Crackdown on Government Credit Cards: What You Need to Know

The UK government has announced a significant crackdown on the use of government procurement cards (GPCs), with thousands of cards set to be cancelled. This move comes amid concerns over unjustified expenditure and a broader push to cut wasteful spending across government departments. Speaking on Sky News’ Breakfast with Wilfred Frost, Cabinet Minister Pat McFadden confirmed the measures, stating that while he would not accuse civil servants of "fiddling their expenses," he acknowledged that some expenditures were "not justified." He emphasized the importance of treating public money with care, particularly as the government seeks to tighten its finances ahead of next week’s spring statement.

Under the new rules, government departments and agencies have been instructed to freeze nearly all of the 20,000 GPCs currently in circulation. The goal is to reduce the number of active cards by at least 50%. Civil servants who currently hold these cards will now be required to reapply and provide a clear justification for why they need them. Those who fail to do so will have their cards cancelled by the end of the month. This marks a significant shift in how the government manages its procurement cards, which have been increasingly used over the past few years.

Exemptions and Tightened Spending Rules

Not all GPCs will be subject to the freeze. A small number of cards, such as those used by diplomatic staff working in conflict zones, will be exempt from the crackdown. This exemption recognizes that, in certain high-risk environments, GPCs are often the most practical way to account for small expenditures. However, for the majority of cardholders, the rules are being tightened significantly. The spending limit on the cards will be reduced from £2,500 to £500, and any expenditure above this limit will now require the approval of a senior civil servant. These changes reflect the government’s commitment to increasing transparency and accountability in public spending.

The Surge in Government Procurement Card Spending

The decision to crack down on GPCs comes after a dramatic rise in their use over the past few years. According to figures cited by Pat McFadden, the number of cards and the total expenditure associated with them have "grown enormously," quadrupling in just four or five years. In the last financial year alone, spending on GPCs in central government departments and core agencies reached over £600 million, compared to just £1.5 million in 2020/2021. This rapid increase has raised concerns about the lack of oversight and the potential for misuse of public funds.

Justifying the Use of Government Procurement Cards

While the government is clamping down on what it sees as unnecessary spending, it also acknowledges that GPCs can be a valuable tool in certain situations. For example, in hostile or remote environments, such as those faced by Foreign Office staff, the cards provide a convenient way to account for small expenditures without the need for cumbersome paperwork. These justifications highlight the importance of balancing fiscal responsibility with the practical needs of government employees working in challenging conditions.

The Wider Context of Budget Cuts and Financial Pressure

The crackdown on GPCs is part of a broader effort by the government to reduce spending and eliminate waste as it grapples with a challenging fiscal landscape. Chancellor Rachel Reeves has seen her fiscal headroom shrink by £9.9 billion since the October budget, due to a combination of economic stagnation and geopolitical tensions. This financial pressure has led to a series of cost-cutting measures, including the abolition of NHS England and plans to scrap other health-related bodies. Integrated care boards have also been asked to halve their budgets, and welfare cuts worth around £6 billion are expected to be announced, potentially impacting disability benefits.

What This Means for the Future of Government Spending

The cancellation of thousands of GPCs and the tightening of spending rules send a clear signal that the government is serious about restoring financial discipline. With the spring statement just around the corner, the focus will be on how these measures fit into the broader strategy to plug the gap in public finances. As the government continues to identify areas for savings, civil servants and departments will be under increasing pressure to demonstrate value for money and justify their expenditures. This marks a new era of fiscal responsibility, one that is likely to have far-reaching implications for how the government operates in the years to come.