On Wednesday, the Chancellor of the Exchequer will deliver her Spring Statement to the House of Commons. It is an opportunity for her to respond to the latest forecast of the Office for Budget Responsibility (OBR) for the economy and public finances, but there will also be some changes in expenditure. Unless she is by now numbed by the grisliness of her first nine months as Chancellor, Rachel Reeves cannot be looking forward to it: the OBR is expected to predict a lower rate of growth for 2025 and the Government is facing a squeeze on its resources.
Pre-briefing is now a universal practice – which does not mean it is any less a gross discourtesy to the House of Commons and its exclusive authority over taxation and expenditure – and the Chancellor has revealed that she will cut spending on the Civil Service by £2 billion a year. That, at least, is the headline she was emphasising, but closer examination shows a more complicated policy picture – and one which has a strong whiff of wild-eyed panic about it.
The sum of £2bn is large enough to be eye-catching, but this is not a sudden swing of the axe. In fact, government departments will be asked to reduce their running costs by 15% over the course of this parliament. It is expected that this will represent £2bn per year across Whitehall by the end of the decade, but if a week is, famously, a long time in politics, then four or five years is an epoch. Nor will it be Reeves’ hands on the axe: Pat McFadden, Chancellor of the Duchy of Lancaster and head of the Cabinet Office, will write to departments with the instruction.
There are a number of reasons to be sceptical about this endeavour. Reeves told the BBC’s Laura Kuenssberg that the savings are ‘more than possible’, which is in itself not a wholehearted endorsement, and she has pointed to advances in technology and greater use of artificial intelligence as levers to reduce costs.
There is no doubt some truth in this. During Brexit and the Covid-19 pandemic, the Civil Service grew rapidly in size and as of December 2024 numbered 514,395, an increase of around 150,000 employees in less than a decade and the highest headcount for 30 years. It is implausible to imagine there is no scope for a reduction. However, it is a fundamental truth of politics that ministers always overestimate how far spending can be cut by ‘efficiency savings’.
It is also unclear where the cuts will be. Reeves told Sky News that ‘back office jobs’ would be targeted, indicating areas like travel budgets, consultancy fees, human resources and communications. The axe would not fall on ‘people working on the front line in our schools and our hospitals and our police’. This is a standard populist mantra, but Dave Penman, general secretary of the FDA trade union, sounded a note of caution, calling the distinction between ‘front line’ and ‘back office’ staff ‘artificial’.
‘The idea that cuts of this scale can be delivered by cutting HR and comms teams is for the birds,’ he added.
There is also a feeling of confusion and haste about Reeves’ announcement. In recent weeks, McFadden has spoken of ‘radical’ plans by which ‘the central Civil Service would and can become smaller’; while the Prime Minister, who has articulated the need for ‘nothing less than the complete re-wiring of the British state’, gave a speech two weeks ago in which he said the Civil Service was ‘overstretched, unfocused, trying to do too much, doing it badly’. Like Reeves, he highlighted technology like AI as opportunities to reduce expenditure, though he was perilously light on specifics.
Are these three senior ministers describing the same process? Is there a masterplan being developed somewhere in the bowels of the Cabinet Office or HM Treasury? Or is the Chancellor reaching for glib slogans to ease the pain of the Spring Statement?
If this is a serious programme of efficiency, the Government needs to answer hard questions. How did it arrive at the figure of a 15% reduction in costs? Will this apply to all departments, or be an average across Whitehall? What impact will it have on the delivery of public services? Will there be transitional costs in adopting new technology and practices? Will the end of the parliament be the end-point by which the Civil Service will be at its desired size and shape?
There is an unsettling silence on these issues, and it speaks to a fundamentally unserious approach. The Prime Minister has had outbursts about a ‘tepid bath of managed decline’ and a ‘cottage industry of checkers and blockers using taxpayer money to stop the Government delivering on taxpayer priorities’. But he has also praised the ‘talent, commitment and ideas’ of civil servants, ‘constrained for too long’. He has pledged to reduce the costs of compliance with regulations by a quarter, but admitted the Government does not even currently know how much those costs are.
Reeves wants us to focus on the figure of £2bn. It sounds impressive. But there is very little reason to believe that it is more than a headline. The Government has a long way to go in its project to re-wire the British state.
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