Rachel Reeves is facing a war with unions amid claims as many as 50,000 public sector workers would lose their jobs under plans to cut Civil Service running costs by 15%.
The Chancellor said Labour was looking to slim down the sector, which she said had swelled during the Covid-19 pandemic, by slashing its “back office functions, the administrative and bureaucracy functions” by the end of this parliament.
The size of Britain’s Civil Service fell by 19% between 2010 and 2016 to a workforce of around 384,230. But it began ballooning following the Brexit referendum, as policy specialists were drafted in to prepare for the UK exiting the EU.
The number of full time employees in the sector reached a high of 515,085 in September 2024 - a rise of 18,970 (3.8%) compared to a year prior, according to the Institute for Government. While there was a small drop of 0.1% drop in the number of staff in December, the service still has 514,395 full time employees.
Transport Secretary Heidi Alexander on Monday denied that the Government was “setting a target” for job cuts, but insisted the Civil Service must be “leaner” and more “agile”.
"We're not setting a target,” she told Times Radio.
“Boris Johnson did that and said he wanted to reduce the number of people working in the civil service and the numbers went up by 130,000.
“What we want to do is make the state more agile.
“We do think it should be leaner and we think we can make better use of technology and AI in how we provide public services and that is true for central government departments as much as it's true for other parts of the public service.”
Ms Reeves has denied the plans are a return to the austerity overseen by Conservative predecessors, pointing to money poured into capital spending and the NHS.
However, the leader of the biggest Civil Service union said any cuts will hit frontline services after years of underfunding by previous Conservative governments.
Public and Commercial Services union general secretary Fran Heathcote said: “The impact of making cuts will not only disadvantage our members but the public we serve and the services they rely on.
“We've heard this before under Gordon Brown when cuts were made to backroom staff and consequences of that was chaos.”
The Chancellor told Sky News she was “confident” Civil Service numbers could be reduced by 10,000, but one union chief said the cuts could lead to some 50,000 staff being let go.
FDA general secretary Dave Penman told ITV: “We're talking about something that's close to 10% of the entire salary bill of the Civil Service over the next three to four years.
“The Civil Service is about half a million staff. So that could be up to 50,000 staff who would go.”
It comes after a backlash, including in the party’s own ranks, to cuts to welfare spending and a decision to slash the aid budget to fund a boost to defence spending, and ahead of the Chancellor’s spring statement on Wednesday.
On Sunday, Ms Reeves was asked about some people on the left of the party who think she is “wielding the axe” and fear that Labour austerity is on the table.
She told the BBC’s Sunday with Laura Kuenssberg: “Last year, I put £100 billion more into capital spending than the previous government had committed to, we put more than £20 billion into the National Health Service.
“That is a far cry from what we’ve seen under Conservative governments in the last 14 years.”
She said any budgets to unprotected departments, such as the Ministry of Justice, would be set out in the spending review in June.
“We’ll set all that out when we do the spending review, but we can’t just carry on like we have been spending on the same things that the previous government spent on.
“People want to know we’re getting value for money, when people are paying more in tax that they’re getting more in return.”
She also said that anyone who runs a business will agree that plans to cut Civil Service costs will be “more than possible” given advances in technology and AI.
The Cabinet Office will tell departments to cut their administrative budgets by 15%, which is expected to save £2.2 billion a year by 2029-30.
“We are, by the end of this Parliament, making a commitment that we will cut the costs of running government by 15%,” Ms Reeves said.
Ms Reeves said the size of government “increased massively” during the pandemic.
“But the size of the Civil Service hasn’t come back during that period. So, we now need to make sure that we do realise those efficiency savings so we can invest in the priorities.”
She said the cuts would come from “the back office functions, the administrative and bureaucracy functions”.
Union bosses have argued there is no simple distinction between the “back office” and the “front line”.
Mike Clancy, general secretary of Prospect, said: “The Chancellor has talked about undertaking a zero-based review of spending, this must include a realistic assessment of what the Civil Service doesn’t do in future as a result of these cuts.
“Public servants in ‘back office’ and ‘frontline’ role will both be critical to delivering on the Government’s missions and the Government must recognise that many civil servants are working in ‘frontline’ roles.”
Looking ahead to the spring statement, Ms Reeves said she would not pre-empt the Office for Budget Responsibility’s forecast she will be responding to.
“But the world has changed,” the Chancellor told Sky News’ Sunday Morning with Trevor Phillips.
“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.”
The Chancellor has repeatedly said she will not budge from her fiscal rules, which rule out borrowing to fund day-to-day spending.
This has led to mounting pressure over how to balance the books – by raising taxes or cutting spending – amid disappointing growth figures and higher-than-expected borrowing.
