Whitehall departments will be ordered to slash spending to balance the books and focus on “the delivery of what matters most”.
Chancellor Rachel Reeves said overall “day to day” spending will increase as part of the Government’s borrowing and taxation splurge.
But Treasury documents show every department must try and save 2% over the coming year.
And the Home Office will try and save £2.2 billion by processing more asylum cases and ending the use of hotels for migrants.
Sources have indicated the department wants to process 11,000 cases a month to end the scandal of taxpayer-funded hotel rooms.
Critics have warned the move will simply shift spending onto other Government departments.
Shadow Home Secretary James Cleverly said: “There was no mention of border security in the Budget, but it’s unsurprising when Home Office spending is being cut and transferred to rising local government and welfare budgets to pick up the tab for Labour’s asylum amnesty.
“Over 16,000 small boat arrivals since Labour took office, asylum hotels reopening across the country, and nothing more than a white flag and blank cheque to deal with it”.
The Treasury said: “Taking additional actions since cancelling the Migration and Economic Development Partnership with Rwanda, which are forecast to deliver £2.2 billion of savings in 2024-25 and 2025-26 by reducing the asylum backlog.
“Compared to the previous trajectory of spending, this represents a total saving of over £4 billion on asylum across the two years.”
A Labour source said: “Just a few months ago we have inherited a completely failed immigration system from the tories. Including spending over £700million on Rwanda, and gimmicks that didn’t work. We’re working on clearing down the backlog they left behind after years of just doing nothing.”
The Office for Budget Responsibility said spending will fall next year in the Home Office, Department for Culture, Media and Sport, Environment, Food and Rural Affairs, HM Revenue and Customs, HM Treasury and Cabinet Office.
Addressing the overall Government spending plans, the Treasury said: “The Government has set departments a 2% productivity, efficiency and savings target for next year. This will ensure that departments are focusing on the delivery of what matters most.”
Chancellor Rachel Reeves said in the House of Commons: “Day to day spending from 2024-25 onwards will grow by 1.5% in real terms and total departmental spending, including capital spending, will grow by 1.7% in real terms.
“At the election we promised there would be no return to austerity. Today we deliver on that promise.
“But given the scale of the challenges that are facing our public services, that means there will still be difficult choices in the next phase of the Spending Review. Just as we cannot tax and spend our way to prosperity, nor can we simply spend our way to better public services.
“So we will deliver a new approach to public service reform, using technology to improve public services, and taking a zero-based approach so that taxpayers’ money is spent as effectively as possible. and so that we focus on delivering our key priorities.”
Reeves has revealed defence chiefs will be given an extra £3 billion but dodged calls to increase spending to 2.5% of GDP.
The Chancellor insisted there is “no more important job for Government” and confirmed the funding boost amid fears over whether the military could win a war.
But she conceded “we will set a path to spending 2.5% of GDP on defence at a future fiscal event”.
Failing to commit to the figure could lead to cuts in troop numbers and equipment, experts fear.
And it will also hamper attempts to replenish Britain’s depleted ammunition stocks.
Ms Reeves said: “There is no more important job for Government than to keep our country safe, and we are conducting a Strategic Defence Review to be published next year. And as set out in our manifesto, we will set a path to spending 2.5% of GDP on defence at a future fiscal event.
“Today, I am announcing a total increase to the Ministry of Defence’s Budget of £2.9bn next year ensuring the UK comfortably exceeds our NATO commitments and providing guaranteed military support to Ukraine of £3bn per year, for as long as it takes.”
Under the previous Conservative government, troop numbers were cut to their smallest size since the Napoleonic era as they reduced the British Army by 10,000 to 72,500.
Fewer than half of the Royal Navy’s escort vessels – Type 45 Destroyers and Type 23 Frigates – are currently deployed or immediately deployable.
Only two of out six Type 45 destroyers – HMS Duncan and HMS Dauntless – are currently active, according to the Defence Journal.
Five out of the nine Type 23 frigates are on operations. Both classes of ship are due to be replaced with Type 31 and 26 counterparts.
The Defence Journal said Type 45 availability has increased by 17 per cent, with Type 23 rising by 26 per cent.
The House of Lords international relations and defence committee warned civilians must be ready to fight because Britain’s military is too small.
