Several cabinet ministers have written to the prime minister and the Treasury two weeks ahead of the Budget, to voice concerns over the scale of cuts their departments may face.
There are fears that steep spending cuts will be needed to meet what Whitehall sources have suggested is a £40bn funding gap.
In what some say is an unusual move, ministers from hard-pressed departments are calling for a last-minute rethink of the Budget, “going over the head” over the chancellor, to address the prime minister directly.
Overall spending totals have been agreed by the prime minister and chancellor, with Downing Street saying: “Not every department will be able to do everything they want to.”
There has been considerable Cabinet disquiet about the spending cuts required to meet the Treasury’s proposed spending limit.
Bloomberg reported that ministers had expressed concern that the proposed cuts could be as high as 20% next year.
They reportedly include Deputy Prime Minister Angela Rayner who runs the Ministry of Housing, Communities and Local Government, as well as Justice Secretary Shabana Mahmood and Transport Secretary Louise Haigh. None of the ministers denied the report.
Haigh refused to comment on the reports, but told the BBC: “Budget negotiations and discussions are taking places across government in absolutely the usual way.”
She added that she was “looking forward to the chancellor’s announcement” on 30 October.
Responding to the speculation, the prime minister’s official spokesperson said public services needed “reform” and government departments will have to “become more productive”.
Sir Keir Starmer and Rachel Reeves have agreed on the spending totals to be unveiled in the budget on 30 October, the spokesman said.
But negotiations are ongoing with individual departments about their specific allocations, the spokesman added.
Danny Shaw, a commentator on justice and policing affairs, who has previously advised the Home Secretary Yvette Cooper, said cuts of that order would be “devastating” for the justice department.
“It would completely destroy in many ways the criminal justice system in terms of the courts, probation, prisons and legal aid,” he said.
There is already a backlog of around 68,000 cases in the crown courts, he added.
A Labour source told the BBC that there was “significant angst” across government at a failure from the Treasury to “recognise the trade-offs” of cutting spending.
A former senior aide to Conservative chancellors during multiple Budgets said that they had never experienced a cabinet minister “going over our head” to the prime minister.
However, a Downing Street source said exchanges like this were were a “completely normal part of the process”, and denied that it is unusual for cabinet ministers to address their concerns to the prime minister rather than the chancellor.
Education Secretary Bridget Phillipson declined to comment on whether she was part of the group that had written to Sir Keir Starmer and the Treasury.
“There are lots of conversations happening right now across government between the chancellor with members of the Cabinet as you would expect in the usual way as part of the Budget process,” she told BBC Radio 4’s Today programme.
Asked whether her department was protected from spending cuts, she said that “education is always a priority for Labour governments”.
Filling the gap in funding public services could lead to the largest tax raising Budget in a generation when Chancellor Rachel Reeves makes her statement at the end of this month.
Reeves has decided to commit to a new borrowing rule that means day-to-day spending must be covered by tax revenues.
As the government insists it will stick to manifesto promises not to raise taxes on working people, the focus is now on the extension of National Insurance to employer pensions contributions and increases in some form of capital gains tax.
There is also speculation that amid falling petrol prices, there is a possibility of higher fuel taxes.
