Civil service to axe 10,000 jobs, Chancellor Rachel Reeves says – as she eyes cutting £2bn in costs
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”.
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What to expect from the spring statement
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”.
Chancellor Rachel Reeves will give the spring statement next week. Pic: PA
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 UK and India have struck an “ambitious” trade deal that will slash tariffs on products such as whisky and gin.
The agreement will also see Indian tariffs cut on cosmetics and medical devices and will deliver a £4.8bn boost to the UK economy, according to the government.
It is also expected to increase bilateral trade by £25.5bn, UK GDP by £4.8bn and wages by £2.2bn each year in the long term.
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The news will be a welcome boost for the government following poor local election results, which saw Labour lose the Runcorn by-election and control of Doncaster Council to a resurgent Reform UK.
What will also be touted as a victory for Downing Street is the fact the government managed to strike a deal with India before the White House.
Speaking to reporters on Tuesday, Sir Keir Starmer hailed the “historic day for the United Kingdom and for India”.
“This is the biggest trade deal that we, the UK, have done since we left the EU,” the prime minister said.
What trade-offs are in the ‘historic’ deal with India?
This is the most significant trade deal Britain has negotiated since Brexit. It has been three years in the making with round the clock negotiations taking place in recent days.
Britain and India were coming from very different starting points. India’s economy is notoriously protectionist, with average tariff rates floating at around 130%. The UK, by comparison, is a very open economy. Our tariff rates hover around 5%. It means there were many prizes on offer for UK exporters, who are eyeing up a rapidly growing economy with increasingly powerful consumers.
The government will point to considerable concessions on 90% of tariff lines, 85% of them will go down to zero within the decade. It includes wins on whisky, which within ten years will be halved from the current 150%. No other country has managed to get India to move on that.
Of course there are trade-offs involved. The UK has agreed to lower tariffs on Indian textiles and apparel- a big employer in India. It will also make it easier for Indian professionals to come to the UK, something the Indians have been pushing hard on. However, there will be no formal changes to immigration policy.
Both countries have also refused to budge on certain industries. The UK has not lowered tariffs on milled rice, out of fear it could decimate native industries. The same applies to dairy for the Indians. Both sides have agreed quotas on cars for the same reason.
The Indians were pushing for an exemption for its high emission industries from the UK’s upcoming carbon tax. It is understood that will not happen.
“And it’s the most ambitious trade deal that India has ever done. And this will be measured in billions of pounds into our economy and jobs across the whole of the United Kingdom.
“So it is a really important, significant day. “
In a post on X, Indian Prime Minister Narendra Modi also welcomed the agreement as a “historic milestone” and added: “I look forward to welcoming PM Starmer to India soon.”
Negotiations for the deal relaunched in March after stalling under the Tory government over issues including trade standards and the relaxation of visa rules for Indian workers.
Overall, 90% of tariff lines will be reduced under the deal, with 85% of those becoming fully tariff-free within a decade.
Whisky and gin tariffs will be halved from 150% to 75% before falling to 40% by year ten of the deal, while automotive tariffs will go from more than 100% to 10% under a quota, the Department for Business and Trade (DBT) said.
For Indian consumers, there will be reduced tariffs on cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate and biscuits.
Meanwhile, British shoppers could see cheaper prices and more choice on products including clothes, footwear, and food products including frozen prawns as the UK liberalises tariffs.
India’s trade ministry said that under the deal, 99% of Indian exports will benefit from zero duty, Britain will remove a tariff on textile imports and Indian employees working in the UK will be exempt from social security payments for three years.
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Shadow trade secretary Andrew Griffith added: “It’s good to see the government recognise that reducing cost and burdens on businesses in international trade is a good thing, and that thanks to Brexit we can do.
“But it would be even better if they would apply the same reasoning to our domestic economy, where they remain intent on raising taxes, energy costs and regulatory burdens.”
The news was also welcomed by business group the British Chamber of Commerce, which said it was a “welcome lift for our exporters”.
William Bain, head of trade policy, said: ”Against the backdrop of mounting trade uncertainty across the globe, these tariff reductions will be a big relief. Products from Scotch whisky to clothing will benefit and this will give UK companies exporting to India a clear edge on increasing sales.
“The proposals for a follow-up investment treaty will also provide a solid platform to grow manufacturing and other sectors in our two economies.”
Representative Maxine Waters, ranking member of the House Financial Services Committee (HFSC), led Democratic lawmakers out of a joint hearing on digital assets in response to what she called “the corruption of the President of the United States” concerning cryptocurrencies.
In a May 6 joint hearing of the HFSC and House Committee on Agriculture, Rep. Waters remained standing while addressing Republican leadership, saying she intended to block proceedings due to Donald Trump’s corruption, “ownership of crypto,” and oversight of government agencies. Digital asset subcommittee chair Bryan Steil, seemingly taking advantage of a loophole in committee rules, said Republican lawmakers would continue with the event as a “roundtable” rather than a hearing.
HFSC Chair French Hill urged lawmakers at the hearing to create a “lasting framework” on digital assets, but did not directly address any of Rep. Waters’ and Democrats’ concerns about Trump’s involvement with the crypto industry. He claimed Waters was making the hearing a partisan issue and shutting down discussion on a digital asset regulatory framework.
This is a developing story, and further information will be added as it becomes available.
Veteran US Internal Revenue Service (IRS) official Trish Turner was appointed to lead the agency’s digital assets division following the departure of two key crypto-focused executives.
Turner, who has spent over 20 years at the IRS and most recently served as a senior adviser within the Digital Assets Office, will now head the unit, according to a report from Bloomberg Tax citing a person familiar with the situation.
Her promotion marks a significant leadership transition at a time when US crypto tax enforcement is facing both internal and external pressures.
On May 5, Sulolit “Raj” Mukherjee and Seth Wilks, two private-sector experts brought in to lead the IRS’s crypto unit, exited after roughly a year in their roles.
Mukherjee served as compliance and implementation executive director, while Wilks oversaw strategy and development. Wilks announced his departure on LinkedIn, while Mukherjee confirmed his decision in a statement to Bloomberg Tax.
“The reality is that federal employees have faced a very difficult environment over the past few months,” Wilks wrote. “If stepping aside helps preserve someone else’s job, then I am at peace with the decision.”
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IRS ramps up crypto scrutiny
The IRS has ramped up its focus on cryptocurrency in recent years, increasing audits and criminal probes targeting digital asset transactions.
It also attempted to introduce broad crypto broker reporting requirements, which drew sharp criticism from industry stakeholders and was eventually overturned by President Donald Trump.
Set to take effect in 2027, the so-called IRS DeFi broker rule would have expanded the tax authority’s existing reporting requirements to include DeFi platforms, requiring them to disclose gross proceeds from crypto sales, including information regarding taxpayers involved in the transactions.
Related: NFT trader faces prison for $13M tax fraud on CryptoPunk profits
Turner’s leadership also comes during a shift in Washington’s approach to crypto regulation.
With the return of the Trump administration in January, federal agencies have scaled back regulations perceived as burdensome to digital asset innovation.
For instance, the Securities and Exchange Commission has dropped or paused over a dozen enforcement cases against crypto companies. Additionally, the Department of Justice has announced the dissolution of its cryptocurrency enforcement unit, signaling a softer approach to the sector.
Internally, the IRS is also navigating instability. Over 23,000 employees have reportedly expressed interest in resigning after Trump reintroduced a deferred resignation policy, raising concerns about long-term staffing and morale within the agency.
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