Reuters
Ministers have been urged to stop spending that does not contribute to the Government's priorities, with Chancellor Rachel Reeves promising to take “an iron fist against waste”.
Reeves will ask departments to identify efficiency savings equivalent to 5% of their current budgets, as part of a review of their spending plans for coming years.
Budgets will also be reviewed by panels, including former high-ranking bankers, to advise on necessary spending.
Conservatives said Reeves had so far failed to make the public sector more efficient or cut social spending.
The Treasury says the spending review will be “zero-based”, meaning departments will have to re-justify all their spending every year.
It will set the daily expenses of the departments between 2026 and 2029, as well as the investment budgets for the next five years.
The guidelines will state that they will be “advised to stop spending that does not contribute to a priority”.
Last week, Prime Minister Sir Keir Starmer outlined his plan for change, including the six steps he wanted to take before the next election.
These include building 1.5 million homes in England and treating 92% of NHS patients in 18 weeks.
The Treasury says the chancellor will “work with departments to prioritize spending that supports the steps needed to deliver the plan”, indicating that some areas not deemed a priority will be downgraded.
Budgets will be reviewed by panels including former senior executives from Lloyd's Banking Group, Barclays Bank and the Co-operative Group, working alongside think tank experts, academics and others from the private sector .
The Treasury says the panels will “provide an independent perspective on what government spending is and is not necessary”.
“The previous government allowed millions of pounds of taxpayers’ money to be wasted on projects that were poor value for money,” Reeves said.
“We will not tolerate it. I said I would have an iron fist on public finances and that includes taking an iron fist against waste.”
As an example of the type of program the government intends to eliminate, Treasury cited a program that placed social workers in schools.
It said the program had cost £6.5m but an evaluation had found no evidence of a “positive impact on social service outcomes”.
Shadow Treasury Minister Richard Fuller said: “Providing value for money for the taxpayer is a noble aim.
“But Rachel Reeves' record so far has been to hand out anti-inflationary pay rises to Labor union payers, without imposing anything in return, and without carrying out any reforms to public sector productivity or workers. social spending.”
Liberal Democrat Treasury spokeswoman Daisy Cooper urged the government not to cut social spending, warning it would be a “false economy that would only put people at risk and harm public finances”.
She said billions of pounds could be “saved in the NHS budget by properly investing in social care”.
In her October Budget, the Chancellor announced tax rises of £40 billion, much of which will hit businesses.
At the time, Reeves said it was “not the sort of Budget we would want to repeat” but argued it was necessary to plug a £22 billion “black hole” in the public finances left by the previous Conservative government.
She has since said she would not need to raise taxes to “top up” government spending.
Last week the Prime Minister said: “I don't want to suggest that we're going to keep coming back for more because that's not the plan.
“What I can’t do is tell you that there are no unforeseen circumstances in the future that wouldn’t result in any change.”
“If you look at Covid and Ukraine,” Sir Keir added, “everyone knows there are things we can't see now, but I can tell you our intention was to get things right difficult in this budget, not going backwards.”
