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The UK Treasury is offering its officials up to £100,000 to leave voluntarily as part of plans to cut hundreds of jobs in the finance ministry amid one of the deepest restructurings of the country’s civil service.
Chancellor Rachel Reeves wants to slash about 300 of her department’s roughly 2,100 staff by 2030, according to several people familiar with the plan. The cuts form part of a wider drive to cut 16 per cent of administrative costs across Whitehall.
The Treasury, which controls public spending and sets economic policy, has also imposed a freeze on external recruitment for many non-essential roles, aiming to hit its cost-cutting target through voluntary exits and natural attrition.
However, people briefed on the plan said it could still require some officials to be made redundant if enough departures cannot be achieved voluntarily across its offices in London, Darlington, Norwich and Edinburgh.
Staff numbers at the UK finance ministry have almost doubled in the past decade, according to the Institute for Government. Hiring picked up strongly after the 2016 Brexit referendum and the 2020 pandemic.
“The Treasury is the largest it has been on record, so during this period of stability it’s now right we reduce our size back to more normal levels through a voluntary exit scheme, in line with the whole of government,” the Treasury told the FT.
The cuts have contributed to a sour mood among Treasury officials, where turnover is high and many feel they are paid less than in other departments, according to union officials.
Two directors in its financial services department quit recently: John Owen joined consultants EY in September and Richard Knox is joining the pension regulator.
“Morale in the Treasury is pretty low,” said Robert Eagleton, national officer for the FDA union, which represents civil servants including some in the Treasury.
“It is one of the lowest-paid government departments and has the highest staff turnover,” he said. “Our members now face the ongoing uncertainty caused by headcount reductions and recruitment controls. Many are worried about redeployment, the risk of redundancy, and the lack of career progression opportunities.”
The Treasury opened its voluntary exit scheme to London-based staff last summer. As many as 200 people whose applications are accepted will be told the value of their proposed exit packages by the end of February, putting the Treasury well on track to hit its 300 by 2030 target.
These are calculated as three weeks’ pay for each year of work with a ceiling of 15 months pay and a maximum salary of £80,000, meaning someone with over 21 years of service could get up to £100,000.
Abe Allen, industrial officer at the PCS union that also represents Treasury staff, said: “You can’t grow an economy without the Treasury officials to guide it, so it would be very misguided for the chancellor to do any kind of widespread redundancy programme.”
The Treasury is already consulting on “pockets” of restructuring that could lead to redundancies, Allen said. If this turned into a wider programme of cuts, the union could ballot its members on potential industrial action, he said, adding: “Nothing is off the table.”
The Labour government has said it wants to shrink the size of the civil service, without announcing a specific headcount reduction target.
However, the Treasury last year imposed cuts to all departments’ administrative budgets of at least 16 per cent in real terms by 2030 — to be achieved via job cuts, consolidation of back-office functions such as IT contracts, and other efficiencies.
At present there are 36 voluntary exit schemes under way across government, with about £300mn set to be spent on these staff departure packages.
While led by individual departments, the Cabinet Office is overseeing the programme to try to ensure that amid the cuts, crucial skills are not lost.
Last month Cat Little, Cabinet Office permanent secretary, told MPs that 5,000 civil servants were on track to have left by the end of March under the exit schemes.
Officials have not shied away from the suggestion that fresh voluntary and then mandatory redundancy schemes may be needed in departments still under pressure to meet their spending targets.