In its Spending Review documents, the HM Treasury said it would deliver reductions to departmental administration budgets of 16% in real terms by 2029-30, saving around £2.2bn.
The report said the cuts would be “delivered through savings and efficiencies, supported by the £150m announced at Spring Statement 2025 to help deliver employee exit schemes, and with greater embedding of a cost-conscious culture across Whitehall, including reducing travel costs”.
Looking at the MHCLG specifically, its planned departmental administration budget for 2025-26 is £285m, which will then fall to £284m in 2026-27, £281m in 2027-28, £272m in 2028-29 and £262m in 2029-30.
This means the MHCLG will deliver “efficiency gains” of £50m per year by 2028-29.
The MHCLG will achieve this through workplace and digital reform as well as “funding simplification for local Government.”
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On workplace and digital reform, the Spending Review said it would boost productivity in AI, insourcing services, use digitally enabled processes to deliver cladding remediation and make the workforce more “agile and streamlined”.
Regarding funding simplification, the report said the number of “onerous competitive bidding processes” would be lowered and data requested from central Government would be streamlined.
MHCLG to use AI, move work in-house and centralise cladding remediation
The MHCLG will boost productivity using AI to “expedite routine tasks, quickly checking simple errors and helping with administrative tasks such as note-taking”.
The Spending Review report into efficiency delivery plans suggests this could save staff 500,000 hours per year.
The department will also continue to minimise the use of suppliers and consultants, and build “digital capability and learning platforms in-house” rather than using external companies.
Its cladding remediation portfolio will be consolidated into the Cladding Safety Scheme, which will “deliver efficiency gains faster, using digitally enabled processes to support cladding remediation delivery, with built-in stronger counter-fraud protections”.
The above plans, the report said, would allow a more “slimline and agile workforce” in conjunction with the voluntary exit scheme that has already been launched.
Funding simplification will mean cut in number of MHCLG grants offered
As part of funding simplification plans, the MHCLG will be “significantly reducing the number of MHCLG-led grants”.
The report said further details will be published in the 2026-27 Local Government Finance Settlement.
“This consolidation will reduce administrative costs for MHCLG, with greater efficiencies expected for local Government. The additional flexibility on how funding is spent, together with longer planning horizons, will allow local authorities to deliver better outcomes,” it explained.
The department has also been tasked with streamlining the data and information submission process for funding applications.
One way it will do this is to switch from a customer software for each fund to a single platform.
“In addition to significantly reducing administrative burdens for users, it will enable process improvements within the department through a standardised approach to reporting and monitoring, and more efficient data processing,” the report said.
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Spending Review 2025: MHCLG’s administration budget to be cut by 15% over next five years
