Chancellor Rachel Reeves, who is currently in Beijing as part of a trip to improve economic ties, has said she plans to conduct a major crackdown on Government waste.
She aims to target five per cent efficiency savings across departments as part of a comprehensive budget review set to conclude in June.
Departments will be given three years to achieve the five per cent target and will retain the ability to reallocate saved funds within their own budgets.
The Labour Chancellor emphasised that the efficiency measures would help ensure funding for essential public services.
“It’s through finding those efficiency savings that we’ll have the money to spend on the priorities of the British people,” Reeves said.
The Conservative opposition has dismissed Labour’s claims about improving public sector efficiency.
Shadow Treasury minister Richard Fuller said: “Delivering value for money for the taxpayer is a noble goal.
“But Rachel Reeves’ record so far has been to dole out inflation busting pay rises to Labour’s union paymasters whilst mandating nothing in return, and making no reforms to public sector productivity or welfare spending.”
The five per cent figure is now believed to rise even further as Reeves has previously ruled out further tax hikes as speculation starts to stir around welfare cuts.
The only other option would be to break her own rules, which Institute for Fiscal Studies Paul Johnson has described as “pretty scary for the markets” – many of whom were already “concerned about the UK position”.
Reeves has come under fire for decision to travel to China amid a time of economic turmoil at home.
Gilt yields have now reached their highest points since 2008 – hiking up the cost of government borrowing – which fuelled concern that Reeves would fail to abide by her self-prescribed rules on debt and spending without imposing further cuts on working people.
The Conservatives have blasted her trip abroad, saying that she had “fled to China” over explaining the state of the nation’s economy.
Reeves has defended the trip, stating she is there to establish a long-term relationship with China that is “squarely in our national interest”.
However, she refused to comment on the state of Britain’s economic turmoil, stating instead that her existing fiscal plans would stay in place.
She said: “The fiscal rules laid out in the Budget are non-negotiable.
“Economic stability is the bedrock for economic growth and prosperity.”