Ralph Blackburn reaction to the Spring Statement.
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00:00Hello, Rafe Blackburn the Yorkshire Post's Westminster correspondent here
00:04just outside the Houses of Parliament where yesterday the Chancellor Rachel
00:08Reeves delivered her spring statement. Now this is not a budget, it's slightly
00:12different from that. Budgets are held once a year in the autumn and that's
00:16when we get a lot of big announcements around tax and spend that we did not see
00:20yesterday. The spring statement is in effect a response to the Office for
00:25Budget Responsibilities assessments and forecasts of the public finances. That's
00:31the watchdog which assesses what the Treasury is doing and they made two
00:35major pronouncements on Rachel Reeves's and the Treasury's finances. The
00:41first was it cut the growth forecast in half, that's the growth forecast for 2025
00:46from 2% to 1% and that basically means the Exchequer is getting less money and
00:51what that in turn meant is that the Chancellor's fiscal headroom was wiped
00:56out. Now fiscal headroom is quite a kind of nerdy phrase, it basically means the
01:02surplus that the Treasury has on on top of what it spends and it's used for
01:07things like emergency. So in this case for a variety of reasons including
01:12global uncertainty the cost of government borrowing has gone up and so
01:16this fiscal headroom has had to be used to spend to spend on that. So that
01:23therefore led the Chancellor to make certain decisions like the one around
01:28these welfare reforms we have seen. So the government is making changes to the
01:33personal independence payment and also to Universal Credit which it says will
01:37cut spending on welfare by five around five billion pounds by 2029 2030. So this
01:45is likely to be very contentious amongst Labour MPs, they say there's a
01:51lot of good measures within this but according to the government's own
01:55assessment it's likely to push around 250,000 people including 50,000 children
02:01into relative poverty and the concern amongst the MPs I've been speaking to is
02:06that instead of kind of looking at what reforms need to be made and working from
02:11there the government is actually working backwards, it's working how can we get
02:14the savings we need to meet these fiscal rules to get some more headroom
02:19in case of emergencies and then going from there and what they're worried
02:23about is that that won't actually lead to good outcomes for people out of work,
02:27people on benefits, disabled people. We're likely to see some sort of rebellion
02:32going forward when those measures are put to the House of Commons however all
02:37of this conversation around fiscal headroom might be moot because another
02:41thing the OBR said which is very important is that if Donald Trump
02:45introduces blanket tariffs of 20% on the UK as he's threatened to next week then
02:50Rachel Reeves's entire headroom, her spare budget will be wiped out in one
02:56day so if that happens or there are other you know events which which which
03:01lead to this you know pandemic, energy rises, all these sort of things which
03:05are going to cost the government a lot of money it's highly likely that she'll
03:08have to come back in the autumn either with tax increases or with spending cuts.