Reeves confirms 15% cut to Civil Service running costs

Government running costs will be cut by 15% by the end of the decade, the chancellor has promised.

Rachel Reeves told the BBC savings would be made from back office and administrative roles rather than front-line services.

But unions warned the impact of cuts would still be felt by the public, while 10,000 jobs are expected to go.

It comes ahead of the chancellor's Spring Statement on Wednesday, when she is expected to announce spending cuts for some government departments.

The move is part of an ongoing spending review looking into all areas of government activity.

In the coming week, Whitehall departments will receive a letter from Cabinet Office Minister Pat McFadden with instructions to make savings amounting to more than £2bn a year by the end of the decade.

Sectors such as human resources, policy advice, communications and office management are expected to be in the firing line.

Reeves told the BBC's Sunday with Laura Kuenssberg programme the government wanted to use savings to invest in its priorities, such as the NHS.

She said the size of the Civil Service had increased "massively" during Covid and had not returned to pre-pandemic levels.

"We are, by the end of this Parliament, making a commitment that we will cut the costs of running government by 15%," she said.

Reeves said cutting running costs by this amount was "more than possible" given advances in technology and artificial intelligence.

Pressed over how many civil service jobs could go, the chancellor told Sky News staff numbers could be reduced by about 10,000.

As of December 2024, an estimated 547,735 people were employed by the Civil Service according to the Office for National Statistics. This includes temporary and casual employees.

Civil servants are politically impartial officials employed by the government, covering areas including policy development and services like benefits and prisons.

Dave Penman, head of the FDA union, which represents senior civil servants, said the distinction between back office and the front line was "artificial".

"The idea that cuts of this scale can be delivered by cutting HR and comms teams is for the birds," he said.

"This plan will require ministers to be honest with the public and their civil servants about the impact this will have on public services."

Meanwhile, Mike Clancy, head of the Prospect union, said: "Civil servants in all types of roles help the public and deliver the government's missions.

"Cutting them will inevitably have an impact that will be noticed by the public."

Earlier this month Cabinet Office Minister McFadden promised "radical" reform of the Civil Service, with performance-related pay for senior officials and those not meeting expectations incentivised to leave their jobs.

And last week Prime Minister Sir Keir Starmer vowed to reshape the "flabby" state and "unshackle" civil servants from "bureaucracy".

Disappointing economic growth, higher borrowing costs and lower-than-expected tax revenues have increased the pressure on the government to find savings.

Earlier this week, the government unveiled sweeping changes to the benefits system, including making it harder for people to claim disability payments, with the aim of saving £5bn a year by 2030.

Reeves has signalled she will not raise taxes or government budgets in her Spring Statement next week, telling the BBC this week that "we can't tax and spend our way to higher living standards and better public services".

She is constrained by self-imposed rules, including not borrowing to fund day-to-day spending and seeing debt fall as a share of the UK economic output by 2029/30.

Pressed over whether some departments would see their budgets cut, Reeves said: "There will be real-terms increases in government spending in every year of this Parliament."

However, she refused to confirm whether this would apply to individual unprotected departments like the Ministry of Justice or the Home Office, saying this would be set out in the spending review in June.

The chancellor said every department had been asked to rank their spending from most important to least.

"We want to put more money into the things that are the most important things for voters, for citizens, and less money on the things that are just not necessary or we should be doing in a different way," she added.

Responding to claims from some on the left of the Labour Party that the government's approach amounted to a return to Conservative austerity, Reeves pointed to the £100bn of extra capital spending and £20bn for the NHS announced in October's Budget.

"That is a far cry from what we've seen under Conservative governments in the last 14 years," she added.

Conservative shadow chancellor Mel Stride said Labour had left the economy "in a really vulnerable state".

He told the BBC borrowing costs had risen partly because financial markets "are twitchy at the way the UK economy has been run over the past nine months".