Rachel Reeves tells Whitehall to make huge cuts before autumn budget
August 29, 2024
R1: Cuts to Whitehall budgets could mean cuts to the barnett formula come the Autumn Statement
by backupJM
1 comment
Makes for some grim reading…
>Rachel Reeves has warned that “public spending is not sustainable” as she told government departments to make billions of pounds of savings in advance of the budget.
>The chancellor is setting out detailed savings targets that “really scrape the bone” in Whitehall after Sir Keir Starmer warned of “painful” further spending cuts to come in the autumn.
>Several departments are understood to have been told to find more than £1 billion in savings each, with others ordered to find hundreds of millions of pounds in a cost-cutting drive that goes well beyond an attempt to fund public sector pay rises.
…
>She repeatedly refused to rule out raising inheritance tax or capital gains tax, saying she was “not going to write a budget two months ahead of delivering it”. However, the chancellor is already preparing to make further cuts in spending after asking for £3.2 billion in savings to fund pay rises for millions of workers. Insiders said that the figure was a minimum, not a ceiling, for the cuts needed to fill the £22 billion “black hole”.
>The Department of Health has been asked to find savings worth around £1.3 billion in time for the October budget, sources told The Times. Officials at the Department for Education are also looking at how to absorb around £1 billion of savings.
>Another Whitehall department has been told by the Treasury to find £1 billion in cuts, and redundancies and hiring freezes are being considered. Departments have been told to prioritise reducing back-office spending and the cost of services such as consultants and other contractors.
>One government source said: “We’re all being asked to really scrape the bone in terms of what other cuts might need to be considered — it is properly grim.”
…
>Ben Zaranko of the Institute for Fiscal Studies said that there was “very much continuity from what the Conservatives were doing” in Reeves’s demand for Whitehall savings.
>**However, he said that, after years of austerity, “there is a whole load of core state functions it’s hard to see how you make big savings from”.**
>“The danger for the government is that you end up having lots of big arguments about small sums,” he added.
1 comment
Makes for some grim reading…
>Rachel Reeves has warned that “public spending is not sustainable” as she told government departments to make billions of pounds of savings in advance of the budget.
>The chancellor is setting out detailed savings targets that “really scrape the bone” in Whitehall after Sir Keir Starmer warned of “painful” further spending cuts to come in the autumn.
>Several departments are understood to have been told to find more than £1 billion in savings each, with others ordered to find hundreds of millions of pounds in a cost-cutting drive that goes well beyond an attempt to fund public sector pay rises.
…
>She repeatedly refused to rule out raising inheritance tax or capital gains tax, saying she was “not going to write a budget two months ahead of delivering it”. However, the chancellor is already preparing to make further cuts in spending after asking for £3.2 billion in savings to fund pay rises for millions of workers. Insiders said that the figure was a minimum, not a ceiling, for the cuts needed to fill the £22 billion “black hole”.
>The Department of Health has been asked to find savings worth around £1.3 billion in time for the October budget, sources told The Times. Officials at the Department for Education are also looking at how to absorb around £1 billion of savings.
>Another Whitehall department has been told by the Treasury to find £1 billion in cuts, and redundancies and hiring freezes are being considered. Departments have been told to prioritise reducing back-office spending and the cost of services such as consultants and other contractors.
>One government source said: “We’re all being asked to really scrape the bone in terms of what other cuts might need to be considered — it is properly grim.”
…
>Ben Zaranko of the Institute for Fiscal Studies said that there was “very much continuity from what the Conservatives were doing” in Reeves’s demand for Whitehall savings.
>**However, he said that, after years of austerity, “there is a whole load of core state functions it’s hard to see how you make big savings from”.**
>“The danger for the government is that you end up having lots of big arguments about small sums,” he added.