100,000 civil servant job cuts: How Britain could rip out Whitehall waste

As Elon Musk prepares to slash US spending, Britain needs an outsider to tame the Treasury, experts say

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If there were any doubts about Elon Musk’s determination to slash government spending as Donald Trump’s new efficiency tsar, his latest missives on X should put them to bed.
“The excess government spending is what causes inflation! ALL government spending is taxation,” the Tesla chief executive wrote on X on Thursday.
One of the president-elect’s first appointments upon winning the election was to name Musk head of the newly created Department of Government Efficiency.
At a Trump rally last month, Musk said it would be possible to cut “at least $2 trillion” from federal spending – nearly a third of the $6.5 trillion federal budget.
The excess government spending is what causes inflation! ALL government spending is taxation. This is a very important concept to appreciate. It is either direct taxation, like income tax, or indirect via inflation due to increasing the money supply. https://t.co/ypG9hm940Z
Economists have expressed doubts as to how feasible this target is. But if he even comes close to meeting his cost saving ambitions, Musk will set a precedent for Government cost-cutting around the world.
It is not just Donald Trump who thinks government has become wasteful. There are many on both the Left and Right who think Britain suffers from the same problem.
“Every year billions of pounds are spent on programmes we have never evaluated,” says Joe Hill, policy director at think tank Reform.
The number of civil servants has soared by 129,000 in eight years to surpass half a million and public spending is on track to be equivalent to 44.5pc of the national economy by the end of the decade, nearly five percentage points higher than before the pandemic.
We are paying more for less. Public sector productivity last year was down by 6.3pc compared to 2019. Public projects such as HS2 spiral wildly over deadline and over budget. This inefficiency is felt in higher taxes and crumbling infrastructure.
It does not have to be this way – it costs 8.5 times more to build high-speed rail lines in the UK than in France, suggesting that they have found a way to do it on a budget when we have not.
What can we learn from Musk? The billionaire has promised to send “shockwaves” through the system and “drain the swamps” of bureaucracy.
It is clear he will be applying a private sector approach to public bodies – a pivot that will prove highly controversial.
In the UK, the traditional wisdom is that governments need to invest money in reform in order to be able to make savings through improved efficiency. For example, upgrading computer systems to slash waiting times in the NHS.
However, Musk’s approach will turn this model on its head, believes Simon French, who was chief of staff to the government’s chief operating officer and played a central role in the coalition government’s spending reforms.
“They will go, ‘we’re just going to stop doing this’. It will be fascinating to watch how they get on,” says French, who is now chief economist at stockbroker Panmure Gordon.
It is a position supported by Kemi Badenoch, leader of the Opposition, who campaigned saying that “Government should do fewer things but better. And what it does, it should do with brilliance”.
A key target for any government cost-saving initiatives will be Whitehall. Reforming the Civil Service is possible – it has been done before.
During the coalition government, Lord Maude, minister for the Cabinet Office, led the Efficiency and Reform Group, which over five years made cumulative savings worth £52bn. “You could definitely do the same again,” he says.
Lord Maude reduced the size of the Civil Service by 21pc, slashed the use of consultants by two-thirds, renegotiated “very bad” legacy government contracts, reformed procurement, sold under-occupied property and oversaw a digital transformation programme.
“We showed that you can do more with less. It can be done. But a lot of it, regrettably, has regressed since then,” he says.
“All organisations have a kind of built in tendency to expand, unless someone is actively on the case to prevent it and to reduce it.”
A key problem is the Treasury, he believes. Because the Exchequer oversees such a large budget, wasteful sums that would look huge to most ordinary observers looks trifling to officials.
“I remember a senior Treasury official saying to me quite early on, ‘Well, minister, in the Treasury, we don’t get out of bed for less than £100m’,” recalls Lord Maude. “I said ‘well, I’m a cabinet minister and I’m giving quite a lot of attention to really quite small amounts of money’.
“What we did was despite the Treasury, not because of it. The Treasury was at best indifferent to what we were doing and, at worst, was actively hostile to it.”
