Key events
UK inflation falls to 2.8% in boost for Rachel Reeves before spring statement
UK inflation has fallen back by more than forecast to 2.8%, providing some positive news for Rachel Reeves before she makes her spring statement, Richard Partington reports.
‘Must-do for any responsible government’ – minister defends surprise extra benefit cuts to feature in spring statement
Good morning. This time last week Stephen Timms, a welfare minister, was doing an interview round to defend the £5bn disability benefit cuts announced the previous day, and he refused to rule out further benefit cuts in the future. Most of us thought he was being careful because of the risk of further cuts later in this parliament, or possibly later this year. I don’t think anyone expected extra cuts to be announced within days.
But that is exactly what has happened. As Heather Stewart, Kiran Stacey and Richard Partington report in the Guardian splash, only hours before the spring statement, the Treasury has revealed that the disability benefit cuts are going to be even deeper than the ones set out last week. That is because the Office for Budget Responsibility, the government’s all-powerful fiscal regulator, has ruled that the Treasury was being unrealistic when it said the benefit cuts would save £5bn. (The OBR is probably right – in the past benefit “crackdowns” have rarely saved as much the Treasury forecasts.). And this means the cuts have to be beefed up, to save another £1.6bn.
The change was first reported by the Times, which says that “universal credit incapacity benefits for new claimants will now be frozen until 2030 rather than increased in line with inflation” and that there will also be “a small reduction in the basic rate of universal credit in 2029”.
Keir Starmer and Rachel Reeves were already facing a strong backlash from Labour backbenchers over the benefit cuts. This development is likely to exacerbate that, although quite how visible that will be today is hard to predict. Many Labour MPs are alarmed about the cuts in private, but have not spoke out publicly.
John Healey, the defence secretary, has been giving interviews this morning, and he has defended what the Treasury is doing. Referring to the assessment that last week’s benefit cuts will only save £3.4bn, not £5bn, he told Times Radio:
I think that’s a calculation that we may see confirmed from the Office of Budget Responsibility about the longer term savings that our plans to change the welfare system may bring, and that’s a must-do for any responsible government, particularly one that believes in the importance of our social security system. Doing nothing is not an option. It’s failing and writing off a young generation.
Today we will be focusing almost entirely on the spring statement. Graeme Wearden, who writes the Guardian’s business blog, will be joining me here later, and we will be covering the statement in detail, and bringing you all the best analysis and reaction.
Here is the agenda for the day.
Noon: Keir Starmer faces Kemi Badenoch at PMQs.
12.30pm: Rachel Reeves delivers the spring statement.
2.30pm: Richard Hughes, chair of the Office for Budget Responsibility, holds a press conference.
4.15pm: Reeves holds a press conference.
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