Spending review: No new cash unless departments cut by five per cent
Government departments won’t receive any cash for new projects unless they meet the Treasury’s requirement of a five per cent spending cut, Darren Jones has said.
The chief secretary to the Treasury spoke at the Institute for Government (IfG) think tank’s conference on Tuesday about the need for a “reckoning” with state spending.
Jones wrote to government departments last month to kick off the multi-year 2025 spending review, which the government pushed back to June after originally giving a deadline of April.
And he told the conference that no new money for fresh projects would be available to ministers who didn’t meet No11’s savings targets, with the review expected to fix departmental budgets for the three years from 2026-27 to 2028-29.
“We are long overdue a reckoning with government spending and a realistic appraisal of how we are using taxpayers money… I just do not accept the idea that we should just keep spending more and more money for continued poor outcomes,” he said.
“Taxpayers and the users of public services obviously deserve better. We therefore won’t settle for doing things the same and hoping for a different result, we have to do things differently, and we will.”
And he added: “That is why funding from the Treasury to support new priorities will only be made available to departments that have first fulfilled the requirements of our zero-based review and met the minimum five per cent savings and efficiency target required in this spending review process.”
The cabinet has already been told it will have to be “ruthless” in finding savings in departmental budgets, as Chancellor Rachel Reeves has come under pressure over the impact of her Budget on the economy amid rising costs of government borrowing.
Outgoings must reflect the government’s priorities under its ‘plan for change’ – which formed the backbone of Labour’s election manifesto, and focused on growth, the NHS, schools, clean energy, and policing.
Departments will also see their plans for upcoming spending interrogated by external experts, including bankers and academics, in what’s been dubbed ‘challenge panels’.