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Rachel Reeves will unveil further welfare cuts in her spring statement after being told the reforms announced last week will save less than planned, Sky News understands.
The Office for Budget Responsibility (OBR) has rejected the government’s assessment that the package of measures, including narrowing the eligibility criteria for personal independence payments (PIP), will save £5bn.
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The fiscal watchdog put the value of the cuts at £3.4bn, leaving ministers scrambling to find further savings.
Ms Reeves is now expected to announce that universal credit (UC) incapacity benefits for new claimants, which were halved under the original plan, will also be frozen until 2030 rather than rising in line with inflation
As originally reported by The Times, there will also be a small reduction in the basic rate of UC in 2029, with the new measures expected to raise £500m.
A Whitehall source told Sky’s political editor Beth Rigby that it is “hard to tell how MPs will react”, as while the OBR’s assessment means fewer people will be affected by the PIP changes than thought, they “might be unhappy about the chaotic nature of it all”.
The government did not publish an impact assessment of the crackdown on benefits it announced last week, saying that would come alongside the spring statement on Wednesday.
Several Labour MPs criticised the measures as pushing more sick and disabled people into poverty, while former Labour leader Jeremy Corbyn called the package a “disgrace” on Tuesday and accused the government of imposing austerity on the country.
Watch and follow the spring statement live across Sky News from 11am
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