Defence officials slash civil servants’ spending powers by 97%

Defence ministers are set to drastically clamp down on the spending powers of senior civil servants in their department, i has learnt.

In what is the first sign of the Government’s crackdown on consultancy bills, officials who were previously allowed to authorise spending of up to £2m without getting approval from ministers will now have to get sign-off for any contract more than £50,000 which represents a 97 per cent cut.

Industry sources fear this will lead to big delays in signing important contracts and lead to a huge increase in bureaucracy within the Ministry of Defence as ministers become deluged with requests for spending approvals. One source said it “risked grinding the department to a halt”.

The type of decisions affected by this could range from high-level consultancy contracts looking at strategic military planning and new IT to recruitment policy and the cleaning or managing of MoD facilities, including barracks.

One source told i that the changes were extreme. They said: “The bar for approvals will become incredibly low and will create a bureaucratic nightmare for ministers in future.”

Jane Runeckles from the FDA, the trade union for senior civil servants, said: “We continue to look for reassurance from the Ministry that the Government’s focus on new spend does not draw attention away from areas that remain under pressure from the continuing threat of headcount reductions. We cannot afford the lowered threshold for ministerial approval to stand in the way of organisational needs and the delivery of strategic aims.”

Last week, i revealed that contractors had been given 36 hours to come up with “high level, headline” ideas for cuts and this new clampdown on spending by senior officials is part of the department’s urgent attempt to slash spending ahead of cuts in the Autumn statement .

Chancellor Rachel Reeves has been outspoken on her views to cut consultant spending, pledging to “rein them in”.

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Ms Reeves said: “I get submissions of departments looking at a planning application or an investment in the economy. It says so-and-so consultancy is looking at this and then I ask for some more detail and its hundreds of thousands of pounds.

“Now the Civil Service recruits every year some of the top graduates, brings in fantastic apprentices and yet it seems to go to consultancies to do big pieces of work. I just don’t think it’s justified that taxpayers’ money is used in this way.”

Labour had pledged to halve consultancy spend during the general election campaign with Reeves saying that requests would be denied unless they could be proved to offer value for money.

Last week, defence suppliers were told they needed to “make material in-year savings, through the cancellation or deferral of lower priority activity”, or present plans for efficiency savings “as quickly as possible”.

The letter, seen by i said ministers were prepared to make “hard choices”, but the Government would keep it’s target of spending 2.5 per cent of GDP on defence in future years.

Admiral Lord West, the former Chief of Naval Staff told i that “issues like infrastructure, spares and maintenance and training and recruitment of manpower will need to be cut”

The spending cuts are thought to be ongoing all over Whitehall, in preparation for Rachel Reeves’s Autumn Statement in October. Frontline public services are to be protected, but other departments, including the Department for Transport, have begun looking for potential cuts.

Nick Davies, a programme director at the Institute for Government think-tank told i this week that the MoD would not be the only department to take on heavy cuts.

Mr Davies said: The Chancellor’s recent public spending audit announced pressures of £22bn, but cuts of only £5.5bn and indicated that further savings would be announced in the Autumn Budget.

“Even making these initial cuts will be hard and all departments will be assessing where in-year savings can be made, including from suppliers.

“However, the pressures from April 2025 onwards will be even greater, and require making difficult trade-offs on borrowing, taxation and spending.

A Ministry of Defence spokesperson said: “As the Chancellor has said, the Government has inherited public finances much worse than expected.

“The National Audit Office (NAO) has confirmed the largest ever deficit in the defence equipment plan.

“The Government will secure Britain’s defences for the future and increase defence spending to 2.5 per cent of GDP as soon as possible.”