Rachel Reeves channelled Thatcher today vowing to deploy an ‘iron fist against waste’ as she scrambles to avoid more tax hikes.

The Chancellor launched a ‘line by line’ review of government spending, warning that departments must find 5 per cent of efficiencies by 2029. 

Ms Reeves said she will ‘not tolerate’ taxpayers’ cash being blown on poor value projects, as she evoked the approach taken by the ‘Iron Lady’ Tory PM.

‘I have no doubt that we can find efficiency savings within Government spending of 5 per cent and I’m determined to do so,’ she told broadcasters this morning.

‘Because it’s through finding those efficiency savings that we will have the money to spend on the priorities of the British people.

‘So part of this spending review will be cracking down on waste, cracking down on non-priority spending, so that we can focus on the issues – whether that is improving living standards, ensuring our streets are safe, or indeed reducing waiting times in the NHS.’

The review – due to be completed by June and covering three years – will be critical to Labour’s fortunes. 

Experts have accused Ms Reeves of ‘implausible’ spending plans, and raised the prospect she will need to increase the tax burden again – despite imposing record rises at the Budget in October. 

Businesses have been up in arms at the massive national insurance bump, with fears it will destroy jobs and suppress wages.

The UK economy is also showing signs of stalling as confidence plunges in the wake of the raid. 

The review will be the first ‘zero-based’ exercise since 2007 – starting from scratch with every expense to be justified.

Departments will be told to stop spending if it does not contribute to a priority.

Budgets will be scrutinised by ‘challenge panels of external experts’ – including former senior managers from banks including Lloyd’s, Barclays and Co-operative Group.

Unveiling the drive, Ms Reeves said: ‘By totally rewiring how the government spends money we will be able to deliver our Plan for Change and focus on what matters for working people.

‘The previous government allowed millions of pounds of taxpayers’ money to go to waste on poor value for money projects.

‘We will not tolerate it; I said I would have an iron grip on the public finances and that means taking an iron fist against waste.

‘By reforming our public services, we will ensure they are up to scratch for modern day demands, saving money and delivering better services for people across the country.

‘That’s why we will inspect every pound of government spend, so that it goes to the right places and we put an end to all waste.’

The Chancellor’s review will also set out a timetable for achieving the party’s ambition of raising defence spending to 2.5 per cent of GDP.

But she told the Mail at the weekend that any extra cash for the military would have to come out of the same ‘spending envelope’ as other priorities, such as schools, hospitals and the police.

Ms Reeves’ warning on waste came as a report into the growth of red tape revealed some of Britain’s biggest watchdogs are growing faster than the sectors they oversee.

Research by the Policy Exchange think-tank has found that headcount at seven major regulators grew by 84 per cent over the past decade.

The Financial Conduct Authority, which regulates banks and other City businesses, has seen staff levels double (116.6 per cent increase) since 2013-14.

Numbers at the Financial Reporting Council, in charge of accountants, have more than tripled (256 per cent) while the Competition and Markets Authority has seen a 69.8 per cent increase.