(Bloomberg) -- Senior ministers have written to Prime Minister Keir Starmer expressing their alarm at the scale of spending cuts that their departments face in the UK budget due in less than two weeks, people familiar with the matter said.
Multiple members of the premier’s cabinet have sent formal letters to the premier about cuts they’re being asked to make in the one-year departmental spending review to be announced alongside the budget, according to the people, who requested anonymity discussing behind-the-scenes communications. They spoke about the letters on the condition the departments involved weren’t identified.
The unease at the top level of government highlights the political tightrope that Chancellor of the Exchequer Rachel Reeves is treading as she seeks to restore order to Britain’s public finances through a combination of taxes and spending cuts totaling £40 billion ($52 billion).
A Downing Street spokesperson said the exchanges are a standard part of the process, and that departments are spelling out their challenges and opportunities.
Listen to the Bloomberg UK Politics podcast on Apple, Spotify or anywhere you listen.
“There are some difficult choices that we’re all having to confront,” Education Secretary Bridget Phillipson told Sky News in response to the report on Thursday. “We as Cabinet ministers have conversations with the Treasury, with others, in order to get a good settlement.”
In the run-up to any budget, it’s normal for there to be verbal and written exchanges between ministers and the Treasury, as well as conversations within the cabinet. Nevertheless, taking the step of writing a formal letter to the prime minister is an escalation that underscores the strong misgivings that some members of the cabinet have about decisions they’re facing in their departments.
The ministers are concerned the cuts are not politically feasible, and that under current plans, the government will struggle to deliver election manifesto promises and meet the expectations of the Labour Party’s new voters, according to the people. They are particularly concerned about spending for the next year, they said.
Spending allocations for 2025-26 are particularly tight because Reeves wants space to comfortably meet her target of ensuring day-to-day spending is covered by tax revenues, after also filling a £22 billion fiscal black hole she says was left by her Tory predecessor, according to people familiar with the challenge.
One of them described the first year spending constraints as a nightmare which would improve in future years when there has been more time to raise revenue.
Reeves has already put plans for new rail links, roads and hospitals on ice as she seeks to restore order to the public finances, but the Labour government has also stressed the need for capital investment to stimulate growth. That leaves areas such as welfare and local government spending vulnerable to cuts.
Meanwhile, with the National Health Service facing historically high waiting lists, courts facing lengthy backlogs and the government being forced to release prisoners early, there will be demands for increased spending on health care and the criminal justice system.
At a cabinet meeting on Tuesday, Starmer told his top team that the government in the budget would take “tough decisions so we can invest in the future,” according to an official readout. Reeves blamed the Conservatives for the inheritance and the difficult outlook, which meant there would have to be “difficult decisions on spending, welfare, and tax,” according to the readout.
Nevertheless, several cabinet ministers in their letters sought Starmer’s support to reverse some of the intended cuts, the people said. The displeasure has come from a broad range of ministers, rather than just those in charge of departments with the highest capital spending or from one faction of the party, they added.
Starmer and his chief of staff, Morgan McSweeney, held a meeting of political aides late Tuesday in No. 10, themed around how to frame the budget politically. They said it would be tough but that Labour needed to land the political argument about its purpose: investment.
Darren Jones, the chief secretary to the Treasury who has been personally involved in difficult negotiations with departments on their spending packages, also addressed aides, saying that the budget offered the opportunity to reset after a difficult first 100 days in government. But others in government are concerned that that the budget will only make their political situation harder, the people said.
--With assistance from Ellen Milligan.
(Updates with education secretary’s comments in fifth paragraph.)
©2024 Bloomberg L.P.
