U.K. Foreign Office Seeks to Cut Wage Bill by as Much as a Fifth

The U.K. Foreign Office plans to cut its wage bill by as much as 20%, two people briefed on the matter said, after Boris Johnson’s government reduced overseas aid spending to help repair pandemic-hit public finances.

Much of the cost saving would come from cutting workers on international development projects that are no longer going ahead, as well as short-term contracts and secondments coming to an end, according to the people, who spoke on condition of anonymity. But these wouldn’t be enough to reach the 20% target, and some redundancies are likely to be needed, one person said.

Plans are at an advanced stage though the process is not yet finalized, the people said. A Foreign, Commonwealth and Development Office spokesperson said no decision has been taken.

The move follows the decision to reduce Britain’s overseas aid spending to 0.5% of gross national income from 0.7%, a cut of about 4 billion pounds ($5.5 billion), as it tries to repair the fiscal damage inflicted by the deepest economic slump in three centuries triggered by the coronavirus outbreak.

Government departments have been told to identify areas to make savings ahead of the next spending review, which Chancellor of the Exchequer Rishi Sunak is expected to deliver in the fall.

“Like all government departments, the FCDO is reviewing our operating costs ahead of the next spending review to ensure we have the right capabilities to deliver on our international priorities and respond to any challenges,” the Foreign Office spokesperson said in an emailed statement.

The government is trying to tackle a budget deficit that swelled to about 300 billion pounds -- a peacetime record -- due to emergency pandemic spending.

Johnson won Parliament backing for the cut to overseas aid last week, despite a significant rebellion in his own Conservative Party over a move that breaks a key manifesto pledge. Critics say the decision will see essential projects in developing countries halted.

©2021 Bloomberg L.P.

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