Westminster insiders are wondering how Rachel Reeves can achieve her plans for sweeping Civil Service cuts.
Ahead of her Spring Statement tomorrow, the Chancellor has confirmed that she wants a 15% reduction in Whitehall funding by the end of the decade, aiming to save £2.2bn a year.
Government sources quoted in the media insisted these cuts will come from administration budgets and not affect front-line services. Yet the distinction between back-office admin costs and front-line services is hard to make in practise.
Departmental administration budgets cover staff costs for a range of different Civil Service roles including policy advisors, HR professionals, analysts, engineers and scientists.
Around two thirds of Whitehall admin budgets is spent on pay while the rest goes on procurement of goods and services including equipment, accommodation, travel and learning and development.
All central government departments will be affected by the cuts which are likely to be extended to arm’s length bodies, regulators and non-departmental public bodies.
And the search for cuts will be particularly challenging at a time when ministers have ordered the establishment of new bodies that need to be staffed by civil servants such as GB Energy, Great British Railways, Skills England and Regulatory Innovation Office.
Reeves’s proposed cuts follow the announcement by Pat McFadden, the minister responsible for the Cabinet Office, earlier this month of Civil Service reforms including significant reductions in staff numbers, relocation of more staff out of London, changes to performance management to incentivise the lowest performers to leave and a target for one in 10 civil servants to have a data or digital role.
Several departments are running or haver recently completed voluntary exit schemes to encourage civil servants to accept redundancy. These schemes have been oversubscribed and tend to appeal to high performers who are more confident of their ability to secure a role in the private sector.
There has also already been reduction in Civil Service recruitment, with fewer roles advertised externally. But to date there has been no detail on how McFadden will achieve his plans.
Departments now must return forecasts for the spending review to HMT by mid-April to show how the cuts will be achieved. Even departments with increased capital budgets will be expected to deliver programmes with fewer staff. The Ministry of Defence, which is poised for an overall budget increase, is still likely to need to cut administration costs.
Civil Service morale is reported to be low following the announcement of cuts. Some Whitehall siders expect a drop in productivity as a result. Policy advice to ministers could also be halted with resources in doubt until plans for cuts are finalised.
Ministers will need to give clear directions to their permanent secretary about which policies are no longer deemed essential to the government’s programme, which could lead to entire policy areas being dropped entirely rather than partially reduced.
It is true that Civil Service numbers increased significantly in the wake of Brexit and the Covid pandemic. Ministers are hopeful that moving on from those two seismic events does give scope for reducing the Whitehall head count.
Identifying where the axe can fall without impacting frontline services is going to be a huge challenge. This is a debate that will continue to run far beyond the Chancellor’s statement and its aftermath this week.
