Chancellor Rachel Reeves has announced a plan to find 5% in “efficiency savings” within government spending, aiming to prioritize key public services for future funding. This initiative is part of a broader review to set departmental budgets for the coming years, which will conclude in June 2024.
Reeves emphasized that while overall departmental spending will increase, the government must crack down on wasteful spending to ensure money is allocated effectively to high-priority areas. These include building more homes, reducing hospital backlogs, and improving early childhood education, all of which align with the government’s “plan for change.”
The Treasury will work closely with departments to ensure that spending supports these priorities, with some areas possibly downgraded if they are deemed less critical. Despite the increase in overall spending, departments will be expected to identify savings over the three-year review period, allowing them to reallocate funds within their budgets.
While the government has committed to increased funding in areas like defense, which will see a rise to 2.5% of national income, Reeves argued that ensuring value for money will allow for essential public service investments without needing tax increases.
The Treasury has also set up a new internal unit, the Office for Value for Money, which will advise the chancellor on where savings can be made. Additionally, experts from various sectors, including banking and business, will help scrutinize departments’ spending plans.
Reeves’ announcement comes amid political debate over how to balance government spending with public sector productivity. Critics, including Conservative and Liberal Democrat politicians, have raised concerns about the potential impact of such efficiency savings on sectors like social care. However, Reeves assured that her goal is to prioritize the needs of the British people without resorting to austerity-style cuts seen under previous governments.