The chancellor has said she is “confident” 10,000 civil service jobs can be axed after numbers ballooned during the pandemic – as she seeks to cut more than £2bn from the budget.

Rachel Reeves has told Sky News she is certain the government can deliver those cuts to “back office jobs” to free up resources for “front line” services.

She is expected to unveil a raft of spending cuts during the spring statement on Wednesday – and has reportedly ruled out tax rises.

The FDA union has said the government needs to be honest about the move, first reported by The Telegraph, and the “impact it will have on public services”.

Reeves concedes cuts won’t be pain-free

Appearing on Sky’s Sunday Morning With Trevor Phillips programme, the chancellor was pushed repeatedly for a precise number of civil service jobs she wants to cut, and she eventually replied: “I’m confident that we can reduce civil service numbers by 10,000.

“And during COVID, there were big increases in the number of people that were working in the civil service.

“That was the right thing to do to respond to those challenges. But it’s not right that we just keep those numbers there forever.”

Ms Reeves said there are “a number” of civil service jobs that can be done by technology, while “efficiencies” can also be made by getting rid of quangos.

Asked what roles she expects to no longer need, she said: “It will be up for every department to set out those plans.

“But I would rather have people working on the front line in our schools and our hospitals and our police, rather than back office jobs.”

She said cuts will be made to things like travel budgets, spending on consultants, and also on communications.

She conceded that the cuts will not be pain free, but says she would rather spend money to “deliver better public services”.

Civil service departments will first have to reduce administrative budgets by 10%, which is expected to save £1.5bn a year by 2028-29.

The following year, the reduction should be 15%, the Cabinet Office will say – a saving of £2.2bn a year.

The chancellor has also said she won’t be putting up taxes on Wednesday, telling The Sun On Sunday: “This is not a budget. We’re not going to be doing tax raising.”

Ms Reeves added: “We did have to put up some taxes on businesses and the wealthiest in the country in the budget [in the autumn].

“We will not be doing that in the spring statement next week.”

The chancellor has repeatedly insisted she won’t drop her fiscal rules which preclude borrowing to fund day-to-day spending.

Civil service departments will receive instructions from the Chancellor of the Duchy of Lancaster Pat McFadden in the coming week, The Telegraph reported.

“To deliver our Plan for Change we will reshape the state so it is fit for the future. We cannot stick to business as usual,” a Cabinet Office source said.

“By cutting administrative costs we can target resources at frontline services – with more teachers in classrooms, extra hospital appointments and police back on the beat.”

The move comes after the government last week revealed welfare cuts it believes will save £5bn a year by the end of the decade.

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FDA general secretary Dave Penman said the union welcomed a move away from “crude headcount targets” but that the distinction between the back office and frontline is “artificial”.

“Elected governments are free to decide the size of the civil service they want, but cuts of this scale and speed will inevitably have an impact on what the civil service will be able to deliver for ministers and the country…

“The budgets being cut will, for many departments, involve the majority of their staff and the £1.5bn savings mentioned equates to nearly 10% of the salary bill for the entire civil service.”

Ministers need to set out what areas of work they are prepared to stop as part of spending plans, he said.

“The idea that cuts of this scale can be delivered by cutting HR and comms teams is for the birds. This plan will require ministers to be honest with the public and their civil servants about the impact this will have on public services.”

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Mike Clancy, general secretary of the Prospect union, warned that “a cheaper civil service is not the same as a better civil service”.

“Prospect has consistently warned government against adopting arbitrary targets for civil service headcount cuts which are more about saving money than about genuine civil service reform.

“The government say they will not fall into this trap again. But this will require a proper assessment of what the civil service will and won’t do in future.”

The chancellor says she “rejects” new analysis that suggests the average family could be £1,400 a year worse off by the end of the decade.

Rachel Reeves told Sky’s Sunday Morning With Trevor Phillips programme that living standards will “increase during the course of this parliament”.

She insisted there has already been a “sustained increase” since Labour came to power last year.

The analysis, by the Joseph Rowntree Foundation (JRF), says frozen tax thresholds, rising mortgage and rent costs, and falling real earnings are all predicted to take their toll on living standards in Britain.

For the poorest third, living standards are forecast to drop twice as much compared with middle and high earners.

The charity believes the government will miss one of its stated “milestones” – to raise living standards across the UK before the next election.

It says the £1,400 drop by April 2030 means a 3% fall in disposable income for the average family, while the lowest income households will be £900 per year worse off – a 6% fall.

The situation could be even bleaker for some, as the analysis doesn’t account for the recently announced £5bn in cuts to disability benefits.

