UK (Parliament Politics Magazine) – Rachel Reeves plans to unveil the biggest UK spending cuts, targeting billions in Whitehall budget reductions, as economists warn of public service impacts.
In next week’s spring statement, Chancellor Rachel Reeves will outline the largest spending reductions since austerity, dismissing tax increases as a solution to her budget deficit.
Rachel Reeves to reveal billions in Whitehall budget cuts
In a major budgetary shift, Chancellor Rachel Reeves will inform MPs next Wednesday of proposals to slash Whitehall budgets by billions of pounds, exceeding earlier projections. The cuts could see some departments lose as much as 7% of their funding over the next four years.
She will outline Whitehall’s average spending levels for the next few years, with detailed department allocations to be disclosed in June’s spending review.
What did economists say about Labour’s spending cuts?
Despite Labour’s assurance to restore public services, economic leaders warn that the newly proposed reductions will further erode the industries. The announcement follows a £5bn reduction in benefit payments, primarily targeting disabled individuals.
A new research from the Resolution Foundation think tank indicates that some disabled individuals could face a loss of around £10,000 per year in benefits by the end of the decade due to changes announced on Tuesday.
What did Whitehall sources say about government cuts to public services?
One Whitehall source stated,
“The government has been clear that departments will have to find more efficiencies. That is why Wes Streeting [the health secretary] has cut NHS England, that is why Liz Kendall [the work and pensions secretary] has made reductions to welfare payments.”
Another insider said,
“I don’t know how much longer we can go on pretending this is not austerity when the reality is we’re making cuts to vital public services such as police and prisons.”
What did Ben Zaranko say about the potential impacts of government cuts on public services?
Ben Zaranko from the Institute for Fiscal Studies (IFS), stated,
“The government will be hoping that the short-term cash injection provided last year, and efficiency improvements as public services continue to recover from the pandemic, will be enough to deliver service improvements even if money is tight.”
He said, “But we’re in a very different world to 2010 and, even though the pace of cuts would be substantially slower than in the peak austerity years, it would still represent the steepest cuts since 2019.”
Mr Zaranko added,
“It is difficult to see how this could be delivered without some adverse impacts on public services and those who rely on them.”
Impact of latest economic struggles on the chancellor’s upcoming budget statement
The chancellor’s upcoming statement was initially expected to provide a simple update to the official economic forecasts from the Office for Budget Responsibility.
The OBR will present its final forecasts on Friday, including an assessment of how close the chancellor is to fulfilling her pledge of a balanced day-to-day budget and a reduction in debt by 2029-30.
Reports indicate that officials may seek a lower rise in Whitehall budgets, aiming for an average increase of 1.1% annually post-2025-26, instead of the 1.3% increase announced last year.
Are further spending cuts causing alarm among cabinet ministers?
The prospect of additional spending cuts is already raising concerns among cabinet ministers.
- Ed Miliband, the energy secretary
- Yvette Cooper, the home secretary
- Angela Rayner, the deputy prime minister
- Shabana Mahmood, the justice secretary
These above ministers have voiced fear about additional spending reductions last week in a cabinet meeting.
Is the Department for Transport planning cuts to major infrastructure projects?
The Department for Transport plans reductions to the Oxford-Cambridge rail project, which Ms Reeves had secured funding for only two months ago. Officials have also suggested seeking private investment to support the long-awaited Lower Thames Crossing, a £9bn road tunnel connecting Essex and Kent.
A spokesperson for the transport department stated,
“This is speculation. East West Rail is already well underway with the infrastructure now in place on the first phase of the line for services between Oxford and Milton Keynes.”