Spending Review: IFS chief suggests Treasury ‘making up numbers’ over DOGE-style Whitehall cuts
The Ministry of Defence and Department for Health and Social Care are slated to see billions cut in Whitehall budgets in what a DOGE-style body within the Treasury described as “efficiency gains” – despite both departments set to see a real terms increase in spending between 2026 and 2029.
A new government document has revealed that savings in Whitehall will mainly come in 2029 when it hopes government departments will shave up to £13.8bn off costs.
But Institute for Fiscal Studies (IFS) chief Paul Johnson has pushed back against government estimates and suggested the plans were unserious in a brutal takedown of Treasury officials.
The think tank director, who formerly served as director of public spending at the Treasury, suggested failure to deliver on efficiency plans could undermine calculations made to level expenditure across departments.
The Office for Value for Money (OVfM), the UK government’s DOGE-style body responsible for finding cuts, has revealed that health will see savings of up to £2.8bn from next year, rising to £9bn in savings by 2029.
It makes up the bulk of government savings planned in the next three years, with defence coming third in the OVfM’s efficiency rankings after HMRC, which is set to ditch letters for digital communications with taxpayers.
Efficiency gains come as both healthcare and defence saw large real terms increases to budgets in yesterday’s Spending Review.
Analysis conducted by the Institute for Fiscal Studies (IFS) noted that both departments were set to see a large increase in capital budgets as the government looks to upgrade military equipment and provide better technology to patients.
Spending on infrastructure
An efficiency blueprint published by the DOGE-style body said efficiency gains in the Department for Health and Social Care was part of improving operations and reducing staff sickness absence across the NHS, which has dragged public sector productivity.
The Home Office also sets to deliver efficiency gains of over £500m a year by 2029.
Unlike defence and health, the Home Office will not see a real terms boost to budgets over the three years of the Spending Review.
AI is set to play a big role in driving savings, according to the paper produced by the OVfM.
Outgoing IFS director Johnson said he was surprised the government was cutting administration budgets by 10 per cent over the three-year period, plus an additional five per cent in 2029-30.
“That is not the result of a serious department by department analysis.”
“I hesitate to accuse the Treasury of making up numbers, but…,” he trailed off.
He also told participants in an event on Thursday morning that the size of the government was inflating at levels not seen in years.
“In economic history terms, I think this decade will be seen as the decade in which the British state grew.”
A £20bn increase to employers’ national insurance contributions (NICs) was also highlighted as a bad move for the UK economy.
“This was clearly, of the big taxes, the least good from an economic point of view, even if it may have been the easiest from a political point of view.”
“Increases or extension of the VAT base, or rate increases in the basic rate of income tax, for example, would have been less damaging for the economy, but I won’t say more than that.”
Its analysis also showed council tax bills would rise at the fastest rate over any parliament in decades.