Rachel Reeves takes axe to Civil Service: Government departments to make £2billion cuts
22 March 2025, 22:14 | Updated: 23 March 2025, 00:08
Rachel Reeves is poised to order the civil service to slash more than £2 billion a year from its budget by the end of the decade as part of the Government's spending review.
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The Cabinet Office will order departments to cut their administrative budgets by 15%, which is expected to make £2.2 billion in savings a year by 2029-30.
They will first be asked to reduce budgets by 10% by 2028-29 in a bid to save £1.5 billion a year, which the head of the FDA union said equates to nearly 10% of the salary bill for the civil service.
Administrative budgets include 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, The Telegraph reported.
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."
Read more: Middle income parents spared from burdensome tax returns under shake up from Rachel Reeves next week
FDA general secretary Dave Penman said the union welcomed a move away from "crude headcount targets" but that the distinction between the back office and front line is "artificial".
"Elected governments are free to decide the size of the civil service they want, but cuts of this scale and speed will inevitably have an impact on what the civil service will be able to deliver for ministers and the country.
"Whilst we welcome the move away from crude headcount targets, the distinction between back office and front line is an artificial one.
"The budgets being cut will, for many departments, involve the majority of their staff and the £1.5 billion savings mentioned equates to nearly 10% of the salary bill for the entire civil service."
He urged ministers to set out what areas of work they are prepared to stop as part of spending plans.
"The idea that cuts of this scale can be delivered by cutting HR and comms teams is for the birds.
"This plan will require ministers to be honest with the public and their civil servants about the impact this will have on public services."
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.
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.”
