delivered by one of our worst ever chancellors. Rachel Reeves’s speech was an exercise in make-believe, a painful collection of cliches and distortions, a grotesque attempt at pretending that all is well as the economy careens into the abyss.
The entire premise of her Spring Statement was false. Reeves’s conceit was that the world has changed, and that she is responding by embracing dramatic cuts to welfare and the Civil Service as well as pro-growth policies.
It is fantasy. There is no plan for change. The country remains on auto-pilot. Reeves is only pretending to have shifted course: her language was radical, but her actions trivial. Spending is still rising, including on welfare, as are taxes and red tape. Her Civil Service reductions are unlikely to materialise. Britain’s drift to socialism and middle class pauperisation continues unabated.
Broken Britain is in desperate need of shock therapy, but we were offered only tinkering. Her policy changes were driven by the need to game arbitrary fiscal targets and placate the Office for Budget Responsibility (OBR), rather than any sort of intellectual realisation that her October Budget was a calamity, or that her entire ideological superstructure must be torn down. She remains a Left-wing technocrat, and reality has yet to mug her.
Her supposedly massive cuts are equivalent to a fifth of the spending splurge she originally unveiled in October. This is not even close to the austerity the British state so desperately requires, and welfare spending continues to spiral out of control. Working age health and disability related welfare expenditure is due to rise by £15.4 billion between 2024-25 and 2029-30, an increase that would ordinarily be seen as explosive. Yes, some claimants will be worse off, a point that is being highlighted by the Left, but overall spending on these kinds of benefits is still surging.
This is symptomatic of one of Britain’s most disgraceful national failings: the pathologisation of swathes of the country, the pseudo-medicalisation of many who could and should work, the disgraceful trapping of millions into benefit dependency, ruining their life chances and those of their children. Poverty, correctly understood, can only truly be defeated by work and a strengthening of the family and civil society, not by transfers. Tories and Labour alike (with some noble exceptions) have found it too politically tough to tackle the epidemic of worklessness and anomie created by our dysfunctional welfare state: it is still easier to import hundreds of thousands of foreign workers.
Reeves has trimmed some benefits, but only to manipulate the OBR’s fiscal forecasts. She has not properly reformed the system from first principles. Spending on working age health and disability welfare benefits will grow by 4.9 per cent per year, higher than the pensioner benefits spending increase of 3.8 per cent. This isn’t austerity, or prudence, or an attempt at shifting incentives: it is a desperate scramble to paper over the cracks in an unsustainable system.
The employment rate, down half a percentage point since 2019, will slump further from 60.5 per cent in the second half of 2024 to 60.2 per cent in 2029. Those with a job will work less: the average working week will drop from 32.0 hours in 2025 to 31.8. Britain’s attack of workshyness will become even more virulent after the supply-side of the economy is vandalised again.
The jobs-annihilating Employment Rights Bill wasn’t even included in the OBR’s calculations. It is a vicious, socialistic assault on private enterprise, and is almost as stupid as Reeves’s raid on private schools. Just like the looming increase in national insurance, the Employment Bill will tip many businesses over the edge. Reeves has failed to learn from Labour’s limited deregulation of the planning rules, which the OBR scores as boosting the economy: why not unleash the private sector in every other industry?
Extortionate taxation is another reason why productivity growth is so weak. Reeves’s increase in the tax burden to a historic high of 37.7 per cent of GDP in 2027-28 is a catastrophe. By reducing the gains from risk-taking, investment, work and private initiative, it will guarantee less of each. Reeves still shows no signs of understanding any of this, even though she has triggered a classic vicious circle: her higher taxes have shrunk the economy’s potential, which will soon require another round of levies, and then another.
Reeves’s belt-tightening vibes are equally meaningless. Public expenditure overall is rising to 45 per cent of GDP this year. It will be 0.2 points higher by 2029-30 than Reeves announced in October, partly because the debt interest bill is rising, and 1.6 points higher than the Tories were planning.
Even if the OBR’s heroically optimistic growth forecasts materialise, and there are no further shocks, public spending will consume 4.2 percentage points more of our national income by 2029-30 than before the pandemic, entrenching an unacceptable collectivisation of our economy and society. Even such numbers are misleading: they do not include the second phase of defence increases announced by Starmer, worth an extra 0.4 per cent of GDP. This would cost an additional £17.3 billion in 2029-30: where will Reeves find the money?
In the meantime, the Chancellor is guilty of what Joe Hill of Reform calls “everythingism”: she shouldn’t expect a 0.2 point rise in defence as a proportion of GDP to be enough to turn the UK into a defence-industrial superpower. Boosting the economy and local “regeneration” should be a byproduct of defence spending, not its purpose. Reeves has no clue what real, entrepreneurial, market-driven growth looks like.
She hasn’t even delivered the bare minimum to prepare for the known unknowns of geopolitics and global economics, including Donald Trump’s trade wars. Britain’s welfare state continues to live beyond its means. Her restored fiscal head room is a statistical illusion that will not survive contact with reality. Hideous tax rises will almost certainly be necessary, either as early as this winter or next year. The worst is yet to come.
This must have been the most disingenuous fiscal statement of all time,
