In the first Spring Statement[1] since her appointment as Chancellor of the Exchequer, Rachel Reeves MP outlined a comprehensive strategy aimed at ushering in a ‘new era of security and national renewal’ for the United Kingdom. This plan focuses on bolstering economic growth, enhancing national security, and implementing significant reforms to public services and infrastructure.[2]
How will the UK Government’s Plan for Change improve people’s finances and housing?
People will be, on average, £500 a year better off from 2029 compared to the Office for Budget Responsibility’s (OBR) autumn forecast, supporting the Government’s Plan for Change. Additionally, the OBR has determined that the UK’s landmark planning reforms will drive housebuilding to its highest level in over 40 years, bringing the country closer to its target of constructing 1.5 million homes.[3] These reforms are expected to expand the economy by 0.2 per cent in 2029-30, equating to £6.8 billion in today’s money, with growth projected to reach 0.4 per cent over the next decade. To accelerate growth, the government is training up to 60,000 young people to rejuvenate the construction industry, increasing capital investment by £13 billion over this parliamentary term, and reforming public services by eliminating inefficiencies. The Government remains committed to prioritising economic growth through the Spending Review, the Autumn Budget, and throughout the Parliament.[4]
How is the UK Government driving economic growth?
Kickstarting economic growth is the Government’s top priority, with a focus on increasing household incomes. To achieve this, the government is backing major infrastructure projects such as a third runway at Heathrow, revitalising the Oxford-Cambridge Growth Corridor, launching the National Wealth Fund, and making strategic public investment decisions that will drive economic growth across the country. As a result, the Government’s actions across the Autumn Budget and Spring Statement are expected to raise real GDP by 0.6 per cent by 2034-35. Unlocking the full potential of the Oxford-Cambridge Growth Corridor could contribute up to £78 billion to the UK economy by 2035.[5]
To further accelerate economic growth and boost housing, the Chancellor has announced an additional £13 billion in capital investment over this Parliament, supplementing the £100 billion uplift announced in the Autumn Budget. This additional investment offsets modest savings in day-to-day spending and ensures that total departmental spending will increase over the next five years. The Government is also funding a £625 million initiative to expand skills training in the construction sector, producing up to 60,000 more skilled construction workers to support its plan to build 1.5 million homes in England and advance key infrastructure projects.[6]
In addition, £100 million will be allocated to create 35,000 additional training places in construction-focused Skills Bootcamps, providing opportunities for trainees, career returners, and current employees. A further £40 million will support up to 10,000 young people in accessing construction Foundation Apprenticeships, offering a direct entry route into the industry. The Government will also invest £100 million to establish 10 Technical Excellence Colleges specialising in construction across all regions of England. To further strengthen the workforce, £165 million will be allocated to increase funding for training providers offering construction courses for 16-19-year-olds and adults. Additionally, a £2 billion grant will fund up to 18,000 new social and affordable homes, reinforcing the government’s commitment to addressing housing shortages.[7]
What reforms is the UK Government implementing to improve public services and taxation?
The Government has introduced a £3.25 billion Transformation Fund to drive fundamental public service reform, harness digital technology and Artificial Intelligence (AI), and enhance frontline service delivery, ultimately reducing taxpayer costs. This fund will support crucial initiatives, including an additional £25 million to reform the children’s social care system and improve the fostering system. It will also allocate £8 million to develop new technology for probation officers, allowing them to focus on reducing reoffending rather than administrative tasks.[8]
To modernise government operations, the fund will provide £42 million for three pioneering DSIT-led Frontier AI Exemplars. These AI applications will enhance efficiency, streamline bureaucracy, and improve public sector effectiveness.[9]
To close the tax gap, the Government has introduced measures projected to generate £1 billion per year by 2029-30. The UK tax gap was estimated at approximately £40 billion in 2022-23. An additional £80 million will be allocated to third-party debt collectors, expected to recover £1.3 billion over five years – delivering a return of approximately £16 for every £1 spent. Furthermore, HMRC will receive £4 million to pilot a private-sector partnership aimed at improving tax collection and recovering unpaid tax debt.[10]
Tax penalties will also be revised to encourage timely payments. Late payment penalties for VAT and Making Tax Digital for income tax Self-Assessment will increase: from 2% to 3% at 15 days, from 2% to 3% at 30 days, and from 4% to 10% from day 31, taking effect in April 2025. As part of the digital transformation of tax administration, Making Tax Digital for income tax Self-Assessment will be extended to sole traders and landlords earning over £20,000, beginning in April 2028. This follows the existing rollout plan, which will see individuals with incomes above £50,000 joining in April 2026 and those earning above £30,000 joining in April 2027. Approximately 4 million businesses have an income below the £20,000 threshold.[11]
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[1] HM Treasury, Spring Statement 2025, 26 March 2025, Link
[2] The Times, Rachel Reeves: The prize is an economy that finally delivers, 26 March 2025, Link
[3] Office for Budget Responsibility, Economic and fiscal outlook – March 2025, 26 March 2025, Link
[4] HM Treasury, Chancellor delivers security and national renewal in a new era of global change, 26 March 2025, Link
[5] HM Treasury, Chancellor delivers security and national renewal in a new era of global change, 26 March 2025, Link
[6] HM Treasury, Chancellor delivers security and national renewal in a new era of global change, 26 March 2025, Link
[7] HM Treasury, Chancellor delivers security and national renewal in a new era of global change, 26 March 2025, Link
[8] HM Treasury, Chancellor delivers security and national renewal in a new era of global change, 26 March 2025, Link
[9] HM Treasury, Chancellor delivers security and national renewal in a new era of global change, 26 March 2025, Link
[10] HM Treasury, Chancellor delivers security and national renewal in a new era of global change, 26 March 2025, Link
[11] HM Treasury, Chancellor delivers security and national renewal in a new era of global change, 26 March 2025, Link
