Departments have been asked to find an extra £4.9bn in efficiency savings from 2028 onwards, and will need to outline plans for these savings at the next spending review.
In today's Budget speech chancllor Rachel Reeves said government would find £4.9bn efficiencies by 2031.
The Red Book, which sets out details of the Budget, explained that departments will need to set out plans for savings amounting to £2.8bn in the financial year 2028-29, rising to £4bn in 2029- 30, and £4.9bn in 2030-31.
The target is in addition to the near-£14bn in day-to-day spending efficiencies departments agreed at this summer’s 2025 Spending Review, which are to be made by 2028-29.
The Red Book for the budget says the extra efficiencies will mean that, over the three years from 2028-29 to 2030-31, day-to-day spending will grow at an average of 0.8% per year in real terms.
It adds the 2028-29 efficiencies – which represent 0.5% of departmental budgets set at SR25 – will apply to all departments, although the NHS and Ministry of Defence will be “allowed to retain and reinvest the savings to improve patient care and protect national security”.
It does not say whether the 2029-30 and 2030-31 targets will apply to all departments.
The Red Book says efficiency savings will come from activity including:
- Abolishing police and crime commissioners and reducing councillor numbers by around 5,000, saving over £250m over five years
- Reclaiming £74m from asylum accommodation suppliers
- Pursuing Covid fraud cases through the new Public Sector Fraud Enforcement Unit
- Further action to close the tax gap “by pursuing those who try to bend or break the rules, collecting more unpaid taxes and modernising the tax system”, bringing the total additional revenue raised by closing the tax gap this parliament to £10bn in 2029-30.
Cross-government value for money review
James Murray, the chief secretary to the Treasury, will lead a review of value for money across government spending ahead of the next spending review.
The Red Book says this will include looking at:
- New models of care within the NHS and communities, as part of implementing the 10 Year Health Plan, to help shape a system that delivers earlier intervention and preventative care where possible
- Reforming youth services provision, to better align with the ambitions of the National Youth Strategy and maximise the value and impact of out-of-classroom support for young people
- Assessing funding and delivery of homelessness services, including ways to improve the supply of value for money and good quality temporary accommodation and supported housing, such as greater coordination and planning in procurement between different parts of the state
- Maintenance of public assets, to protect the value and function of the infrastructure, buildings and equipment that deliver public services.
The review “will build evidence and potential solutions” ahead of the 2027 Spending Review “so that government support delivers better outcomes and better value for money”.
It forms part of the government's commitment to carry out thematic reviews on complex and cross-cutting spending issues between spending reviews, as recommended by the Office for Value for Money.
The OvFM – which was set up last year as a time-limited body to assess government spending and help departments find efficiencies, and how now been wound up – said the introduction of thematic reviews will “ensure continuous improvement to public services, as it institutionalises a mechanism for assessing systemic problems between spending reviews and collaboratively developing solutions across departments”.