UK Chancellor of the Exchequer, Rachel Reeves, has presented the Spring Statement amid sweeping regulatory reforms across various sectors.
Last October, Reeves made history as the first woman to deliver the Autumn Budget, remembered for its substantial tax hikes. The Labour government defended these increases as necessary to address a £22bn “black hole” in public service funding left by the previous Conservative government.
Businesses and workers will welcome Reeves’ latest remarks, as she stated that these tax hikes have been effective and that the Labour government will “keep its promise” by not introducing further increases – at least for now.
However, Reeves made it clear that tax enforcement remains a key focus.
She said: “But when working people are paying their taxes, while still struggling with the cost-of-living. It cannot be right that others are still evading what they rightly owe.”
To tackle this, Reeves announced government investment in cutting-edge technology to help HMRC crack down on tax evasion. The aim is to increase the number of tax fraudsters charged each year by 20%.
“These changes raise a further £1bn, taking total revenue raised from reducing tax evasion under this government to £7.5bn. Figures verified by the Office for Budget Responsibility,” she added.
Focus on efficiency
While much attention has focused on the US government’s efforts to boost efficiency, particularly through the launch of the Department of Government Efficiency (DOGE) headed by Elon Musk, the UK is also making its own moves in this area.
Reeves announced plans to reduce the cost of running the government by 15% by the end of the decade, saving around £2bn.
“This work shows that we can make our state leaner, and more agile, delivering more resources to the frontline while ensuring we control day-to-day spending to meet our fiscal rules,” she said.
“Today, I build on that work by bringing forward £3.25bn of investment to deliver the reforms that our public services need through a new Transformation Fund.”
The Payment Systems Regulator (PSR) was among the first watchdogs cut under Prime Minister Keir Starmer’s push to reduce bureaucracy and stimulate economic growth. The PSR is set to merge with the Financial Conduct Authority (FCA), a move welcomed by many in the financial industry. However, the transition raises uncertainty, especially for civil servants employed at the PSR, many of whom are still unsure as to when the merger will take place.
The Spring Statement may have added to these concerns. Reeves confirmed that “voluntary exit schemes to reduce the size of the Civil Service” are part of the government’s broader efficiency agenda.
These exits are expected to generate significant savings. As Reeves put it: “Our work to make government leaner, more productive and more efficient will help deliver a further £3.5bn of day-to-day savings by 2029/30.”
The funds saved will be redirected toward other priorities.
“I can confirm today the first allocations from this fund include funding for voluntary exit schemes to reduce the size of the Civil Service, pioneering AI tools to modernise the state, investment in technology for the Ministry of Justice to deliver probation services more effectively, and up-front investment to support children in foster care to give them the best start in life and reduce cost pressures in the future.”
The FCA, meanwhile, will likely be hoping for a share of that investment. In its five-year plan published earlier this week, the regulator emphasised the need for sufficient funding to balance risk effectively, especially as it prepares to take on new responsibilities following the PSR merger.
