One in 10 civil servant posts to leave London

Ian Smith, former head of Reed Elsevier, to recommend Whitehall move into the regions
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Up to 10 per cent of London-based civil servants will have to move to a dozen regional hubs linked to the private sector under cost-cutting proposals to be announced next month.

Ian Smith, the former chief executive at Ftse 100 media group Reed Elsevier, is expected to make the recommendations in a Government-commissioned report to be published ahead of the Budget.

Mr Smith has been asked to find ways of trimming Whitehall bureaucracy following on a 2004 civil service relocation review led by Sir Michael Lyons, now chairman of the BBC Trust. A Whitehall source said that 10-to-12 "campuses" would be created, typically accommodating about 200 civil servants. These would be situated next to major industrial bases linked to the relevant departments. For example, more Ministry of Defence staff could become neighbours to aerospace manufacturers in Bristol.

The report will mark a high-profile comeback for Mr Smith, who was ousted at Reed in November after just eight months at the helm. He is believed to have fallen out with the chairman, Anthony Hapgood, over the business's prospects. Mr Smith thought it needed several hundreds of millions of pounds of investment.

Mr Hapgood believed that Reed was in better shape than that, and in an announcement the company said that Mr Smith had left by "mutual consent". Reed counts film industry bible Variety and livestock journal Poultry World among its many publications.

Erik Engstrom, a group director for five years, was promoted to the top job. On Thursday, Mr Engstrom will preside over his first full-year results announcement.

Analysts at Numis Securities have forecast a slight increase in pre-tax profit from £1.21bn to £1.25bn. In 2007, pre-tax profit was just under £1bn. In its note, Numis said: "We view Reed as fundamentally attractive, but need greater clarity on the group's structure and investment levels before moving to a positive recommendation."

Mr Smith was a surprising appointment because he did not have a media background. He joined from Taylor Wimpey, the housebuilding giant, and had previously worked for oil group Shell in the Middle East.

During the handover period early last year from the previous chief executive, Sir Crispin Davis, then-Business minister Lady Vadera made her much-ridiculed comment that there were "a few green shoots" of economic recovery. She was in fact referring to Reed's successful issue of $1.5bn of fresh debt in mid-2009, which defied market difficulties.