Rachel Reeves has vowed to take an ‘iron fist on waste’ as she launches the biggest audit of government spending in almost two decades.
Every pound of spending in Whitehall will be examined line by line in the Chancellor’s spending review, which will not be completed until June.
Ms Reeves will tell departments to find savings in their budgets as she warned she ‘would not tolerate’ taxpayers’ money being spent on projects of poor value.
The review – which will span three years – will aim to deliver on Labour’s priorities. It will be the first zero-based exercise since 2007, where we have to start from scratch and every expenditure has to be justified.
Departments are told to stop spending if it does not contribute to a priority.
The budgets will be scrutinized by ‘challenge panels of external experts’, including former senior managers from banks such as Lloyd’s, Barclays and Co-operative Group.
Ms Reeves said last night: ‘By completely rewiring the way the government spends money, we will be able to deliver our Plan for Change and focus on what matters to working people.
‘The previous government allowed millions of pounds of taxpayers’ money to be wasted on poor value for money projects.
Rachel Reeves speaks at a press conference after a meeting of eurozone finance ministers in Brussels. The Chancellor will say she ‘will not tolerate’ taxpayers’ money being spent on low-value projects
Ms Reeves’ warning about waste came after a report on the growth of red tape found some of Britain’s biggest watchdogs are growing faster than the sectors they oversee (file photo)
‘We will not tolerate it; I said I would have an iron grip on public finances and that means taking an iron fist against waste.
‘By reforming our public services, we will ensure they are up to date with today’s demands, helping us save money and deliver better services to people across the country.
‘That’s why we’re going to inspect every pound of government spending, so it goes to the right places and all waste is stopped.’
The Chancellor’s review will also set out a timetable for achieving the party’s ambition to increase defense spending to 2.5 percent of GDP.
But she told the Mail last weekend that any extra money for the military would have to come from the same ‘spending envelope’ as other priorities such as schools, hospitals and the police.
Ms Reeves’ warning about waste came after a report on the growth of red tape found that some of Britain’s biggest watchdogs are growing faster than the sectors they oversee.
Research from the Policy Exchange think tank has shown that the workforce at seven major regulators has grown by 84 percent over the past decade.
The Financial Conduct Authority, which oversees banks and other City businesses, has seen its workforce double since 2013-14 (an increase of 116.6 percent).
Numbers at the Financial Reporting Council, which is responsible for accountants, have more than tripled (256 percent), while the Competition and Markets Authority has seen a 69.8 percent increase.
The report is supported by former Cabinet Secretary Lord Sedwill (pictured in 2020).
However, over the same period, the number of people working in financial services and related professional services grew by only 6.5 percent.
Staff levels at broadcast regulator Ofcom have increased by 87.7 percent despite job losses in the TV industry.
The 17 biggest watchdogs spend £5 billion a year and employ 39,000 people, the report says, but the total cost of the ‘regulatory state’, including the bureaucratic burden on businesses, is estimated at around £70 billion.
The report says that the UK’s regulatory environment has been experiencing virtually ‘uncontrolled growth’ for decades, raising costs for businesses, damaging innovation and making life for civil servants and professionals ‘increasingly miserable’.
The report blames a security-first political culture, a bureaucracy where it is “remarkably cheap” to introduce new rules and a “complete lack of incentive” to cut red tape.
It recommends that ministers create a ‘gateway’ requiring £2 of savings to be found for every £1 of new regulatory costs introduced – and that businesses should be able to appeal if official impact assessments reveal the effects of a new rule underestimate.
The report is backed by former Cabinet Secretary Lord Sedwill, who wrote in a foreword: ‘The government adds a margin of safety to Parliament’s legislation, regulators add a margin of safety to that of the government, compliance teams in the private sector and the public sector add a margin of safety to Parliament’s legislation. the supervisors. Large institutions can bear this burden. Little ones find it suffocating.’
