Pre-Budget round-up: "100,000" job cuts, HMRC warning, tax & welfare plans

Ahead of Wednesday's budget, here's CSW's round-up of the civil service in the news, including the latest on possible job cuts, and a memo from the HMRC's Lin Homer on the latest "disappointing" demand for new savings

By Civil Service World

06 Jul 2015

It's Budget week and that can mean only one thing – frenzied speculation about what's going to be in the red box. The budget wrap in this morning's Telegraph features a pretty stark headline for officials, warning that George Osborne will "pave the way for up to 100,000 civil service job cuts" when he gets to his feet on Wednesday. 

The figure itself is not new, however. The FT reported just after the election that Whitehall was "braced for up to 100,000 job losses over the next five years". That estimate was based on the government's plan for a further £10bn of departmental savings by 2017-18 – with £15-20bn more to follow in 2019-20 – as well as warning from the FDA that job cuts in this parliament were likely to be the same as or greater than those endured in the last. 

The total civil service workforce fell by almost 72,000 during the last parliament, according to the Institute for Government, so it's likely that 100,000 remains more of an extrapolation rather than a hard figure – and we may not know the full details until the spending review in the Autumn. But the Telegraph does quote a "Cabinet source" with views likely to raise eyebrows among officials. The source says the Department for Education "worked far better" after it made job cuts, adding: "The reason is that everybody knows that if they don’t turn up in the morning, their work does not get done. People feel more committed."

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That upbeat message certainly contrasts with the view reportedly expressed by the HMRC's top civil servant in an internal memo seen by the Financial Times today. 

George Osborne's further in-year squeeze on Whitehall budgets – announced just after the Queen's Speech – led to a fresh £80m being shaved from the tax authority's  budget. And the FT says Lin Homer reacted by telling staff: "It is disappointing to be required to make cuts at a time when we are delivering a transformation programme to modernise HMRC, improve services to customers and increase our compliance yield." According to the paper, Homer said there was "little prospect" that HMRC could manage the cuts "without some business impacts".

Tax and welfare

It's not just the papers trying to get ahead of the Budget – some helpful details were also given out by the prime minister and chancellor this weekend. Firstly, David Cameron and George Osborne confirmed that family homes worth up to £1m are to be made exempt from inheritance tax. The threshold at which the 40% levy kicks in will rise from £325,000 per person to £500,000 as of April 2017, and will apparently be funded by limiting pension tax relief for those earning over £150,000.

And as our colleagues on PoliticsHome reported yesterday, Osborne has shed more light on how he would meet the Conservatives' pledge to find £12bn more in welfare cuts. The household benefit cap is to be lowered by a further £3,000 to £23,000 in greater London, with the figure expected to be £20,000 outside of the capital.  As ever, Civil Service World will be picking apart what the Budget means for Whitehall on Wednesday, as-it-happens.


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