Reeves 'to slash 50,000 civil service jobs' as she pushes to cut spending by £2 billion per year
24 March 2025, 05:24 | Updated: 24 March 2025, 08:48
Rachel Reeves' spending plans are likely to mean 50,000 job losses in the civil service, a trade union has warned.
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The Chancellor said Labour was looking to cut back the Civil Service, which she said had swelled during the Covid-19 pandemic, by slashing its "back office functions, the administrative and bureaucracy functions".
The FDA union said orders for departments to cut budgets by 15%, which is expected to make £2.2 billion in savings a year by 2029-30, would result in the overall salary bill being reduced by 10%.
The union's general secretary Dave Penman said: "We're talking about something that's close to 10% of the entire salary bill of the Civil Service over the next three to four years.
"The Civil Service is about half a million staff. So that could be up to 50,000 staff who would go."
-For all the latest on the Chancellor's Spring Statement listen to LBC on Wednesday from 7am on Global Player
John McDonnell gives his advice to the Chancellor ahead of the Spring Statement | Watch in full
The Chancellor said she was "confident" Civil Service numbers could be reduced by 10,000.
Meanwhile the leader of the biggest civil service union said any cuts will hit frontline services after years of underfunding by previous Conservative governments.
Public and Commercial Services union general secretary Fran Heathcote said: "The impact of making cuts will not only disadvantage our members but the public we serve and the services they rely on.
"We've heard this before under Gordon Brown when cuts were made to backroom staff and consequences of that was chaos."
Jeremy Hunt speaks to Matthew Wright | Watch in full
Speaking to LBC on Sunday, Mr Hunt said the chancellor must go even further and slash the welfare budget beyond the £5 billion announced last week to a whopping £49 billion.
“Labour are going to be in office now for many years and if they are the right things for the country, then I would rather she did them than not do them,” he said.
“But she needs to be much, much bolder. And the problem is that the market swing between budgets and fiscal events, and that impacts the Chancellor's headroom by about £19 billion pounds on average, if you go back to 2000.
“And so you need to have some decent headroom, otherwise you're going to come unstuck. And both she and I had very narrow headroom.
“The way to get that headroom and to have much more stability in public finances is to say very boldly, the welfare bill is too high and for working-age adults, we are going to bring it back to pre-pandemic levels, 2019 levels.
“The pandemic finished three years ago. It's not an unreasonable objective for a parliament that puts £49 billion in the coffers and then we can actually restore some stability.”
The cuts are set to hit administrative budgets including HR, policy advice and office management rather than frontline services.
Departments will receive instructions in a letter from Chancellor of the Duchy of Lancaster Pat McFadden in the coming week.
A Cabinet Office source said: "To deliver our Plan for Change we will reshape the state so it is fit for the future. We cannot stick to business as usual.
"By cutting administrative costs we can target resources at frontline services - with more teachers in classrooms, extra hospital appointments and police back on the beat."
The move comes after Sir Keir Starmer vowed to reshape the "flabby" state and slash the cost of bureaucracy, and ahead of the Chancellor's spring statement.
Rachel Reeves is expected to unveil spending cuts as she seeks to balance the books after disappointing growth figures and higher-than-expected borrowing.
It is expected that most of the cuts will come from slashing the number of civil servants. Civil Service is currently the largest it's been in 20-years, with 514,000 employees.
Read more: Middle income parents spared from burdensome tax returns under shake up from Rachel Reeves next week
Labour set to announce biggest cuts 'since austerity': Is Keir Starmer a hypocrite?
Ms Reeves is expected to reveal around £10 billion of spending cuts in her much anticipated Spring Statement.
She is set to make the string of economic announcements against the backdrop of a faltering economy and tighter headroom when it comes to the fiscal rules she set herself in October.The chancellor's adjustments come in response to reduced growth forecasts by the Office for Budget Responsibility (ONS) and the Bank of England, with the government attempting to fill a notable black hole of between £15 billion and £20 billion in the public finances.
The growth figures, combined with higher-than-expected borrowing, were expected to put pressure on Ms Reeves to increase taxes or cut spending in order to meet the financial rules she set at the budget.
It is understood that changes to the tax regime are not expected next week.
LBC revealed today The Treasury is planning to unveil a new digital service to spare thousands of working parents from having to fill out burdensome paperwork.
At the moment, those who are hit by the high-income benefit charge have to submit a tax return every year to HMRC – but this will be binned by the summer.They’ll be able to pay the charge through their payslips instead.
The high income benefit charge hits parents who claim child benefit when they earn between £60,000 and £80,000 a year.
Ms Reeves told LBC: “We are taking action to make life easier for working parents.
“By giving them the choice to pay the tax charge through PAYE, we're making our tax system simpler for busy families, reducing the risk of them being penalised for not filing a tax return and supporting growth and productivity across the UK.”
