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Government departments have reportedly been asked to identify 20 per cent of their lowest priority spending areas as Rachel Reeves eyes up billions of pounds in cuts ahead of the Spring Statement.
The chancellor presented earmarked savings to the government’s spending watchdog, the Office for Budget Responsibility (OBR), on Wednesday before she delivers her statement on 26 March.
Treasury sources have said several factors have impacted plans presented under Ms Reeves’ October budget, with increased borrowing costs and weak economic growth likely to require further spending cuts in order to meet commitments on managing the public finances.
Curbing the cost of welfare and a drive for greater efficiency across Whitehall are expected to contribute the bulk of the savings.
ITV’s deputy political editor Anushka Asthana reports senior sources across government have told her they have been asked to identify the 20 per cent of spending within their departments that they see as lowest priority.
The hosts of ITV News Talking Politics podcast also wrote that the Department for Work and Pensions was drawing up plans to overhaul disability and health benefits to significantly reduce the number of people who are judged as unable to work.
That will mean that far fewer disabled people will receive higher benefit levels, and many more will be expected to search for work.
Work and pensions secretary Liz Kendall, who is expected to set out welfare reforms within weeks, told cabinet colleagues on Tuesday there are 2.8 million people not in work due to ill-health and one in eight young people not in education, training or employment.
She told them this is “holding back the economy” and is “bad for people’s wellbeing and health”, with the sickness and disability bill for working-age people rising by £20 billion since the pandemic and forecast to hit £70 billion over the next five years.
A Health and Disability Green Paper will set out plans to supports those who can work back into jobs, rather than write them off, she said.
A Government insider told the BBC: “Clearly the world has changed a lot since the autumn Budget. People are watching that change happen before their eyes.
“The Office for Budget Responsibility will reflect that changing world in its forecasts later this month and a changing world will be a core feature of the Chancellor’s response later this month.”
Elsewhere, the i paper has reported that Ms Reeves has cut up to £1.4bn in spending for modernising schools and hospitals to pay for a pay deal with trade union. The agreement was made with the unions in July.
