UK freezes government credit cards in drive for savings

LONDON (Reuters) - Thousands of government-issued credit cards accounting for hundreds of millions of pounds of spending will be frozen this week, Britain's Labour government said, as it tries to repair the country's strained public finances.

Against a backdrop of slowing growth forecasts and bound by fiscal rules that limit day-to-day borrowing, ministers are seeking to cut budgets wherever they can. Sweeping welfare cuts are expected on Tuesday before a fiscal update on March 26.

The decision to freeze almost all of around 20,000 "Government Procurement Cards" falls under efforts to reduce wasteful spending, the cabinet office said in a statement late on Monday.

According to the cabinet office, spending on government credit cards has more than quadrupled since the 2020-21 financial year, rising to over 675 million pounds ($876.83 million) in 2024-2025 from around 155 million pounds.

"It's not right that hundreds of millions of pounds are spent on government credit cards each year, without high levels of scrutiny or challenge," cabinet office minister Pat McFadden said.

"Only officials for whom it is absolutely essential should have a card."

Only a minority of staff, including diplomats working in crisis areas, will be spared. Frozen cards will be reallocated to those who can justify a need for them, or else be cancelled by the end of the month.

The aim is to cut the number of cards in circulation by at least 50%.

Government cost-cutting is also on U.S. President Donald Trump's agenda, with far more drastic measures, including mass layoffs, being spearheaded by tech mogul Elon Musk's Department of Government Efficiency (DOGE).

($1 = 0.7698 pounds)

(Reporting by Alvise Armellini; editing by William James and Ed Osmond)