Departments are set to have their spending plans scrutinised by "challenge panels" of external experts – including bankers, academics and think tanks – as part of a bid to focus funding on priority areas, it has emerged.
Briefings from HM Treasury ahead of the formal launch of the 2025 Spending Review, which will fix departmental budgets for the three years from 2026-27 to 2028-29, have also warned that chancellor Rachel Reeves will be seeking 5% efficiency savings over the period.
Chief secretary to the Treasury Darren Jones is due to write to secretaries of state today to effectively kick off the Spending Review. Widely-reported Treasury commentary said departments would be told outgoings that don't aid the new government's priorities must be cut.
As part of the process, the Treasury said departments will be required to get their spending plans independently scrutinised by so-called challenge panels. The panels will include former senior management of Lloyd's Banking Group, Barclays Bank and the Co-operative Group. Think tanks, academics and the private sector will also advise on whether spending in particular areas is "necessary".
A supporting statement from Reeves said: "By totally rewiring how the government spends money we will be able to deliver our plan for change and focus on what matters for working people.
"The previous government allowed millions of pounds of taxpayers' money to go to waste on poor value for money projects. We will not tolerate it; I said I would have an iron grip on the public finances and that means taking an iron fist against waste.
"By reforming our public services, we will ensure they are up to scratch for modern day demands, saving money and delivering better services for people across the country. That's why we will inspect every pound of government spend, so that it goes to the right places and we put an end to all waste."
Multiple reports cited one Treasury example of spending that could and should be stopped: a scheme to place social workers in schools. The department was quoted as stating that an evaluation of the £6.5m scheme had found "no evidence of positive impact on social care outcomes".
"Departments will be advised that where spending is not contributing to a priority, it should be stopped," the Treasury reportedly said.
"Although some of these decisions will be difficult, the chancellor is clear that the public must have trust in the government that it is rooting out waste and that their taxes are being spent on their priorities."
Versions of the briefing published by the BBC, the Guardian and the Times said departments would be asked to find 5% efficiency savings as part of the Spending Review.
The Guardian said the figure sought would be 5% of each department's current budget, and that the savings must be delivered over the coming years of the Spending Review period.
Reeves had already put departments on notice to deliver 2% efficiency and productivity savings in 2025-26 in October's Autumn Budget.
Mike Clancy, general secretary of Prospect union – which counts civil servants among its members, said the tone of the Treasury's announcement was worrying in relation to the approach towards spending reductions.
"We all want to see an efficient public sector that delivers high quality services at good value for money, but the reality is previous arbitrary cuts made in the name of efficiency have often ended up damaging services and costing more in the long run," he said.
"If this Spending Review is to buck this trend, it needs to be built on the insight and expertise of public sector specialists who are the ones responsible for delivering the government’s missions on a day-to-day basis.
"A responsible and prudent spending review is one that makes long term investment in the people and infrastructure that can deliver improved outcomes and helps to empower experts within and beyond the public sector."
PCS general secretary Fran Heathcote added: “The civil service doesn’t need an iron fist. It needs someone who understands how it works. The chancellor says she will listen to bankers, thinktanks and the private sector but she won’t listen to us or our members – the very people who have the specialist knowledge vital to keep public services running."
The government has yet to publicly set a date for the 2025 Spending Review. At the end of last month, the Financial Times reported that it was being pushed back from spring to June.