Does the UK need a DOGE?

As the half-term recess approaches, many of Westminster and Whitehall’s most influential figures are focusing on one of the defining events in any government’s lifetime: the Spending Review.

Led by the Treasury, the Review sets out multi-year parameters for departmental spending. The current process, which will be completed in the late Spring, focuses on 2026 onwards – and will have a major impact on the government’s efforts to turn its rhetoric on economic growth into reality.

The IoD has now published its submission to the Spending Review, identifying three critical priorities.

Improving public sector productivity

The top priority in our latest Policy Voice survey, identified by 38% of business leaders, is improving public sector productivity. Its current weakness is dragging down the economy as a whole – so it must be urgently addressed.

That means getting a firmer grip on total public service spending, and driving bold reforms in service delivery too. The country cannot afford public services to be a bottomless pit – and for business, which have borne the brunt of Labour’s tax increases, it’s key that the Chancellor keeps her pledge not to come back for more.

Many eyes are on the US, where Elon Musk’s new Department of Government Efficiency (DOGE) is rapidly driving extensive budget cuts. Its disruptive (and potentially illegal) approach is not a template for the UK – yet as an experiment in radical reform, it might yet yield lessons for the UK government.

Perhaps the UK’s nearest equivalent is the Office for Value for Money. We argue the OVfM should be made permanent, and strengthened, with greater clarity about its role and clear objectives to demonstrate its impact.

Support for fiscal rules

The IoD backs the updated fiscal rules introduced at the 2024 Budget – it’s right to treat capital spending differently to current spending. Yet if the public finances remain right on the limit of those rules, there is a real risk that small changes in tax receipts lead to a breach.

That’s why the IoD is calling for a higher minimum level of headroom for the current budget fiscal rule, of 0.8% of GDP. Without a wider margin for error, we’re likely to see tax and spending plans tweaked repeatedly, undermining the long-term stability sought by business.

Infrastructure investment should be protected and long-term

Labour’s infrastructure investment plans are hugely important to the UK’s economic prospects. The IoD is calling for the capital investment budget to be protected, to create confidence about the long-term project pipeline.

We also believe the new National Infrastructure and Service Transformation Authority (NISTA) will be crucial to effective delivery. NISTA’s institutional budget should be protected, and it needs a clear framework to guide its decisions about infrastructure priorities.

The 2025 Spending Review will shape the political and policy landscape for years to come. Business will be watching closely to see if the government delivers on these three priorities.

Read the IoD’s full submission to the UK Government’s Spending Review 2025 – which also includes proposals relating to tackling skills shortages, supporting a flexible labour market, sustainability and energy, boosting UK trade, tech adoption and the devolved nations – here.