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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What could be announced in the spring statement?
The spring statement – what you need to know
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.”
Sir Keir Starmer has declared it his “moral mission” to “turn the tide on the lost decade of young kids left as collateral damage”.
The government launches its 10-year youth plan today, which has pledged £500m to reviving youth services.
Culture Secretary Lisa Nandy has also warned that young people are now “the most isolated in generations” and face challenges that are “urgent and demand a major change in direction”.
But despite the strong language, the Conservatives have warned that “under Labour, the outlook for the next generation is increasingly bleak”.
Lisa Nandy is on Sky News from 7am – follow live
Launching the 10-year strategy, Sir Keir said: “As a dad and as prime minister, I believe it is our generation’s greatest responsibility to turn the tide on the lost decade of young kids left as collateral damage. It is our moral mission.
“Today, my government sets out a clear, ambitious and deliverable plan – investing in the next generation so that every child has the chance to see their talents take them as far as their ability can.”
What’s in the government’s strategy?
Under the plans, the government will seek to give 500,000 more young people across England access to a trusted adult outside their homes – who are assigned through a formal programme – and online resources about staying safe.
The prime minister said the plans will also “ensure” that those who choose to do apprenticeships rather than go to university “will have the same respect and opportunity as everyone else”.
The plan comes following a so-called “state of the nation” survey commissioned by Ms Nandy, which heard from more than 14,000 young people across England.
Launching the strategy, she said: “Young people have been crystal clear in speaking up in our consultation: they need support for their mental health, spaces to meet with people in their communities and real opportunities to thrive. We will give them what they want.”
Read more:
Child poverty strategy launched
Young people may lose benefits
Lisa Nandy will speak about the plan on Sky News on Wednesday morning. Pic: PA
But the Conservatives have criticised the government for scrapping the National Citizen Service (NCS), which ended in March this year.
Shadow culture secretary Nigel Huddlestone said “any renewed investment in youth services is of course welcome”, but said Labour’s “economic mismanagement and tax hikes are forcing businesses to close, shrinking opportunities while inflation continues to climb”.
The US Office of the Comptroller of the Currency has affirmed that national banks can intermediate cryptocurrency trades as riskless principals without holding the assets on their balance sheets, a move that brings traditional banks a step closer to offering regulated crypto brokerage services.
In an interpretive letter released on Tuesday, the regulator said banks may act as principals in a crypto trade with one customer while simultaneously entering an offsetting trade with another, a structure that mirrors riskless principal activity in traditional markets.
“Several applicants have discussed how conducting riskless principal crypto-asset transactions would benefit their proposed bank’s customers and business, including by offering additional services in a growing market,” notes the document.
According to the OCC, the move would allow customers “to transact crypto-assets through a regulated bank, as compared to non-regulated or less regulated options.”
The letter also reiterates that banks must confirm the legal permissibility of any crypto activity and ensure it aligns with their chartered powers. Institutions are expected to maintain procedures for monitoring operational, compliance and market risks.
“The main risk in riskless principal transactions is counterparty credit risk (in particular, settlement risk),” reads the letter, adding that “managing counterparty credit risk is integral to the business of banking, and banks are experienced in managing this risk.”
The agency’s guidance cites 12 U.S.C. § 24, which permits national banks to conduct riskless principal transactions as part of the “business of banking.” The letter also draws a distinction between crypto assets that qualify as securities, noting that riskless principal transactions involving securities were already clearly permissible under existing law.
The OCC’s interpretive letter — a nonbinding guidance that outlines the agency’s view of which activities national banks may conduct under existing law — was issued a day after the head of the OCC, Jonathan Gould, said crypto firms seeking a federal bank charter should be treated the same as traditional financial institutions.
According to Gould, the banking system has the “capacity to evolve,” and there is “no justification for considering digital assets differently” than traditional banks, which have offered custody services “electronically for decades.”
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From ‘Choke Point 2.0’ to pro-crypto policy
Under the Biden administration, some industry groups and lawmakers accused US regulators of pursuing an “Operation Choke Point 2.0” approach that increased supervisory pressure on banks and firms interacting with crypto.
Since President Trump took office in January after pledging to support the sector, the federal government has moved in the opposite direction, adopting a more permissive posture toward digital asset activity.
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CryptoUK, a UK-based cryptocurrency trade association, has announced that it will join The Digital Chamber, a US crypto policy advocacy group, potentially marking a significant cross-collaboration on digital asset regulation between the two countries.
In a Tuesday notice, CryptoUK said its team would fall under The Digital Chamber’s umbrella as part of a “unified, cross-border advocacy platform.” Both groups have worked in their respective countries to promote policies favoring the cryptocurrency and blockchain industry, starting with The Digital Chamber in 2014 and CryptoUK in 2018.
“CryptoUK has always aspired to ensure we are driven by policy-led issues, member collaboration, and regulatory engagement,” said Su Carpenter, CryptoUK’s executive director.
The partnership between the two advocacy groups comes as US lawmakers move forward on negotiations to pass a digital asset market structure bill, aiming to establish regulatory clarity for the industry. In the UK, policymakers announced plans to collaborate with their counterparts in the US to explore crypto laws and regulations.
Related: Digital Chamber seeks to guide crypto policy across US states
US-based crypto advocacy organizations, such as The Digital Chamber, have garnered support from former regulators and members of Congress as the Trump White House directs policies toward the industry. Among these groups are the Solana Policy Institute, the Blockchain Association, the Crypto Council for Innovation, and the American Innovation Project.
UK central bank moves forward on stablecoins
On Nov. 10, the Bank of England released a consultation paper to propose a framework for “sterling-denominated systemic stablecoins.” The move by the country’s central bank marked a step toward the UK seeming to play catch-up to the US, where the government passed a law regulating payment stablecoins in July.
Bank of England Deputy Governor Sarah Breeden signaled before the publication of the paper that the central bank’s actions were in response to the US advancing stablecoin policies, and it was “really important” to be synchronized on rules.
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