We’re STILL All in This Together: Can the Chancellor Use the Spring Statement to Stem the Flow of Votes to Reform?

Ben Howlett

Chief Executive, Curia

Despite promises of economic renewal, the Chancellor’s Spring Statement echoes the austerity legacy of a decade ago – an attempt to hold onto 2024 Conservative voters and stop the flow of votes to Reform.

Chancellor Rachel Reeves’ Spring Statement on 26 March 2025 has reignited debates over the Government’s fiscal direction, with many seeing it as a continuation of the austerity legacy laid down by George Osborne. Despite promises of economic renewal, the Chancellor’s Spring Statement echoes that decade-old legacy – widely interpreted as an attempt to reassure Labour’s coalition of 2024 Conservative voters and stem the flow of support to the Reform Party.

By tightening eligibility for benefits, introducing reforms to Personal Independence Payments (PIP), and pledging to crack down on so-called welfare “disincentives,” the Government is clearly seeking to project a tougher stance on public spending and social security – a key concern among right-leaning voters. This rhetoric, accompanied by a significant uplift in defence spending and a more restrictive approach to migration support, appears calibrated to win back those who believe Labour had moved too far from the centre on fiscal and social issues.

While these measures may provide short-term political cover and appeal to voters anxious about fairness and the perceived generosity of the welfare system, they also carry significant social risks – and raise questions about whether the Government is sacrificing long-term resilience for short-term electoral positioning. Nonetheless, the emphasis on “living within our means” may resonate with voters who once backed the Conservatives but drifted to Reform out of frustration with what they saw as economic drift, political uncertainty, and a lack of grip on public finances.

Economic Growth: A Downward Revision

The Office for Budget Responsibility (OBR) has halved the UK’s economic growth forecast for 2025 from 2% to 1%, citing subdued business activity and global uncertainties. This revision reflects the challenges facing the economy, including the lingering effects of the Chancellor’s Budget last year and external pressures such as impending tariffs from the United States.

​Welfare Reforms: Deepening the Austerity Footprint

Central to the Chancellor’s statement are significant welfare reforms aimed at reducing public expenditure by £4.8 billion. Key measures include:​

• Universal Credit Adjustments: The incapacity benefits component for new claimants will be frozen until 2030, and the health element will be cut by 50% and subsequently frozen for new applicants.  Not something which was predicted last week.
• Personal Independence Payment (PIP) Revisions: Eligibility criteria are set to become more stringent, potentially disqualifying individuals with lower needs in daily living activities. ​

These reforms have sparked criticism from Labour backbenchers for disproportionately impacting vulnerable populations, echoing the austerity measures of the past decade.​

Defence Spending: Prioritising Security Amid Fiscal Constraints

Already announced, the Chancelor has confirmed that the Government has committed an additional £2.2 billion to defence spending for the upcoming year, with plans to elevate defence expenditure to 2.5% of GDP by 2027. This increase is to be financed partly by reductions in international aid, reflecting a change in strategic direction towards national security in response to global tensions.  

Investing for Impact: Capital Spending Gets a Boost

The Chancellor announced an increase in capital spending by £2 billion annually relative to previous plans. This additional investment aims to stimulate economic growth and support key sectors, including infrastructure and housing.

A significant portion of this funding is allocated to affordable housing, with £2 billion dedicated to constructing 18,000 affordable and social homes. This initiative is part of the government’s broader goal to build 1.5 million homes during the current parliament, addressing housing shortages and promoting economic activity.

Additionally, the increased capital expenditure supports public services and modern technology sectors, aiming to enhance the UK’s infrastructure and technological capabilities. While these investments are steps toward addressing immediate economic challenges, their long-term impact on productivity and regional disparities will depend on effective implementation and alignment with broader economic strategies.

Planning for Growth: Unlocking Development Through Reform

One of the standout elements of the Spring Statement was the Chancellor’s pledge to “get Britain building again” through a package of planning reforms aimed at accelerating housing and infrastructure development.

Recognising that the UK’s sluggish planning system has long acted as a brake on economic growth, Reeves announced new measures designed to streamline approvals, unlock stalled projects, and support the Government’s target of delivering 1.5 million new homes during this Parliament.

Key to this is a new National Planning Policy Framework, which will place greater emphasis on speed and certainty for developers. Local authorities that meet their housebuilding targets will be rewarded with greater flexibility, while those that consistently fall short may see intervention from central government. Reeves also confirmed that planning reforms would prioritise brownfield development and urban regeneration – part of a broader effort to protect greenbelt land while still boosting supply.

The reforms include new funding for local planning authorities, with an injection of £100 million to improve capacity and ensure applications can be processed more quickly. In addition, major infrastructure projects – such as energy grid upgrades, transport links and housing-enabling works – will be fast-tracked through a revised “critical infrastructure” category.

These announcements are likely to be welcomed by developers, local leaders, and businesses that have long called for a less bureaucratic planning process. However, as with many of the Statement’s pledges, successful delivery will depend on sustained investment, policy consistency, and close collaboration between central government and local authorities.

As Reeves noted in her statement, “We cannot unlock growth without reforming the systems that hold it back. Planning is one of them.”

If implemented effectively, the planning reforms could provide a welcome boost to housing delivery, investor confidence, and the UK’s broader economic recovery. But the test, as ever, will be whether words turn into spades in the ground.

Fiscal Balancing Act: Navigating Borrowing and Spending

The Chancellor faces the delicate task of balancing fiscal responsibility with the need to stimulate economic growth. While the statement refrains from introducing new tax increases, the combination of reduced public spending and modest growth projections suggests a constrained fiscal environment. The OBR forecasts a budget deficit of £4.1 billion by 2029-30, with plans to achieve a £9.9 billion surplus through the proposed measures.  

Stagflation Concerns: A Looming Threat

The interplay of sluggish growth, persistent borrowing, and stringent spending cuts raises the spectre of stagflation – a scenario characterised by stagnant economic activity coupled with rising inflation. While the Government expresses optimism for economic recovery, the current policy trajectory suggests that such concerns are not unfounded.​

We obviously extend our best wishes to the Chancellor in steering the nation through these complex economic challenges, however, her present policies appear to set the stage for a challenging economic period. It is our sincere hope that these measures will yield positive results, and we remain open to being proven wrong in our apprehensions.