Reeves’s growth plans ‘exactly what economy needs’ say UK business groups – politics live

The SNP government in Edinburgh has said it is “deeply disappointed” by Rachel Reeves’ growth speech because of the lack of measures that will help Scotland. In a formal government response, Kate Forbes, the deputy first minister, said:

I welcome the chancellor’s attempt to outline an economic plan, after the very legitimate concerns around her approach to growth which have been raised by many since the UK budget, in particular the damaging decision to raise employers’ national insurance contributions.

However, I am deeply disappointed in the lack of any initiatives which would directly benefit Scotland – especially given our energy expertise, strengths in new technologies like space and AI, world-leading universities and colleges, highly skilled workforce and our reputation as a world-class entrepreneurial nation.

For instance, there is no mention of Grangemouth and I am concerned that UK government investment is being further concentrated in prosperous areas in the South East of England and around Oxford and Cambridge. This will deepen concerns that Scotland is being treated as an afterthought by this UK government.

Liz Kendall, the work and pensions secretary, has confirmed that the welfare cap – a supposed limit on certain types of welfare spending – was breached in the last financial year.

Kendall said that the cap (£137.4bn) was exceeded by £8.6bn in 2024/25, but that this had been expected for almost two years.

In a written ministerial statement, she said:

The forecast breach, due in particular to expected higher expenditure on universal credit and disability benefits, is unavoidable given the inheritance from the last government.

The likely scale of the eventual breach has been known since March 2023. No action was taken by the previous administration to avoid it.

Whilst this government has already shown that it will not shy away from difficult decisions, this breach could only have been addressed through implementing immediate and severe cuts to welfare spending. This would not have been the right course of action.

In her statement Kendall confirmed that measures will be announced later this year to control welfare spending, including reforms to health and disability spending, and measures to tackle welfare fraud.

George Osborne introduced the cap when he was chancellor in 2014. It imposes a supposed limit that can be spent on certain types of benefit (comprising roughly half total welfare spending) and, if a government breaches the cap, it must make a statement explaining itself. This was supposed to incentivise ministers to cut spending.

But economists question its value. This is the fourth time the cap has been breached, and governments have responded to these breaches by changing the level at which the cap applies. In the budget last year Rachel Reeves, the chancellor, updated the cap for 2029-30, and MPs are voting on that this afternoon.

On Friday it will be the fifth anniversary of the day the UK left the European Union. YouGov says the number of people who thnk that was the right decision is down to a record low in its polling, at 30%.

YouGov says only 11% of people, and only 22% of people who voted leave, think it has been a success.

And it says that 55% of people are in favour of rejoining.

Here is the PA Media story on PMQs.

Keir Starmer has claimed the Conservatives are the “coalition of blockers” as he defended his government’s growth proposals and employment law reforms.

The prime minister highlighted opposition to airport expansion and a rail project from Tory frontbenchers, which prompted opposition leader Kemi Badenoch to brand Labour “hypocrites” for raising their own objections in the past.

Starmer, who dubbed the government the “coalition of builders”, was also urged by Badenoch to drop a series of measures contained in the employment rights bill because they “fail his growth test”.

After Badenoch told Starmer to “stop being a lawyer and start being a leader”, Starmer replied: “We know she is not a lawyer, she is clearly not a leader, if she keeps on like this, she is going to be the next lettuce.”

His remark was a nod to Liz Truss’s 49-day long premiership, which saw the Daily Star live-stream a lettuce to see if it would last longer than her tenure in No 10.

The bill raised at PMQs includes measures to introduce day-one protections from unfair dismissals, make changes to sick pay and ensures guaranteed hours on zero-hours contracts.

Badenoch said the government has “embraced a series of Conservative policies” before urging Starmer to “drop” the bill as it “clearly fails the prime minister’s growth test”, adding Whitehall analysis suggests it will cost businesses £5bn a year.

Starmer said the government was “not taking lectures” from the Conservatives.

Badenoch said the legislation would make it “harder for business to hire new employees”, adding: “This isn’t an employment bill. It’s an unemployment bill. Given these clauses, will he drop his bill and show that he is not anti-growth?”

Starmer replied: “We believe in giving people proper dignity and protection at work. That’s why we’re proud of our record of supporting workers. They consistently vote against any protection for working people.”

Peter Mandelson has said his past remarks that Donald Trump was “a danger to the world” were “ill-judged and wrong” before his expected confirmation as ambassador to the US, Eleni Courea reports.

Business groups have strongly welcomed the measures in Rachel Reeves’ speech this morning.

Rain Newton-Smith, CEO at the CBI, said:

It’s crunch time for growth and today the chancellor has heeded business’ call to go further and faster. This is most evident in ministers grasping decisions that have sat on the desk of government for too long. This positive leadership and a clear vision to kickstart the economy and boost productivity is welcome …

The chancellor’s announcements are smart, looking to leverage the UK’s strengths including our world class universities, innovation and openness to global talent.

Shevaun Haviland, director general of the British Chambers of Commerce, said:

The chancellor has laid down a clear marker on her intent to push for growth and these proposals can light the blue touchpaper to fire up the UK economy.

Expanding our international airport capacity, investing in modern roads and railways, and rebalancing the planning system all send signals that the UK is building for a better future.

And Tina McKenzie, policy chair of the Federation of Small Businesses, said:

Today’s rallying cry for government to choose growth is exactly what the economy needs. It sends a strong, confident message that from now on growth comes first, and any barriers to that will be erased.