Civil service to be ordered to cut £2bn from budget

The civil service will be told 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.

The Cabinet Office will tell departments to cut their administrative budgets by 15%, which is expected to save £2.2 billion 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.”

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.”

Mike Clancy, general secretary of the Prospect union, warned that “a cheaper civil service is not the same as a better civil service”.

“Prospect has consistently warned government against adopting arbitrary targets for civil service headcount cuts which are more about saving money than about genuine civil service reform.

“The Government say they will not fall into this trap again. But this will require a proper assessment of what the civil service will and won’t do in future.”

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.