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Angela Rayner, deputy prime minister, is locked in a fierce battle with the Treasury to secure cash for local services, amid claims that the climax of a multiyear spending review has turned into a “chaotic bunfight”.
Rayner and Yvette Cooper, home secretary, are said by multiple officials to be involved in the toughest fight with chancellor Rachel Reeves, as the Treasury nails down departmental budgets for the rest of the parliament.
One senior official said: “It’s a chaotic bunfight. There’s no strategy or plan. It’s seemingly random what is getting funded.” Another official said the discussions had been “wild”, adding: “The internal spending process is brutal.”
The idea of a disorderly process is strongly denied by Treasury officials, who said a number of departments, including the Ministry of Justice, had already settled their budgets much earlier than usual.
Final talks with cabinet ministers will continue into next week ahead of the formal announcement on June 11 of the spending review, which sets departmental day-to-day spending totals until 2029 and capital budgets until 2030.
Rayner’s position is viewed warily in the Treasury and Number 10, not least after the leaking of a memo this week in which she advocated a series of tax rises, mainly on the wealthy, as an alternative to welfare cuts.
The memo, sent in March, was seen as a warning shot to Reeves ahead of the spending review, one person briefed on the matter said. “She could have spoken to her in person, or sent a text,” they said.
The deputy prime minister’s allies claim the letter was leaked to the Telegraph to undermine Rayner by people who thought she should “know her place”. They insisted the leak was not part of a homegrown strategy to portray her as the party’s left-wing conscience.
Rayner’s Ministry of Housing, Communities and Local Government is in a particularly brutal fight for funds, notably to shore up town halls that are facing bankruptcy and to support crumbling child and adult care services.
People briefed on the discussions said Rayner, backed by the health and education departments, was urging the Treasury to provide “frontloaded investment” to reform local services and to deliver savings further down the track.
A person involved in the spending review discussions said negotiations had been “painful” over the past week. They added that wrangling had also been particularly tense with the Home Office, and both the energy and environment departments.
Paul Johnson, head of the Institute for Fiscal Studies think-tank, said after last year’s Budget that projected increases in day-to-day public service spending after 2025-26 of 1.3 per cent were “miserable”, adding: “That may not even be enough to avoid cuts to some departmental budgets.”
One person close to the spending talks said Ed Miliband, energy secretary, was in negotiations about whether he could keep his original spending promises of £6.6bn for the Warm Homes insulation scheme and £8.3bn for GB Energy in this parliament.
They noted that the transport department had been a model, with productive talks having taken place from the start about which projects could be cut, while the MoJ had settled its future budget.
The final days of a spending review are always fraught. Departments that settle their budgets early are insulated from last-minute haggling over scarce resources and eleventh-hour switches of spending.
Cabinet ministers have been holding talks primarily with Darren Jones, Treasury chief secretary, as well as Reeves. Treasury officials said those talks would continue over the weekend and into next week.
The Treasury did not immediately respond to a request for comment.
Officials at the finance ministry insisted the process had been orderly, and said early agreements on an increase to the defence budget funded by cuts to overseas aid and on public sector pay had helped to simplify discussions.
The spending review will set departmental budgets for day-to-day spending for three-years — until 2028-29 — with a focus on the NHS, secure borders and defence, government officials said.
Reeves relaxed her fiscal rules in last year’s Budget to allow up to £100bn of extra spending over the parliament on capital projects — including transport and energy schemes — and some of that money will be allocated on June 11.
What ministers call “unfunded Tory projects” such as road schemes will be axed, as departments carry out a “line-by-line” assessment of all areas of spending.
Some Labour MPs have called on Reeves to open the spending taps. The chancellor’s allies noted that she announced £40bn of tax rises last year and had already made big extra allocations in areas such as health.
Some of the savings demanded by Reeves will come from a squeeze on efficiency and administrative budgets. “We are a responsible government and we need to live within our means,” said one ally of the chancellor.