Spring Statement 2025

Whilst the Chancellor’s Spring Statement did not include any specific mention of charities, or ease concerns regarding the impending increase to Employer's National Insurance contributions, the sector will of course be following developments closely, noting that some of the changes coming down the track, notably welfare reforms, have the potential to drive demand for services.

Key takeaways

With thanks to Anna Moore, here are the key takeaways:

Focus: Securing Britain’s future through the ‘Plan for Change’:

• Driving economic growth (reported benefits to the ‘stability’ introduced in the Autumn Budget, including cuts to interest rates and growth in real wages, against a backdrop of global uncertainty, slow growth in trading partners and increase in borrowing costs).  
• Building an NHS fit for the future
• Keeping the country safe (triggered by a generational challenge to collective security in Europe).

Economic growth: The UK economy is forecast to grow faster than expected from 2026 onwards, although the OBR forecasts the economy to grow by 1.0% in 2025, which is slower than was expected last October. 

The ‘growth’ mission will include:

• The ‘AI Opportunities Action Plan’ – helping the UK to capture the opportunities of AI.
• Oxford-Cambridge Growth Corridor.
• Strategic partnerships between the National Wealth Fund and Greater Manchester, West Yorkshire, West Midlands and Glasgow City Regions.

Defence spending: Commitment to increase defence spending to 2.5% of GDP by 2027 (with an ambition of 3%), with an additional £2.2 billion for the Ministry of Defence next year.  Pledge for a “modern and resilient Armed Forces” and the “modernisation and renewal of the nuclear deterrent”. This is promised to “unlock prosperity through new jobs, skills and opportunities across the country” - funded by a reduction in ‘official development assistance’ (ODA) which promotes the economic development and welfare of low and middle-income countries.

Tax Evasion:

• Increased investment in HMRC's capacity to crack down on tax avoidance, aiming to raise an extra £1 billion.
• Investment promised in HMRCs debt management capacity by introducing pilots for aged debts, more automation and 500 extra compliance staff and 600 extra debt management staff.
• MTD project to continue for self-assessment income tax.

Consultations on:

• • How HMRC can make better use of third party data to increase automation and close the tax gap.
  • Proposals to strengthen HMRC’s ability to take action against those tax advisers who facilitate non compliance from their clients.
  • A comprehensive package of measures to close in on promoters of marketed tax avoidance, whose contrived schemes leave their clients with unexpected tax bills.
  • Options to simplify and strengthen HMRC’s inaccuracy and failure to notify penalties.

Action to tackle:

• • Prosecution of tax fraudsters.
  • Reform rewards for informants.
  • Phoenixism (contrived insolvencies).

Capital Infrastructure: £13 billion investment in capital infrastructure over the next five years (emphasis on infrastructure, housing and defence innovation).

Reform:

• Housing: Additional £2 billion investment in social and affordable housing. National Planning and Policy Framework (NPPF) reforms expected to lead to 170,000 additional homes built over the forecast period with an ambition to build 1.5 million homes this Parliament.  Further investment in a package of skills measures in the construction industry.
• NHS:
  • Waiting lists have fallen for five months in a row.
  • NHS England is to come back within the Department of Health and Social Care.
• Employment:
  • £1 billion investment in personalized employment support to help people back into work
  • Breakfast clubs rolled out in Primary Schoo
•  Welfare: 
  
  • Universal Credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30. However, the Universal Credit Health element will be cut by 50% and frozen for new claimants.
  • Aim to save £4.8 billion from the welfare budget of 2029-30 and pledge that welfare spending will fall as a share of GDP. The OBR forecasts that the welfare cap will be met by £13.5 billion in 2029 30. This is a £3.8 billion improvement on the forecast at the Budget last autumn.
• Public sector:
  • Aim to tackle backlog in elective care and the processes for asylum and immigration.
  • 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.  Allocations will be:
    • Reform to children’s social care system, particularly fostering.
    • Management of offenders in the community.
    • Test and deploy of AI applications to make government operations more efficient and effective.
    • Creation of a leaner and more efficient Civil Service.

If you have any questions, do get in touch with Neil Burton [email protected]