UK Finance Minister Rachel Reeves has unveiled plans to reduce the cost of running the government by 15% within four years as she navigates the country’s strained public finances. The announcement comes ahead of her highly anticipated Spring Statement on Wednesday, where she is expected to outline significant spending cuts across various government departments.
Key Cost-Cutting Measures
“We are, by the end of this parliament, making a commitment that we will cut the costs of running government by 15 percent,” Reeves stated in an interview with the BBC.
According to reports, this reduction could lead to annual savings of £2.2 billion ($2.8 billion) within Britain’s civil service, which currently employs more than 500,000 people. Reeves confirmed that while individual departments will determine the specifics of the cuts, the workforce could see a reduction of around 10,000 civil service jobs.
“I would rather have people working on the front line in our schools and hospitals, in our police, rather than in back-office jobs,” she told Sky News.
Fiscal Rules and Spending Commitments
Reeves reiterated her commitment to maintaining fiscal discipline when delivering her financial update, emphasizing two key rules:
- Not borrowing to fund day-to-day expenses.
- Ensuring that debt falls as a share of GDP by 2029-2030.
With a pledge to avoid tax increases, adhering to these rules may necessitate further spending reductions in some departments.
Economic Challenges and Global Shifts
The Labour government, in power since July, has struggled to revitalize the British economy—a challenge further complicated by shifting global dynamics, including Donald Trump’s return to the White House.
“The world has changed,” Reeves told Sky News. “We can all see that before our eyes, and governments are not inactive in that—we’ll respond to the change and continue to meet our fiscal rules.”
Official data released on Friday revealed that public sector net borrowing— the gap between government spending and tax revenue—grew last month, limiting Reeves’ flexibility in balancing the books.
Controversial Welfare Cuts
On Tuesday, the government announced cuts to disability welfare payments, aiming to save more than £5 billion annually by the decade’s end. Despite this, Reeves insisted there would still be “real-terms” increases in total public spending every year until the current parliament ends in 2029.
With her upcoming financial statement, Reeves faces the challenge of balancing fiscal responsibility with public service commitments while addressing the country’s ongoing economic struggles.
