Chancellor Rachel Reeves is one of the most unpopular Chancellors in history after 20 months in the job, with a minus 6% approval rating among Labour members compared to Keir Starmer's 3%, according to multiple reports. The relationship between Prime Minister Keir Starmer and Chancellor Rachel Reeves has unravelled, with senior ministers joking about their strained interactions, according to ministers. Reeves's public performances are wooden, her grasp of detail questionable, and her reputation with Labour MPs is poor, sources said.
Reeves's Spring Statement contained a pledge 'We promised change at the election' in the official published version, but she actually said 'The promise we changed' during delivery, which was edited from Hansard, multiple reports indicate. She claimed that the average family will be £1,000 better off by 2029, based on Treasury calculations of real household disposable income figures from the Office for Budget Responsibility's economic and fiscal outlook, according to research. However, the Resolution Foundation analysis shows two-thirds of that boost has already happened and future years look bleaker, multiple reports indicate.
Independent analysis challenges this economic optimism. Joseph Rowntree Foundation modelling projects that under Labour, annual household disposable incomes will grow by £40 to the end of the current parliament in 2029, according to research. JRF estimated incomes would fall by £580 from April this year until April 2029, research shows. JRF's analysis focuses on households and accounts for actual housing costs at 2025-26 levels, making its inflation-adjusted figure a more accurate reflection of whether families will feel better off, according to research. JRF cautioned that significant changes to OBR forecasts and its own modelling are possible due to the economic impact of the war, research indicates.
Reeves is resisting calls to increase defence spending significantly, proposing only a £10 billion increase over four years instead of filling a £28 billion shortfall, multiple reports indicate. She has demanded £3.5 billion in savings from the Ministry of Defence this year, according to multiple reports. Reeves raised the Ministry of Defence's poor record on gender parity as a reason for resisting defence funding increases, she is said to have argued. The Defence Investment Plan may be delayed until the summer, almost a year late, amid funding disputes, multiple reports indicate.
There is a valid argument against increasing employers' national insurance contributions, but it is necessary for funding public services like the NHS.
On cost-of-living measures, Reeves signaled that middle-income families will not get universal government help with soaring energy bills; any bailout will be targeted, she said. Energy bills could rise by £160 from July due to the Middle East crisis, adding to cost-of-living pressures, multiple reports indicate. Reeves is introducing an 'anti-profiteering framework' to crack down on price gouging by companies during the Middle East crisis, she said, though specific measures have not been detailed.
Reeves warned she won't hurry to help debt-laden young Brits with student loans, admitting the system is 'broken' but it's not a top priority, she said. She froze the salary threshold for student loan repayments at £29,385 for three years, causing more graduates to repay sooner, according to multiple reports.
Business impacts include Reeves cutting income tax relief for Venture Capital Trusts from 30% to 20%, starting in April, which could leave a funding shortfall for start-ups, multiple reports indicate. British manufacturers will pay an extra £940 million a year in business rates due to changes by Reeves, according to multiple reports.
On youth employment, Reeves noted that in the last five years of the previous government, the number of young people not in education, employment or training increased by 113,000, she said. The number of inactive people reached record highs under the previous government, she added. Over the last decade, apprenticeship starts by young people fell by 40%, Reeves said. The Government is taking action with additional investment to reform apprenticeships to prioritise young people, she stated. The Government is implementing an £820 million youth guarantee to provide young people with employment support and guaranteed jobs, Reeves said, though implementation details remain unclear.
The system is broken, but it's not a top priority.
Reeves's broader economic policies include claims that unemployment is set to peak later this year and then fall in every year of the forecast period, ending at 4.1%, she said. The unemployment rate at the end of the forecast period will be lower than it was at the start of the Parliament, she added. The Government beat economic forecasts last year, Reeves said, and she is confident it will beat economic forecasts again in the year ahead. Government policies include discounts on business energy costs, trade deals with India, the US and the EU, reforms to back entrepreneurs, investments in infrastructure, skills funding for further education, and planning reforms, she outlined.
Reeves rejected revenue options such as legalising cannabis to raise tax revenue after the 2024 election, according to reports. She opposes new oil and gas exploration in the North Sea despite calls to scrap this opposition, multiple reports indicate.
Future announcements include Reeves setting out more reforms in the coming weeks to support young people, she said. She will set out three major choices in her second Mais lecture in two weeks' time to determine the country's economic future, Reeves stated, though the specifics are unknown.
Key unknowns include what specific measures will be included in the 'anti-profiteering framework' to crack down on price gouging, how the £820 million youth guarantee will be implemented, and what the three major choices in Reeves's Mais lecture will entail. The exact timeline and content of the delayed Defence Investment Plan remain unresolved, and it is unclear how the government will address the potential funding shortfall for start-ups due to the cut in Venture Capital Trust tax relief.