Money expert and financial journalist Martin Lewis has investigated Chancellor Rachel Reeves’ claims that UK households will be ‘£500 better off’ following her spring statement.
The Chancellor addressed the country on Wednesday as she delivered a spring statement with an update on the nation’s financial situation, as well as giving an outline of the kinds of changes the government is considering for the future. As well as announcing cuts to Universal Credit’s health benefits, raising the National Living Wage and cutting the UK’s growth forecast in half from 2% to 1%, Reeves also claimed that ‘real household disposable income will rise by £500’ in the years to come.
Money Saving Expert founder Martin Lewis took to Twitter to dig into the claim using the OBR’s own document, Economic and Fiscal Outlook March 2025, released in its forecasts on Wednesday.
Martin Lewis said in his four-word verdict ‘it’s not that rosy’ when he found out where the £500 claim came from.
He tweeted: “So where did the Chancellor’s #SpringStatement “real household disposable income will rise £500” come from?”
“Below I’ve clipped what seems to be the relevant bit from the OBR, and its not that rosy.
“The £500 isn’t mentioned but looking at this it’s over the life of parliament not per year. Most of it comes in the last two years, after drops first, and is based on assumptions that some of current tax proposals eg freezing tax thresholds will end. It’s worth a read.”
The OBR excerpt reads: “We expect real household disposable income (RHDI) per person to grow at an average of around ½ per cent a year in the five years from 2025-26 to 2029-30.
“But growth is projected to vary significantly around this average, first slowing sharply from 2½ per cent in 2024-25 to almost no growth in 2027-28.
“This is driven by four factors: (i) lower real wage growth as firms rebuild profit margins; (ii) non-labour income growth returning to medium-term trends; (iii) an increase in household taxes as firms pass employer NICs onto wages and income tax thresholds remain frozen; and (iv) slower benefits growth due to a rising state pension age and welfare measures announced since October.
“After the sharp slowdown, RHDI per person growth picks up to average ⅔ per cent a year in 2028-29 and 2029-30 as the freeze on income tax thresholds ends and real wage growth increases.
“Compared to the October profile, stronger real wage growth means RHDI per person grows slightly more quickly across the forecast. Aggregate RHDI growth averages 1 per cent a year across the forecast, while population growth averages just under ½ per cent a year.”
The OBR continues to add that ‘policy measures’ will lower RHDI per person slightly, around 0.25% by 2029-2030 – with benefit cuts to blame.
It added: “The main driver is lower benefit income due to the Government’s welfare reforms. Planning reforms boost incomes, offsetting some of the hit, as higher productivity raises wages and a larger housing stock means more compensation for housing services. Yet three quarters of the extra income from housing services comes as ‘imputed rent’ – what homeowners would receive if they rented out their home. This makes the boost less tangible for households.”
Economists warned of further uncertainty ahead of the autumn budget, while opposition critics accused Reeves of mismanaging the public finances, and unions said the policy changes marked a return to austerity.
But in an article on Thursday, the Chancellor wrote: “While there are no quick solutions to fixing our damaged economy, our plan for change is starting to bear fruit: interest rates cut and wages up; waiting lists down and defence bolstered; the economy predicted to grow faster than the OBR had previously expected from 2026.
“I won’t shy away from the challenges we face, and change won’t happen overnight. But the prize on offer to us is immense.
“Shovels in the ground and cranes in the sky, and an economy that finally delivers on the priorities of the British people.”
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