Departments may have to collectively cut around 40,000 jobs to deliver on their SR25 commitments to reduce administration budgets, the Institute for Government has estimated.
At last summer’s Spending Review, departments agreed to an overall 16% reduction in admin budgets by 2029-30 to “support a rebalancing of day‑to‑day spending away from central government towards the services that the public rely on”.
A few months later, the Institute for Fiscal Studies has calculated that, based on the Office for Budget Responsibility’s forecast that public sector pay will grow at 0.5% per year in real terms over the SR25 period, administrative headcount will need to fall by 18% to deliver these savings.
In its just-published Whitehall Monitor report, the IfG said it has calculated that this 18% cut to admin headcount would be approximately equivalent to a reduction of between 29,000 and 40,000 jobs.
To calculate this, the IfG took total admin budget paybill (£11.2bn) and divided it by estimates of the paybill costs for one median civil servant (including salary, civil service pension contributions and National Insurance contributions) to get a total number of civil servants covered by the admin budget. It then worked out 18% of that number to find the total number of jobs that would need to be cut.
The think tank said the exact figure within the range of 29,000 and 40,000 depends on whether you take the median salary for all civil servants (£35,680), including those working in arm’s length bodies, or the median salary of civil servants working in the median core department for pay (£49,055).
“Core department civil servants are more likely to be covered by administration budgets than the former group, but due to a lack of data our estimate is less accurate than that for all civil servants, which is supplied by the Cabinet Office,” the report says. “The true number of civil servants covered by administration budgets is likely to be between these two figures."
The think tank said the government hopes that voluntary exit schemes will help deliver some of these headcount reductions but added that "departments do not seem to have consistently factored in the up-front costs for these schemes into their spending plans".
The report said an "ambitious" 8,583 voluntary exits have been targeted by departments over the next two years, as of August 2025, but added that this would be less than a third of the lower range 29,000 estimated job cuts needed to meet the savings target. However, the think tank noted that the voluntary exits figure "has likely grown" since August.
The IfG said it understands that voluntary exit schemes are being run in over a third of core departments, including the Cabinet Office, DBT, Defra, DESNZ, DfE, DHSC, FCDO and MHCLG.
"More departments may be running exit schemes, but there is no requirement for government to report them publicly," it added.
“So while early indications are that the government is moving in the right direction to bring down civil service numbers, further workforce reforms will be required,” the report said. “This makes the long-awaited Strategic Workforce Plan all the more crucial in the context of such significant cuts."
What level of efficiencies have departments committed to?
At SR25, departments agreed to make the following admin cuts by 2029-30:
- 15%: DBT, DCMS, Defra, DESNZ, DfE, DfT, DHSC, DSIT, DWP, HMT, Home Office, Law Officers’ Departments, MHCLG, MoD, MoJ and the Single Intelligence Account (the funding vehicle for the Secret Intelligence Service, GCHQ and MI5)
- 16%: Cabinet Office
- 17%: FCDO and HMRC
- 25% for small and independent public bodies
Departments also committed to overall day-to-day efficiencies of 5% by 2028-29, with a target of bringing in £13.8bn in savings. They agreed to the following day-to-day efficiency savings:
- Health and Social Care: 4.5%
- Education: 0.8%
- Home Office: 2.9%
- Justice: 3.0%
- Defence: 2.3%
- Foreign, Commonwealth and Development Office: 4.3%
- Housing, Communities, and Local Government: 1.2%
- Culture, Media and Sport: 3.4%
- Science, Innovation and Technology: 5.6%
- Transport: 8.0%
- Energy Security and Net Zero: 8.7%
- Environment and Rural Affairs: 3.1%
- Business and Trade: 4.2%
- Work and Pensions: 3.0%
- Revenue and Customs: 13.1%
- Cabinet Office: 4.7%
- Small departments: 5.2%
All departments have been asked to find at least 3% in day-to-day savings in the SR25 period. The SR25 documents noted that those departments that had not yet developed plans to deliver 3% efficiencies by 2028-29 would "continue to identify opportunities over the coming period".
At the Budget in November, departments were asked to find a further £2.8bn in efficiencies for the 2028-29 financial year, rising to £4.9bn by 2031. In today's report, the IfG criticised the failure to specify how the £2.8bn in extra savings by 2029 will be achieved.
This "cart-before-the-horse approach is a disappointing step backwards", the report said. "The fact these savings and efficiencies are due just before the next general election further brings into question their political credibility."
HM Treasury has been approcahed for comment.