The civil service will be told to slash more than £2billion a year from budgets by the end of the decade as Rachel Reeves desperately tries to balance the books.
Administrative costs must fall 15 per cent in Whitehall by the end of of the decade under a new drive, with jobs expected to go.
The order has emerged days before the Chancellor’s crucial Spring Statement.
Experts believe she needs to fill a £10billion black hole in the public finances – or possibly more – despite already having announced £5billion in curbs to benefits.
Her Autumn Budget plans have been trashed by an alarming slowdown in economic growth and rising debt interest costs – with fears the national insurance raid and Donald Trump’s trade war are about to make things worse.
But Ms Reeves has flatly ruled out increasing taxes again in the this package, meaning the money will need to be found from spending cuts.
That could fuel a burgeoning revolt among Labour MPs horrified at ‘austerity’.
Plans for cuts to civil service budgets have emerged days before the Chancellor’s (pictured) crucial Spring Statement
‘We’re not going to be doing tax raising,’ Ms Reeves told the Sun on Sunday.
‘We did have to put up some taxes on businesses and the wealthiest in the country in the Budget,’ she said of the Autumn Budget last year.
‘We will not be doing that in the Spring Statement.’
The Cabinet Office will tell departments to cut their admin budgets – such as for HR, policy advice and office management – by £2.2billion a year by 2029-30.
They will first be asked to reduce budgets by 10 per cent by 2028-29 in a bid to save £1.5billion. The head of the FDA union said that equates to nearly 10 per cent of the salary bill for the civil service.
Departments will receive instructions in a letter from Chancellor of the Duchy of Lancaster Pat McFadden in the coming week.
A Cabinet Office source said: ‘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.
‘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.’
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 front line 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.
‘Whilst we welcome the move away from crude headcount targets, the distinction between back office and front line is an artificial one.
‘The budgets being cut will, for many departments, involve the majority of their staff and the £1.5billion savings mentioned equates to nearly 10 per cent of the salary bill for the entire civil service.’
He urged ministers to set out what areas of work they are prepared to stop as part of spending plans.
‘The idea that cuts of this scale can be delivered by cutting HR and comms teams is for the birds.
The £132billion total for the year to February is £20.4billion more than the Treasury’s OBR forecast as recently as October
‘This plan will require ministers to be honest with the public and their civil servants about the impact this will have on public services.’
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 move comes after Sir Keir Starmer vowed to reshape the ‘flabby’ state and slash the cost of bureaucracy, and ahead of the Chancellor’s spring statement.