The UK Treasury is asking all government departments, including the Department of Energy and Climate Change, to model cost reduction scenarios of 25% and 40% in real terms by 2019–20.
The Treasury said as part of its 2015 spending review that expenditure limits will be set for each department and annually managed expenditure will be scrutinised.
It added that it will work with departments to “develop options for reform … to reduce spending and increase efficiency while improving public services” during August.
DECC, as well as other departments, will be asked to examine assets and look at how they can be managed more effectively, including privatisation and contracting out assets that don’t need to be part of the public sector.
Initial ministerial discussions on the cuts will take place in September with ministerial decisions signed off in November and the Spending review published.