Chancellor Rachel Reeves presented the government’s Spring Statement today, with an overall theme of getting the economy back on track.
Before the statement, the government suggested there would not be any major announcements or tax increases, meaning the Autumn Budget would be the only fiscal event in a year.
The statement was light on new announcements and did not include any direct changes affecting the housing and mortgage markets.
Planning reforms to bolster GDP growth
Reeves said the government’s proposals to reform planning as part of its National Planning Policy Framework would increase GDP by 0.2% by 2029-30, adding £6.8bn to the economy. Over 10 years, this was predicted by the Office for Budget Responsibility (OBR) to generate an additional £15.1bn, which Reeves said was the “biggest positive growth impact” ever made in its forecast.
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Government to get within ‘touching distance’ of housebuilding target
The planning reforms are set to bring housebuilding to a 40-year high, Reeves said, of 305,000 new homes each year by the end of the forecast period.
She said this would help the delivery of 1.3 million homes in the UK over the next five years, taking the country “within touching distance of delivering our manifesto promise to build 1.5 million homes in England in this Parliament”.
Economic growth revised down
The forecast for the UK economy in 2025 was revised down from the 2% prediction made after the Autumn Budget to 1%.
However, the outlook for growth beyond this year was upgraded and predicted to be 0.2% higher than the OBR expected in October.
Inflation was also predicted to average at 3.2% this year, before meeting the central bank’s 2% target by 2027.
Welfare reforms and self-assessment penalties
Reeves announced changes to Universal Credit, confirming that the standard allowance would rise from £92 per week this year and next year to £106 per week by 2029/30. The ‘health element’ of Universal Credit will also be cut for new claimants and then frozen.
The changes are part of wider reforms, including reducing the number of people eligible for the Personal Independence Payment (PIP).
Further, higher fines will be introduced for some late self-assessment and VAT returns, from 2% to 3% where tax is 15 days overdue, 2% to 3% at 30 days, and 4% to 10% from day 31.
Landlords and sole traders with incomes over £20,000 will be included in Making Tax Digital requirements by April 2028. This builds on current plans for it to apply to sole traders and landlords with incomes over 50,000 by April next year, then those earning more than £30,000 by 2027.
Households financially better off
Lastly, Reeves promised that a healthier economy would add £500 per year to household finances after bills and expenses.
