Gordon Brown plans to end the Yes, Minister culture in Whitehall by forcing through changes to the way government departments are run in order to save billions of pounds.
Three separate reviews set up by the Chancellor have uncovered significant duplication, waste and red tape. He intends to sell off some prime buildings in central London and halve office rental costs by relocating between 20,000 and 30,000 civil servants outside the capital.
Mr Brown has been plotting a "quiet revolution" in Whitehall which will have huge implications for the way the Government is run. He will update MPs on progress when he delivers his annual Pre-Budget Report tomorrow before announcing final decisions next year.
The Chancellor is convinced that there is scope to save at least £3bn a year by ending Whitehall traditions and ensuring departments are run more like private sector firms.
One Brown ally said: "The reviews have found many examples of things being done in a certain way because the Civil Service says 'we have always done it like this'. Many policy staff are based in London on the grounds that they have meetings with ministers. That is not necessary; they can travel in for meetings or do more by phone or video conferences."
The reviews have found evidence of waste because departments carry out their own "back office" functions such as finance, personnel and computer work. The Treasury believes that departments should pool resources and switch the savings to frontline services. It also wants to stem the tide of Whitehall directives to staff in health and education, giving them more freedom.
The shake-up of Whitehall will be a key feature of a Government spending review to be concluded by next summer. In an attempt to head off further tax rises, the Chancellor will tell Cabinet colleagues that they must contribute to the drive for savings. One main target is the Department of Trade and Industry, which employs 7,600 staff in London.
Mr Brown will announce an increase in government borrowing for this year above the £27bn he estimated in his April budget, with City experts predicting it will exceed £30bn. But he will argue that Britain has weathered the global downturn better than most of its rivals and that the economy will grow in line with his Budget estimate of between 2 per cent and 2.5 per cent.
The Tories will be sceptical about the savings identified by the Treasury. They claim the running costs of departments have soared by 50 per cent, or almost £7bn a year, since Labour came to power in 1997. However, Mr Brown believes his reviews will scupper Tory plans to fight the next election on a pledge to cut Whitehall waste.
Sir Michael Lyons, the director of the Institute of Local Government Studies at Birmingham University, has found that 231,000 or one-third of the national total of government employees are based in London and the South-east - 121,814 (17 per cent) in London and a further 108,748 (15 per cent) in the wider South-east. He will recommend that most of the 52 government call centres based in the capital - a quarter of the total - be relocated.
Peter Gershon, the head of the Office of Government Commerce, will report on how to switch resources to the front line by cutting out waste and duplication. His targets include the £120bn a year the Government spends on buying goods and services and the £100bn handed out in state benefits.
Gus O'Donnell, the permanent secretary to the Treasury, will report this month on the roles of Customs & Excise and the Inland Revenue. He is expected to call for streamlining to reduce overlapping but to stop short of proposing a formal merger.Reuse content