Chancellor: Every pound spent will deliver Plan for Change

Chancellor of the Exchequer launches second phase of the Spending Review.

• Prime Minister's Plan for Change at heart of Spending Review, which will drive reform and root out waste.
• Every pound of government spending to be interrogated to ensure it represents value for money for working people. 
• External experts will scrutinise budgets, bringing ideas, expertise and innovation of the private sector into the heart of government.

Government departments will be expected to find savings and efficiencies in their budgets, in a push to drive out waste in the public sector and ensure all funding is focused on the government's priorities.

Every single pound the government spends will be subjected to a line-by-line review to make sure it's being spent to deliver the Plan for Change and that it is value for money, as the Chancellor Rachel Reeves today (Tuesday 10 December) launches the next round of government spending.

It will be the first time in over a decade and a half that government departments have been asked to take such an approach, with what's called a “zero-based review” last undertaken 17 years ago.

Reeves will today begin her work with government departments and reiterate that they cannot operate in a business-as-usual way when reviewing their budgets for the coming years, as the new government continues to fix the foundations after inheriting a £22bn black hole, alongside crumbling public services and damaged public finances.  

Secretaries of State across government will need to allocate their budgets to ensure that government spending is focused on the Prime Minister's Plan for Change, and that every pound of taxpayers' money is spent well. The Chancellor will work with departments to prioritise spending that supports the milestones to deliver the Plan. This includes boosting growth to put more money in working people's pockets, fixing the NHS, creating safer streets, making Britain a clean energy super-power and giving every child the best start in life while strengthening our borders, national security and the economy.

Chancellor of the Exchequer Rachel Reeves said:

By totally rewiring how the government spends money we will be able to deliver our Plan for Change and focus on what matters for working people. The previous government allowed millions of pounds of taxpayers' money to go to waste on poor value for money projects. We will not tolerate it; I said I would have an iron grip on the public finances and that means taking an iron fist against waste. 

By reforming our public services, we will ensure they are up to scratch for modern day demands, saving money and delivering better services for people across the country. That's why we will inspect every pound of government spend, so that it goes to the right places and we put an end to all waste.

The Prime Minister has been clear that public services must reform if they are to be put on a sustainable footing in the long-term, so that outcomes can be improved for people who depend on services every day. Today's announcement builds on the Chancellor of the Duchy of Lancaster yesterday launching a £100 million fund to pioneer public service reform and deliver the Government's Plan for Change, by deploying new test-and-learn teams into public services across the country. They will be empowered to experiment and innovate to fix the public sector's biggest challenges, working towards the Government's ambitious and far-reaching reform programme that will seek to break down Whitehall silos and galvanise government as it seeks to deliver the Plan for Change.

Departments will ensure budgets are scrutinised by challenge panels of external experts including former senior management of Lloyd's Banking Group, Barclays Bank and the Co-operative Group. Panels will bring an independent view to what government spend is or isn't necessary, with a mixture of expertise from local delivery partners, think tanks, academic experts and private sector backgrounds.

In letters sent by the Chief Secretary to the Treasury, departments will be advised that where spending is not contributing to a priority, it should be stopped. Although some of these decisions will be difficult, the Chancellor is clear that the public must have trust in the government that it is rooting out waste and that their taxes are being spent on their priorities.

Work has already begun on evaluating poor value for money spend, with an evaluation into the £6.5m spent on Social Workers in Schools programme, which placed social workers in schools, finding no evidence of positive impact on social care outcomes, meaning the intervention was not considered cost-effective. The Government has made clear it will not shy away from taking the difficult decisions needed to fix the foundations, as shown by the Chancellor's decisions at the Budget to balance the books.

Departments will be expected to work closely together to identify how their work contributes to the Government's missions, meeting in mission clusters throughout the process to agree priorities and links. 

Throughout this process, the ideas, expertise and innovation of the private sector will be sought out and brought right into the heart of government. An online portal has been launched to give businesses the opportunity to put forward policy proposals for the Spending Review, including on how government can deliver public services more efficiently or effectively. These representations will be collated and shared with departments for consideration in their submissions.