What is the Spring Statement?
The Spring Statement is an annual speech made by the Chancellor of the Exchequer in the House of Commons, where they provide an annual update on the health of the economy and present forecasts from the Office of Budget Responsibility (OBR). It is one of two key statements made by the Treasury each year. The other is the Autumn Statement.
What are the main issues?
The statement outlines how the government plans to meet its fiscal rules (its own decisions on spending and taxes), alongside priorities for reforming public services and reducing the size of the state.
In terms of the wider economy, the Office for Budget Responsibility (OBR) has halved the UK growth forecast for 2025 from 2% to 1%. This means the Chancellor Rachel Reeves needs to reduce spending in order to meet the fiscal rules.
The Chancellor confirmed a wide-ranging package of welfare reforms, with cuts totalling nearly £5 billion to disability-related benefits by 2030. These include:
- Tighter eligibility criteria for Personal Independence Payments (PIP), with new assessments designed to significantly reduce the number of people who qualify
- Stricter work capability assessments, alongside an increase in checks on savings and other eligibility criteria
- The health element of Universal Credit for new claimants will be cut by 50% and frozen until 2030, rather than increasing with inflation
- Universal Credit standard allowance will increase from £92 per week in 2025/26 to £106 by 2029/30
Any new spending is limited to areas not devolved to Northern Ireland – such as defence. The Chancellor confirmed the government's pledge to spend 2.5% of GDP on defence by 2027. This commitment is fully funded, with cash coming from Treasury reserves and also from the decision to cut foreign aid funding.
What does it mean for Northern Ireland?
The Barnett formula is the mechanism used by the Treasury in the United Kingdom to automatically adjust the amounts of public expenditure allocated to Northern Ireland, Scotland and Wales to reflect changes in spending levels allocated to public services.
In the Chancellor’s Autumn Statement last year it was announced that the Northern Ireland Executive will be provided with an £18.2 billion settlement in 2025/26.
Through the operation of the Barnett formula the Spring Statement announced a small addition of only £16m to the block grant for 2025/26. This will make little difference to NI departments’ already overstretched budgets where there are already difficult decisions to be taken. The Department for Communities already funds mitigations against the Benefit Cap and the bedroom tax and the Communities Minister must decide whether NI will be protected from these new welfare reforms through further mitigations.
How is the voluntary and community sector affected?
Cuts to disability-related benefits will impact communities hard. The government’s own analysis suggests 250,000 more people – including 50,000 children – could enter relative poverty across the UK. According to the Joseph Rowntree Foundation that figure is likely to be closer to 400,000. Organisations in our sector supporting disabled people, carers and those on low incomes are likely to see increased demand.
This comes at a time when we already know the sector is making difficult decisions to manage the increase to employers National Insurance Contributions (NICs) from April. These changes also highlight the need for a long-awaited anti-poverty strategy from the NI Executive. These cuts will also put pressure on our sector’s relationship with government. Core funding for essential services in a time of increased need is already a huge challenge.
The Chancellor’s statement prioritises the importance of economic growth. Many VCS organisations across Northern Ireland are supported by the UK Shared Prosperity Fund to support to people who are economically excluded but are expected to deliver outcomes with reduced funding allocations for 2025/26 and face further funding uncertainty on arrangements for delivery of these projects through the NI Executive after March 2026.
Where can I find out more information?
You can access the full Spring Statement document here. You can read supplementary Treasury documents here and OBR’s updated economic and fiscal outlook here.
How are we supporting you?
NICVA is calling on the NI Executive to develop an emergency support plan for our sector with a strong focus on sustainable funding. We are also calling on departments to outline how they will mitigate the impact of increased NICs on VCS delivery.
The All-Party Group on the Community and Voluntary Sector continues to be a key mechanism for ensuring issues affecting our sector are recognised by the NI Assembly.
The implementation of a new Partnership Agreement between the Voluntary & Community Sector & Government including the agreement of a set of Fair Funding Principles continues to be a priority for NICVA as we seek to shape the future of our sector’s relationship with Government in these uncertain times.
