As Rachel Reeves tries to save lots of her job, see precisely how the federal government spends each pound of YOUR taxes with our interactive calculator
Rachel Reeves is expected to announce billions of pounds worth of spending cuts at her Spring Statement on Wednesday as she scrambles for savings.
The Chancellor is set to put the squeeze on some Whitehall departments as she tries to patch up a deep hole in the public finances.
At her Budget in October, Ms Reeves left almost £10billion of ‘headroom’ against her fiscal rules.
But new figures from the Office for Budget Responsibility are set to show this has since been wiped out amid sluggish economic growth and rising borrowing costs.
The Chancellor has already overseen plans to slash £5billion from the UK’s ballooning welfare bill, which includes narrowing access to disability benefits.
She has also had to sign off on plans to take an axe to Britain’s foreign aid budget, in order to fund an increase in defence spending to 2.5 per cent of GDP by 2027.
But there are expected to be more cuts to come this week, with Ms Reeves ruling out further ‘tax and spend’ following her £40billion package of levy hikes in October.
Public expenditure data for the last financial year shows how taxpayers’ cash was largely swallowed up by welfare payments, state pensions and NHS funding.
For example, someone on a median UK salary of around £37,000 would expect £1,920 of their taxes to be spent on welfare, £1,592 on the NHS, and £1,013 on state pensions.
Use our interactive tool below to check where your own taxes go…
Ms Reeves is already targeting welfare in her bid for savings, with Work and Pensions Secretary Liz Kendall having set out plans to squeeze benefits last week.
Meanwhile, 2023-24 saw a continued trend in which the Government spent more in debt interest than on education.
Police and transport were other sizeable areas of expenditure in the last financial year. And billions of pounds were committed to the environment, housing, and libraries, museums and sports.
The UK is still making payments to the EU as part of the Brexit settlement, and – despite being repeatedly cut in recent years – £7.2billion still went on overseas aid.
With Labour MPs already unhappy at the welfare and foreign aid cuts, Ms Reeves will have to tread carefully as she considers further fiscal tightening.
One area in which the Chancellor has confirmed she will be making cuts ahead of her Spring Statement is the cost of Whitehall itself.
She has outlined plans to cut civil service running costs by 15 per cent by the end of the decade, while the Treasury is also expected to announce a new crackdown on tax avoidance.
Ms Reeves said that Whitehall officials will be asked to find more than £2billion in cuts to admininstration budgets, adding that likely means 10,000 jobs going.
But trade unions have warned the figure could be more like 50,000. And the Treasury is still thought to need far bigger savings still to offset tumbling growth forecasts.
The hole in the public finances could be as much as £15billion, even after the proposals to cut £5billion off benefits were unveiled.
Although budgets are still expected to rise in real terms overall in the coming years, unprotected departments will be exposed to cuts.
It has been claimed that spending cuts will average 4.7 per cent in most departments, althought the precised details will not be published until the spending review in June.