Average earnings are also set to fall by £700 per year by 2030, according to the JRF.

The charity – which conducts research into reducing poverty – says it came up with its prediction by modelling forecasts from the Bank of England and others.

Chancellor ‘confident we will see living standards increase’

Asked by Trevor Phillips for her response to the findings, the chancellor said she “rejects” them.

Ms Reeves argued living standards in the last parliament “were the worst ever on record”, and said the independent Office for Budget Responsibility (OBR) said in October they are expected to increase, while wages are currently rising at twice the rate of inflation.

“I’m confident that we will see living standards increase during the course of this parliament,” the chancellor insisted, adding there has been a “sustained increase” since Labour was elected.

“We’ve got to do more, absolutely, in terms of raising living standards. But this government has already got started in delivering our plan for change.”

But the JRF says the government welfare cuts are “wrong” and counterproductive and wants the plan scrapped.

It also urges a new “minimum floor” for Universal Credit to help address hardship, and believes the government should instead raise cash by increasing tax on wealth and investments.

The analysis comes three days before the chancellor’s spring statement in which more cuts are set to be announced in a bid to improve the country’s finances.

Some £2bn in cuts to the civil service are expected – but Ms Reeves says they will not affect front line services.

She has also confirmed to The Sun On Sunday that she won’t be announcing any new tax rises.

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Her speech will be in response to the OBR, which on the same day will publish its own forecasts on the economy, the cost of living and government finances.

Growth is Labour’s top priority, but the Bank of England recently halved its growth outlook for the UK economy this year to 0.75%.

There are also worries next month’s hike to employer national insurance and the minimum wage will create further drag on investment.

In recent months, the chancellor has become a lightning rod for criticism.

She been accused of ushering in a new era of austerity and channelling George Osborne with governments cuts to welfare, winter fuel and international aid.

She’s been described as a new Liz Truss, with her focus on growth and tearing up regulation.

She’s been urged to hike taxes for the wealthy by left-wing Labour MPs.

She’s been under pressure to loosen her self-imposed fiscal rules – even Lord Blunkett, the former Labour home secretary, has called on her to allow more government borrowing.

As for the Tories, they claim she’s facing a crisis of her own making after trash-talking the economy and damaging business confidence by hiking national insurance on employers.

But if the pressure is taking its toll on Rachel Reeves, it didn’t show this morning.

She breezed into the Sky News Westminster studio for her interview on Sunday Morning With Trevor Phillips and positively beamed when he asked about the Office for Budget Responsibility (OBR) preparing to slash its growth forecasts, reportedly by as much as half, and the severity of the country’s financial situation.

She insisted the “world has changed” since her October budget and said the government is responding through greater investment in defence and security.

The chancellor has clearly decided to come out fighting.

She’s wedded to her fiscal rules, she’s sticking to her promise not to cut taxes, and determinedly standing by the decisions she took in the October budget.

“I promised at the general election to bring stability back to the economy – and as a result of that stability, interest rates have been cut three times since the general election,” she said.

“That’s only been possible because we put our public finances on a firm footing, and we’ve also put our public services on a firm footing.”

There was no real acknowledgement that cuts in interest rates have now stalled and economic growth is flatlining.

She brushed off the prospect of a more negative outlook by deferring again and again to the as-yet-unpublished OBR forecast.

“I know that we need to go further and faster in delivering economic growth and seeing public services improve – but there are no shortcuts here,” she said. “It’s not possible within just a few months to reverse more than a decade of economic stagnation, but we are making the changes that are necessary to bring money into the economy.”

It’s clearly part of the chancellor’s job to talk up the economy they’re responsible for. But the strategy here was to show no hint of weakness.

The spring statement is already done and dusted as it had to be submitted to the OBR last week for its forecasts to be prepared and printed.

So there’s no way back now on the likely cuts to come.

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We’re expecting the chancellor to set out savings of around £10bn, including the £5bn of welfare savings announced last week.

Today she confirmed the civil service will be forced to cut £2bn a year by slashing administration costs by the end of the decade – although the savings will be used to protect frontline services from cutbacks.

She told me people who were describing the event as an emergency budget – which implies tax changes – are going to look “very silly” when they hear what she’s got to say on Wednesday.

That’s a dig at shadow chancellor Mel Stride and the Tories, who’ve been doing their best to make the “emergency budget” moniker stick.

Read more:
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Benefits system changes explained

You’d think they might want to avoid reminding people of the last emergency budget, which was Jeremy Hunt’s effort to clean up the shrapnel left behind by Liz Truss’s mini budget implosion.

But for Rachel Reeves, it’s an ever-present reminder of what can go wrong.