Lord Maude’s rules included imposing a £25,000 limit on how much departments could spend on advertising or marketing campaigns without his sign off. The measure cut spending on advertising and marketing by two-thirds, and meant government departments stopped paying for campaigns that competed with each other.
“The thing that was absolutely critical is what the Treasury hated – operating on a whole government basis. The Treasury’s theology is all about silos,” says Lord Maude.
Treasury thinking is that if a budget is allocated to a ministry, then it is up to them to spend it as they wish and any waste or misuse will be held to account by Parliament. But this is a “fiction”, Lord Maude argues. Parliamentary scrutiny only comes “after the horse has bolted” and the money has been spent badly.
“What we were doing was exercising spending [restraint] in real-time.”
As things stand, civil servants have no incentive to improve the system themselves, says Lord Maude. Nobody’s career is advanced by blowing the whistle on waste. “There are lots of brilliant civil servants who really do want to do the right thing, but the system impedes them.”
Instead, the state and the Civil Service have ballooned in size since Lord Maude left the Cabinet Office in 2015.
Ministers since have tried to replicate the savings made under Lord Maude, but with little lasting impact – either because they were not taking the right approach, did not have sufficient backing from high up, or did not have enough time.
Sir Jacob Rees-Mogg was minister of government efficiency for just seven months at the end of Boris Johnson’s premiership, not enough time to make an impact.
The civil service payroll could easily be slashed by “at least 100,000”, he says. “There are far, far too many people passing bits of paper to each other.”
The shift to homeworking since Covid means “you have got too many people who aren’t actually working” and there are instances of “weird government accounting”, he adds.
“People get obsessed by the targets rather than by what anybody is actually doing.”
Last month Rachel Reeves launched the Office of Value for Money, a temporary taskforce that will have an initial 12-month period to assess “how to root out waste and inefficiency” and make recommendations for system reform.
The Government says this is part of its “ruthless focus” on getting value on public spending.
However, the Chancellor’s choice of candidate to head the new quango has raised eyebrows. Her new value for money tsar is David Goldstone, who has previously worked on the London Olympics, the restoration of Parliament and HS2 – all projects that have been over budget.
Hill, from the Reform think tank, believes Labour must seek a more radical solution such as “bringing in a disrupter like Elon Musk”.
Sir Terry Leahy, former Tesco chief executive, who has experience running a large, operationally complex business with tight margins, would be ideal, he says.
Another figure who could be considered is Sir Dave Lewis, another former Tesco boss who earned the nickname “drastic Dave” while at Unilever for his willingness to make cuts to improve performance.
Hiring a private sector fire brand to overhaul the Civil Service is not an original Trump idea. Tony Blair tasked Peter Gershon, formerly board director of General Electric, with reviewing government procurement in 1998, before commissioning him to lead a major review of efficiency across government in 2003. His 2004 Gershon Review recommended cutting the Civil Service by 84,000.
Being a Whitehall outsider is extremely important when it comes to finding places to cut.
“The civil service leadership did their level best to have me moved sideways, promoted, fired, anything to get out of their hair,” says Lord Maude. “But I managed to stay there and see it through for five years which no one had ever done before, because I was at the end of my career so I didn’t mind.
“I wasn’t worried about what my next job was going to be, so I was quite liberated.”
Sir Jacob thinks true reform under Sir Keir Starmer is unlikely. “There is no way that this Government will get rid of civil servants. They believe in the large bureaucracy. And they’re their mates.”
But if Musk succeeds in making drastic cuts without detrimental impacts, it will put new pressure on Sir Keir.
“The one thing that may force us to do it is learning from what the US is doing,” says Sir Jacob. “And if the US takes this wasted expenditure out, its economy will power ahead.”
A Government spokesman said: “We are entirely focused on rooting out wasteful spending and driving efficiency across government while also increasing investment in our public services and delivering on key growth projects.
“From creating an Office for Value for Money (OVfM) to cutting out unnecessary consultancy spending and appointing a Covid Corruption Commissioner, we are ensuring every pound of spending represents the best value for taxpayers.”
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