OBR slashes economic growth forecast as 3m families to be hit by welfare cuts

In a dating revelation, the government’s own impact assessment said 3.2m families would lose on average £1,720 per year compared to inflation in 2029 and 2030 under Reeves’s welfare cuts.

Rachel Reeves’ benefits cuts will push an estimated quarter of a million people, including 50,000 children, into poverty by the end of this decade, according to the government’s own impact assessment.

Ministers finally published the document alongside the spring statement, a week after they first outlined moves to slash £5 billion from the welfare bill.

The impact assessment warned the cuts, that will see more than 1 million disabled people lose their benefits, will result in “an additional 250,000 people (including 50,000 children) in relative poverty after housing costs in 2029/30 as a result of modelled changes to social security”.

The respected Institute for Fiscal Studies (IFS) has delivered a damning verdict on the chancellor’s spring statement, saying the has guaranteed “another six months of damaging speculation and uncertainty over tax policy”.

“That didn’t go well between last July’s election and October’s Budget. I fear a longer rerun this year,” director Paul Johnson said.

He slammed Rachel Reeves for deciding to restore her £9.9 billion of fiscal headroom simply back to the same level it was before a growth downgrade from the Office for Budget Responsibility (OBR).

Any further OBR downgrade will reopen speculation about which taxes will have to rise to help Ms Reeves meet her self-imposed fiscal rules again this autumn.

Mr Johnson added: “There is a cost, both economic and political, to that uncertainty. The government will suffer the political cost. We will suffer the economic cost.”

Rachel Reeves has faced pleas from Labour MPs to reverse cuts to health and disability benefits, amid warnings they will lead to increased poverty.

The Chancellor claimed the Government “inherited a broken” welfare system as “more than 1,000 people” qualify for personal independence payments every day – and one in eight young people are not in employment, education or training.

Ms Reeves used the spring statement to confirm further pressure on the welfare budget, which follows cuts to the disability and incapacity bill set out earlier this month.

Labour MP Debbie Abrahams, who chairs the Work and Pensions Committee, told the Commons: “I recognise the difficulties that (Ms Reeves) is facing in terms of fiscal challenges and so on that she inherited and I also support the reforms (Work and Pensions Secretary Liz Kendall) has set out.

“But all the evidence is pointing to the fact that the cuts to health and disability benefits will lead to increased poverty, including severe poverty, and worsened health conditions as well.

“How will making people sicker and poorer help in terms of driving our economy up and people into jobs?”

The Liberal Democrats have accused Rachel Reeves of “balancing the books on the backs of the vulnerable,” as the party’s work and pensions spokesman accused Labour of rushing through cuts.

Torbay MP Steve Darling said: “Today and last week the Chancellor rushed through severe cuts to the benefits system that will hit some of the most vulnerable in our society.

“Whilst we should have considered benefit reform, this is ill-conceived.

“Can the Chancellor explain to the chamber why she is choosing to balance the books of the nation on the backs of some of the most vulnerable in our society?”

Mental health charity Mind has said the extra benefit cuts announced by the chancellor are “devastating and will push more people into crisis”.

Chief executive Dr Sarah Hughes said: “People are telling us that they are so worried about the situation they’d be left with no choice but to end their own life.

“It’s a political choice to try fixing the public finances by cutting the incomes of disabled people, including people with mental health problems.

“Benefits are a lifeline for so many people. Cuts will push people into poverty. This is policy making by numbers with little recognition of the impact on real people’s lives.“

Our Federation of local Minds across England and Wales sees the consequences of these decisions every day.

We are always here to support people, but we can’t do it alone. We urgently call on the Government to rethink these plans. We can, and must, do better.”

An estimated quarter of a million people, including 50,000 children, would be pushed into relative poverty by the end of the decade as a result of welfare reforms, the Government’s own impact assessment has said.

The document, published on Wednesday after Chancellor Rachel Reeves delivered her spring statement in parliament, said: “The potential impact of these reforms on poverty projections has been estimated using a static microsimulation model.”

Using this model, we estimate there will be an additional 250,000 people (including 50,000 children) in relative poverty after housing costs in 2029/30 as a result of modelled changes to social security, compared to the baseline projections.”

The document stated the estimate does not include the impact of the £1 billion annual funding, by 2029/30, for measures supporting people into work “which we expect to mitigate the poverty impact”.

It added that its analysis does not take into account new protections for those with severe lifelong conditions that the Government intends to bring forward.

Growth Commission Chairman Shanker Singham said: “While we applaud the Government’s pro-growth rhetoric and commitment to ‘tearing down regulatory barriers’, ministers must be judged by their actions rather than their words.

“On present form, after two successive quarters with contractions in GDP per capita growth – the yardstick against which to judge whether living standards are improving for British families – the rhetoric is failing to live up to reality.

“What Rachel Reeves announced today amounts to tinkering at the edges when a fundamental reshaping of policy in numerous areas is required.

“Rachel Reeves is right to identify that we live in a ‘changing world’ and the imposition of tariffs by the new US administration would certainly have a wide-ranging impact.

“But that provides an even more compelling reason to commit to a comprehensive trade deal with the US and undertake widespread domestic regulatory reform as part of an effort to restore the UK’s historic economic strength.”

World affairs editor Sam Kiley writes:

Ukraine’s defence against Russia’s invasion has seen the biggest change in warfare since the invention of the aeroplane. Kyiv now rules the Black Sea without a navy to speak of because of its innovations in the use of drones, on, above and below the surface of the sea.

Ukraine produces almost all the new technology is needs for fighting this new kind of warfare, closely followed by Russia. The two nations are now years ahead of even countries like the US and Israel in the development and the real-world use of drones.

Whether in Russia or Ukraine scientists are now rushing to develop autonomous unmanned vehicles, aircraft and boats to allow these weapons to bypass attempts to block their command and control systems which, currently, rely on radio waves or fibre optic guidance systems.

Ukraine has a Navy, and Airforce, and an Army as well as a newly minted Unmanned System Force which only works using these new weapons. The UK, and all other Nato countries, are scrambling to learn the lessons of Ukraine’s defence against Russia and is likely to heavily invest in Kyiv’s efforts – because that’s where the innovations are ahead of the rest of the world.