The process of delivering the next government spending review, which will cover a period of only a single year, has now formally begun, with HM Treasury writing to departmental leaders
HM Treasury has formally begun the 2024 Spending Review process, with cabinet ministers and permanent secretaries instructed to work up bids in advance of the Autumn Budget – and urged to focus on using technology to create efficiencies.
At the end of last month, new chancellor Rachel Reeves announced that the budget would take place on 30 October. She also said departments would need to find efficiencies proposals for saving 2% a year from back-office work – a figure in line with productivity savings then-chancellor Jeremy Hunt sought in the Spring Budget.
The Treasury recently confirmed that chief secretary Darren Jones has written to secretaries of state instructing them to commence work on their bids for the Spending Review, the outcome of which will be publicly revealed on 30 October.
“The chief secretary has now written to departments, kicking off the Spending Review process to fix the foundations, so we can rebuild Britain and make every part of the country better off,” a departmental spokesperson confirmed.
Jones’ letter reportedly tasks ministers with finding reforms and deploying technology that can reduce day-to-day expenditure. It is also said to caution that priority funding will only be available for the so-called “first steps” announced by Labour in the general election campaign. They include shrinking NHS waiting lists, initiating a new border security command, hiring 6,500 additional teachers and reducing antisocial behaviour.
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Shortly before parliament rose for the summer recess, Reeves said a review of the public finances had revealed a £22bn “black hole” caused by spending commitments that the last government had not identified funding for.
She set out details of an initial savings push intended to cut £5.5bn in 2024-25 and £8.1bn in 2025-26. This involves scrapping existing commitments including the Ministry of Housing, Communities and Local Government’s Investment Opportunity Fund, reform of adult social-care charging and the introduction of the Advanced British Standard qualification.
October’s Spending Review is due to cover the 2025-26 financial year and will be followed by a multi-year spending review next spring.
In her 29 July statement to MPs, Reeves committed the government to holding a multi-year spending review every two years from spring 2025 to give departments more certainty over their medium-term finances.
The biennial reviews will have a three-year “horizon”, meaning that there is a one-year overlap designed to ensure that departments never face a funding “cliff-edge” because of a lack of detailed plans for the next financial year.
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