Rachel Reeves’ spending review aims for a smaller, more efficient civil service

A succession of ministers have attempted to cut the civil service or boost its efficiency, with Rachel Reeves becoming the latest chancellor to aim for a smaller and more efficient government.

There is certainly space to do so, with the latest figures showing that the number of officials has grown again. The 516,455 (full-time equivalent) civil servants the government now employs is the highest level in almost 20 years and marks a decade of virtually uninterrupted growth since 2016.

Much of this expansion has been driven by pressures on frontline services. By 2024, growth in the ‘operational delivery’ profession – roles such as prison officers and immigration caseworkers – accounted for about half of the total growth of the civil service. And both Brexit and the pandemic, which clearly demanded more civil servants, triggered hiring sprees.

But this does not justify the extent or duration of the expansion. The rapid growth seen during the pandemic, for example, did not unwind as the health emergency did. And the central Whitehall policy profession has continued to expand at a rapid pace.

The spending review sets the stage for a smaller civil service

For months, ministers have said they want to reduce the size of the civil service, and Reeves’s spending review set out some specifics. Departmental administration budgets will be cut by 11% in real terms between 2025/26 and 2028/29, and by a (perhaps implausible) further 5% in 2029/30 alone.

With civil servants’ salaries a major chunk of administration budgets, these cuts will force departments to prioritise and make decisions about the size and composition of their workforces. We can expect to see more voluntary (and perhaps compulsory) redundancy schemes, and indeed the spending review confirmed £150m for civil service exit schemes.

Successive governments have tried to save money by cutting the civil service. This invariably turns out to be more difficult than ministers first imagine, but there are signs that this attempt could bear more fruit. 

First, the government is taking the sensible approach of defining the savings it wants to achieve before working out what that means for a secondary measure such as headcount. Second, translating lower administration budgets into tangible outcomes will come in the form of the civil service’s first ever strategic workforce plan, due to be published later this year.

This plan is a significant opportunity. It will be the first time the government has taken a considered, long-term view of how its civil service workforce needs to change over the coming years. Now that the spending review has set the financial envelope for each department’s administrative spend, the plan can take that starting point and factor in future demands on the state, as well as the savings available through further digitisation and AI adoption.

The government now needs to get on with turning the plan into reality. Cat Little, permanent secretary at the Cabinet Office and the chief operating officer of the civil service, first announced the plan at the Institute last year. Given that reductions to admin budgets have long been trailed, it is disappointing that the plan was not published alongside the spending review. Ministers and civil service leaders must ensure that the timeline does not slip further.

Ministers are also targeting ambitious efficiency savings

Requiring savings from administration budgets is one way to cut cost from the civil service. But as civil servants themselves will say, there is also plenty of room to make the civil service more efficient.

To that end, a raft of ‘Departmental Efficiency Plans’ were published alongside the spending review – a product of the Treasury’s Office for Value for Money working with departments. By 2028/29, the government is factoring in 4% annual efficiency savings in departments’ day to day spending – ranging from 0.8% in the Department for Education to 13.1% in HMRC. That these targets are backed up by individual departmental efficiency plans is welcome, as is a commitment to publish new plans and targets every two years and to expect 1% further efficiencies in all departments in all future years.

But there are uncertainties. As with the administration budget cuts, the efficiency savings for some departments are weighted towards the end of the spending review period – a familiar tactic and one which can be justified as savings multiply over time. But it also raises some questions over plausibility. The departmental plans are also vague in places, and it is not clear whether the savings are all truly efficiencies – or if they include the administration budget cuts, or simply lower spending in some areas. Nevertheless, these plans – representing a long-term, sustained focus on achieving efficiencies – are a welcome first step.

Over the coming months and years, the challenge for the government will be to maintain momentum in all these areas. Efficiency plans will need to be pursued and departments held to account; the workforce plan must arrive quickly and be ambitious in its scope and specific on what will be cut, where, when and why. 

Ministers and civil service leaders must not miss this opportunity. The prize – a more rationally planned, slimmed down and efficient civil service – is worth the effort.