Downing Street has warned ministers to make their departments more productive rather than asking for more money, as the fractious negotiations over this month’s spending review enter their final stages.
Officials said on Thursday that many ministers would have to accept tough cuts to their departments as part of the spending review, which will be announced alongside the budget on 30 October. Any of those wanting to protect important public services would have to make them more cost-efficient, No 10 added.
The warning comes after three cabinet ministers wrote to the prime minister complaining about the cuts they were being asked to make by the chancellor, Rachel Reeves, and her chief secretary, Darren Jones.
Downing Street said on Thursday: “It is only by growing the economy that we can have the tax revenues needed to fix the NHS and rebuild Britain and make people better off.
“But this also means that public services and departments have to become more productive, and that public services will need reform. Not every department will be able to do everything they want to. There will be tough decisions taken, there will be tough conversations, but ultimately, this government has been very clear that it will fix the foundations.”
Treasury ministers have been negotiating the details of the spending review for weeks, but with less than two weeks to go until it is announced, several departments have not yet agreed their individual settlements. Reeves sent her “major measures” to be assessed by the Office for Budget Responsibility on Wednesday night, but does not have to send the OBR details of what each individual department is getting.
“The negotiations on individual settlements can go up until midnight the night before the budget,” one government source said.
It emerged on Wednesday that three cabinet ministers – the housing secretary, Angela Rayner, the transport secretary, Louise Haigh, and the justice secretary, Shabana Mahmood – have written to the prime minister voicing their concerns.
The Guardian revealed this month that ministers are particularly aggrieved at having to make cuts of 10% or more to their capital budgets, even though Reeves has emphasised the importance of more government investment in the long term.
The chancellor is planning to change the government’s definition of debt so that she can borrow more for infrastructure in the longer term, but that will not help tackle the immediate £22bn shortfall that Reeves has identified in this year’s accounts.
One Whitehall official said: “The problem we have is that we are trying to tell the public we want to invest for the long term, but the first thing we are doing is cutting back on capital spending. I don’t see how we can sell that message.”
Sources in the Treasury and Downing Street have brushed off suggestions that the letters mark an unusual escalation in the talks over spending cuts. “It’s totally normal, happens every time,” one said. Another dismissed the letters as “the usual theatre” that accompanies such talks.
The prime minister’s spokesperson said: “Engagement between departments, Treasury and No 10 ahead of a budget and a spending review, are clearly a standard part of the process where departments will obviously set out their priorities and the challenges that they’re facing.”
