Households in the UK will be £500 better off under the current government, Chancellor Rachel Reeves announced in her Spring Statement.
The income families will have left after their bills and outgoings are paid will rise by 2.2% by 2029, according to forecasts from the Office for Budget Responsibility (OBR).
During her speech, Reeves also confirmed the OBR has revised its forecast for the UK economy, halving the prediction from 2% to 1%.
The Chancellor told Parliament the effects of the fiscal policy from Labour “will mean more money in the pockets of working people and higher living standards”.
Reeves said: “This isn’t just about lines on a graph. It’s about improving people’s lives. Working people are still feeling a pinch after a cost-of-living crisis caused by the party opposite [Conservatives] that caused interest rates and inflation to go through the roof.
“So I am pleased that the OPR confirmed today the real household disposable income will now grow this year at almost twice the rate expected in the autumn, compared to the forecast in the final budget delivered by the party opposite.”
Making protection work for you and your clients
Sponsored by LV= General Insurance
However, the Chancellor also announced further cuts to welfare benefits than previously mooted, which extend to the health element of Universal Credit.
The payment is designed to help people who cannot work due to either experiencing a health condition or disability.
This will be halved for new applicants from April 2026, falling from £97 per week to £50 per week during the 2026-27 financial year. The support will stay at that level until 2029/30.
‘Wrecking ball to the support people rely on’
Clare Moriarty, chief executive of Citizens Advice, was concerned about the impact the reductions to benefits will have on households.
Moriarty said: “This government says it wants to drive up living standards and fight child poverty, but you can’t do that while taking a wrecking ball to the support people rely on.
“We know people are already struggling. Many really are facing an impossible choice between basic needs, like heating or eating. This is even worse than we were expecting and just piles on the pressure for those people already living on a financial knife edge.”
She added: “These looming benefit cuts will drive even more people into poverty, not lift them up. This isn’t just a spreadsheet. We’re talking about real lives, real people, real struggles.”
In her second Budget speech since Labour won the general election, Reeves also announced increases to the defence budget of £2.2bn and promised for housebuilding levels in the UK to reach a 40-year high.
This article was first published on Mortgage Solutions‘ sister site, YourMoney.com. Read: Spring Statement 2025: Reeves promises Brits ‘will be £500 better off’
