The United Kingdom’s Finance Minister, Rachel Reeves, has announced plans to reduce Civil Service running costs by 15% over the next four years, a move expected to save £2.2 billion annually.
The initiative aims to streamline administrative and bureaucratic functions that expanded during the COVID-19 pandemic.
Speaking on the proposed reforms, Reeves emphasized the government’s commitment to redirecting resources toward priority areas such as capital spending and the National Health Service (NHS).
“Last year, I put £100 billion more into capital spending than the previous government had committed to, and we allocated more than £20 billion to the NHS,” she told the BBC’s Sunday with Laura Kuenssberg.
She added that the government’s actions were a “far cry” from those of their Conservative predecessors.
The plan could result in a reduction of approximately 10,000 Civil Service jobs, though Reeves clarified that individual departments would determine the specifics.
“It’s not right to maintain COVID-era staffing increases,” she stated, highlighting the need for efficiency in public spending.
Economic Challenges and Fiscal Targets
The announcement comes amid concerns over slow economic growth and rising borrowing costs, which have strained the government’s fiscal plans.
In her first full budget last October, Reeves pledged to balance day-to-day spending with tax revenue by the end of the decade. However, global economic uncertainties, including potential trade tensions triggered by U.S. import tariffs, have complicated these efforts.
“The world has changed. We can all see that before our eyes, and governments are not inactive in that,” Reeves told Sky News. “We’ll respond to the change and continue to meet our fiscal rules.”
The government has also faced backlash over recent welfare spending cuts, which aim to save £5 billion annually. Some lawmakers within Prime Minister Keir Starmer’s Labour Party have criticized these measures, fearing they signal a return to austerity.
What you should know
Reeves is expected to outline additional measures in her Spring Statement on Wednesday to restore fiscal flexibility and meet her targets.
- While public spending is projected to outpace inflation throughout the current parliament, Reeves stressed the importance of prioritizing expenditures.
“As a government, we have to decide where that money is spent, and we want to spend it on our priorities,” she said.
- The government has also increased defense spending in response to calls from U.S. President Donald Trump for Europe to bolster its security efforts. Further increases are planned in the coming years.
- Addressing trade relations with the United States, Reeves noted ongoing discussions about tariffs and the UK’s Digital Services Tax, which targets large tech companies like Google and Facebook.
“We’re in discussions at the moment around a whole range of things around tariffs with the United States, but we will continue to operate on that principle that you should pay taxes in the country in which you operate,” she said.