Chancellor Rachel Reeves is set to unveil £1.5 billion in savings from civil service administration budgets as part of a broader effort to rein in government spending and demonstrate fiscal discipline ahead of the next general election.
In her Spring Statement on Wednesday, Reeves will announce a 10 per cent cut to the administration budgets of Whitehall departments. These reductions will focus on back-office functions, including HR, communications and policy roles, rather than frontline public services such as prisons or Border Force.
The move is expected to shave close to 10 per cent off the civil service’s £16.6 billion annual salary bill by the 2028–29 fiscal year. The government has stressed that decisions on job cuts will be left to individual departments, and that savings will be redirected toward frontline priorities such as teaching, neighbourhood policing, and local health and social care services.
“The size of government increased massively during the Covid pandemic,” Reeves said in an interview with the BBC. “That was five years ago, but the size of the civil service hasn’t come back during that period. We now need to realise those efficiency savings so we can invest in the priorities.”
The announcement comes as the Office for Budget Responsibility (OBR) is expected to downgrade UK growth forecasts, halving its 2024 projection from 2 per cent to just 1 per cent. With Reeves’ previously announced £9.9 billion fiscal headroom evaporating, the Chancellor now faces a shortfall of £4.5 billion.
A Treasury source indicated that Reeves is determined to restore that buffer. “She’s taken the choice to restore headroom,” the source said. “It’s a message to the market that we are in control of the public finances.”
Alongside the civil service cuts, the Chancellor is also backing previously announced £5 billion welfare savings and a controversial plan to abolish NHS England, which is expected to save £500 million annually. Government sources suggest that as many as 10,000 civil service roles could be lost, although no formal target has been set.
Earlier this month, Pat McFadden, Minister for the Cabinet Office, said the government would also make it easier to remove underperforming civil servants.
In her statement, Reeves is expected to address international instability and shifting geopolitical dynamics, citing Donald Trump’s re-election in the US and the threat of global trade tensions. “The world has changed,” she will say, arguing that economic strength and national security are now more tightly bound than ever.
To respond to these pressures and seize emerging opportunities, Reeves will champion a new £400 million UK Defence Innovation (UKDI) programme. The initiative, housed within the Ministry of Defence, aims to support British tech companies in scaling up for defence contracts—particularly in emerging sectors like AI, quantum computing, and drones. The government is expected to ringfence a portion of the defence budget to fund innovation with wider economic spillover potential.
Reeves will promote the strategy under the “make, sell and buy more in Britain” mantra, framing it as both a national security imperative and a growth strategy.
With economic headwinds mounting, the Spring Statement represents a pivotal moment for Reeves and the Labour government. The Chancellor’s challenge will be to assure markets, support public services, and retain voter confidence—all while navigating a constrained fiscal environment and an increasingly volatile global stage.
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Rachel Reeves to cut £1.5bn in civil service savings to balance public finances