UK Shadow Chancellor Rachel Reeves has pledged to cut government operating costs by 15% by the end of this decade. The cuts will primarily target back-office and administrative functions rather than front-line services. Approximately 10,000 jobs are expected to be affected, impacting the overall efficiency of public services. The Shadow Chancellor is due to deliver a Spring Statement on Wednesday, where she is expected to announce spending cuts across some government departments.
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03-25, 2025This initiative is part of an ongoing government spending review designed to assess activities across all areas of government. Cabinet Office minister Pat McFadden will write to government departments in the coming week, instructing them to achieve cost savings of over £2 billion per year by the end of the decade. Departments such as human resources, policy advice, communications, and office management are expected to be affected by these measures.
In an interview with the BBC, Reeves stated that the government wants to use the savings to invest in priority areas such as the National Health Service (NHS). She noted that the size of the civil service had increased "dramatically" during the COVID-19 pandemic but has not yet returned to pre-pandemic levels. She pledged: "By the end of this Parliament, we will be committed to cutting government operating costs by 15%." Reeves believes that cutting this proportion of operating costs is "entirely possible," given advancements in technology and artificial intelligence.
When pressed on how many civil service jobs might be cut, the Shadow Chancellor told Sky News that the headcount could be reduced by around 10,000. As of December 2024, according to the Office for National Statistics, the UK civil service comprised approximately 547,735 people, including temporary and casual staff. Civil servants are politically neutral officials employed by the government, whose work ranges from policy development to services such as welfare and prisons.
Dave Penman, head of the FDA union representing senior civil servants, said that the distinction between back-office and front-line functions is "artificial." He argued that achieving cuts of this magnitude by slashing human resources and communications teams is "unrealistic." He stated: "This plan will require ministers to be honest with the public and their civil servants about the impact this will have on public services." Prospect union leader Mike Clancy also stated: "Civil servants in all roles help the public and deliver the government’s agenda. Cutting their numbers will inevitably impact the public."
Disappointing economic growth, rising borrowing costs, and lower-than-expected tax revenues have all increased the pressure on the government to find savings. Reeves has stated that she will not raise taxes or government borrowing in next week's Spring Statement. She also said, "We cannot tax and spend our way to higher living standards and better public services." She is constrained by rules she has set herself, including not borrowing to fund day-to-day spending and getting debt as a share of the UK's economic output falling by 2029/30.
When asked whether some departments' budgets would be cut, Reeves stated: "In every year of this Parliament, there will be real-terms growth in government spending." However, she declined to confirm whether this would apply to individual unprotected departments such as the Ministry of Justice or the Home Office, stating that this would be determined in the spending review in June. The Shadow Chancellor said that each department has been asked to rank its spending from most important to least important. She added: "We want to put more money into the things that matter most to constituents, to citizens, and less into things that are unnecessary or that we should be doing differently."
Responding to claims from the Labour left that the government's approach amounted to a return to Conservative austerity, Reeves pointed to the £100 billion of additional capital spending and £20 billion of NHS spending announced in the October budget. "That is very different from what we have seen from Conservative governments over the last 14 years," she added. Conservative Shadow Chancellor Mel Stride stated that Labour had left the economy "in a very fragile state." He told the BBC that rising borrowing costs were partly due to financial markets being "uneasy about the way the British economy has been run over the last nine months."
