Sir Keir Starmer has said that the government can be more efficient by using AI and technology, ahead of the Spring Statement.
Questioned on BBC Radio 5 Live on whether unprotected departments would face cuts, the PM said ministers were “looking across the board”, but he wanted to challenge government to be more efficient.
Rachel Reeves has confirmed civil service departments will be asked to cut 15% from their budgets, but there is political unease among Labour MPs about the scale of cuts to departments, which the chancellor will outline in her statement on Wednesday.
It comes after the government unveiled sweeping changes to the benefits system, aimed at saving £5bn a year by 2030.
Sir Keir said the government was “looking across the board” at spending, when asked by the BBC whether cuts would be announced for departments whose spending is not protected, such as the Ministry of Justice.
“At the budget last year we made some record investments, and we’re not going to undo that,” he added, pointing to increased NHS spending.
He said: “We’re essentially asking businesses across the country to be more efficient, to look at AI and tech in the way that they do their business.
“I want the same challenge in government, which is ‘why shouldn’t we be more efficient?’, so we will be looking there and in one or two other places.”
The PM was asked by the BBC later if he would consider changing the government’s fiscal rules and responded: “No, because we had to stabilise the economy, which is what we did with the Budget.”
He added: “The difference is that the global situation has changed – I think most people would understand that in the last few weeks and months the international insecurity has got very real – that does impact domestically.”
The chancellor’s rules, which she has argued will bring stability to the UK economy, are that day-to-day government costs will be paid for by tax income, rather than borrowing; and to get debt falling as a share of national income by the end of this parliament in 2029/30.
Shadow business secretary Andrew Griffith said it was the chancellor’s decisions that were the cause of sluggish growth forecasts, leading to the imposition of cuts.
“We wouldn’t be here because we would not have put those confidence-destroying taxes on the economy,” he told BBC Breakfast.
“We would have made different decisions, tackled welfare reform earlier – she’s doing that now but if it’s a moral mission of this government, why didn’t they do it nine months ago?”
Reeves’ plan for major money-saving from the welfare budget comes on top of her decision to axe the universal provision of winter fuel payments and only give them to the poorest pensioners.
She told the BBC’s Sunday with Laura Kuenssberg programme that government running costs would be cut, with savings made from back office and administrative roles rather than front-line services.
Last month, the government cut the international aid budget to boost defence spending to 2.5% of national income by 2027, as leaders across Europe looked to overhaul defence policies over fears the US could make a deal with Russia to end the Ukraine war which leaves the continent vulnerable.
Sir Keir and US President Donald Trump spoke about progress on an economic deal between the UK and US on Sunday night, Downing Street said.
It comes as reports that a digital services tax on tech giants could be slashed or abolished.
On Monday, Transport Secretary Heidi Alexander denied the government was signalling a return towards an austerity model.
Challenged on BBC Radio 4’s Today programme, Alexander highlighted that Labour had increased public spending in its first budget in October.
“We have to take some really very difficult decisions and in terms of welfare we will always make sure that there is a system that provides a safety net for the most vulnerable,” she said.
“We’re investing over £20bn more in the NHS and we’ve seen waiting lists coming down in hospitals now for the fifth month in a row.
“The Office for Budget Responsibility last year at the time of the budget said it was one of the most expansionist budgets ever, of all time, so we are not returning to austerity.”
Civil Service unions have warned that services could deteriorate with the loss of jobs.
Paul Novak, the general secretary of the Trade Union Congress (TUC), told BBC Radio 4’s World at One that “there are always efficiencies” to make in the civil service.
But if the government were “serious about making public services work and delivering for people who make those services work then you’ve got to look at investing in those services,” Mr Novak said.
He argued “you’d be hard pressed to find anybody in the civil service or the public sector who say there is a lot of fat to be trimmed”.
The TUC, which helps represent just under 190,000 civil servants in Public and Commercial Services Union, were a “long way” from strike action on proposed changes, Mr Novak said.
The UK civil service workforce is the largest it has been for nearly 20 years, with 548,000 employees, according to the latest figures from the Office for National Statistics.
Numbers swelled by more than 100,000 due to the impact of Brexit and the Covid-19 pandemic.
