5 million homes in England this Parliament and progress vital infrastructure projects. At Spring Statement, the government is committing £625 million in England over four years to boost existing training routes, ensure a sustainable flow of skilled construction workers and support employers to invest in training. This is expected to deliver up to 60,000 additional skilled construction workers this Parliament. (Page 29, paragraph 2.71)
• As part of this, to boost provision, the government is providing an additional £100 million to support 35,000 construction-focused skills bootcamp places, providing a route for new entrants, re-engaging “returners”, and upskilling existing employees. A further £40 million for up to 10,000 additional places on new construction Foundation Apprenticeships will give young people a high-quality entry route into a rewarding career. An additional £165 million will boost funding for providers to deliver more construction courses including through the High Value Course Premium and Free Courses for Jobs. The government is also launching a new Teacher Industry Exchange scheme to attract industry experts to teach in Further Education. This government will further build capacity with £100 million to establish 10 new Technical Excellence Colleges specialised in construction in every region in England. (Page 29, paragraph 2.72)
• The government is committed to working closely with industry to remove barriers and unlock investment in training. In support of this package, the Construction Industry Training Board (CITB) is doubling their New Entrants Support Team (NEST) programme to support employers, particularly small businesses, to recruit and retain apprentices. CITB has also committed £32 million to top up the government’s £100 million investment to support over 40,000 industry placements in construction each year. The government is also launching an £80 million capital fund to support employers to deliver bespoke training tailored to their needs (Page 29-30, paragraph 2.73)

The Chancellor announced that:

• The government will rebalance the payment levels in Universal Credit, to promote work and address perverse incentives, while protecting those who will never be able to work. The OBR and Institute for Fiscal Studies suggest benefit changes which have widened the gap between incapacity benefits and other types of benefits over the last decade have been a factor in driving higher incapacity benefit claims. To address this imbalance, the government will increase the Universal Credit standard allowance for new and existing claims above inflation from 2026–27. This means the standard allowance weekly rate for a single person aged 25 and over will increase from £92 in 2025–26 to £106 in 2029–30. The Universal Credit health element will be frozen for existing claimants until 2029–30, and for new claims, the Universal Credit health element will be reduced to £50 a week in 2026–27 and then frozen until 2029–30.35 The Green Paper is proposing to protect the incomes of those on Universal Credit with the most severe lifelong conditions through an additional premium. (Page 23, paragraph 2.33)
• The government will undertake a fundamental review of the Personal Independence Payment (PIP) assessment, involving policy experts, stakeholders and disabled people. This will ensure the PIP assessment reflects the shift in the nature of health conditions and the wider changes in society since it was introduced over a decade ago. In the meantime, to ensure PIP is focused on those with higher needs, the government will introduce a new, additional eligibility requirement so that a minimum of four points must be scored on one PIP daily living activity to receive the daily living element of the benefit. (Page 23, paragraph 2.34)
• Alongside these measures, the government is restoring trust and fairness in the benefits system to ensure the appropriate support for claimants and better outcomes for the taxpayer. The government will restart Work Capability Assessment reassessments for certain cohorts whose condition may have changed and increase capacity to undertake PIP award reviews to ensure people are receiving the right award. The government will also take further steps to tackle fraud and error in the welfare system by increasing preventative checks in Universal Credit, and investing to recruit over 500 fraud and error staff, saving £240 million in 2029–30. (Page 23, paragraph 2.35)

The Chancellor announced that:

• Following on from the publication of Invest 2035 in October 2024, the government will publish its modern Industrial Strategy alongside the Spending Review. This will set out the government and industry’s 10‑year plan to meet our shared ambitions for unlocking investment and accelerating growth across the 8 growth‑driving sectors. (Page 27, paragraph 2.57)
• At Spring Statement, the government is increasing capital spending by a further £13 billion over the Parliament to support growth‑enhancing investments including infrastructure, housing, and defence innovation. This is in addition to the £100 billion increase in capital spending over the Parliament announced at the Budget last autumn. (Page 27, paragraph 2.58)

The Chancellor announced that the government has accepted the Covid Counter Fraud Commissioner’s recommendation to improve incentives on departments and Local Authorities to recover fraud from Covid schemes. Departments, Arm’s Length Bodies and local authorities are to agree with HM Treasury the retention of fraud recovered from Covid schemes. (Page 35, paragraph 3.10)