Civil Service jobs cuts could reach 90,000

About 90,000 jobs in the Civil Service could be axed as a result of the Government's drive to reduce its running costs, more than double the 40,500 figure announced by Gordon Brown in his Budget.

Ministers admitted yesterday that many more posts would have to be cut if they were to achieve the Chancellor's demand for them to shave 2.5 per cent a year off their administration bills. They also conceded that some compulsory redundancies were likely.

Mr Brown hopes to achieve £20bn of savings which will be transferred to frontline services. But analysts believe the 40,500 job cuts he announced on Wednesday will save only about £2bn. Another problem is that the savings will not be achieved overnight. The Government's own figures show that the average cost of a redundancy package for a civil servant is £65,000.

A further £2.3bn could be saved by plans to move 20,000 staff out of London and the South-east, but that will take 15 years to achieve.

A recruitment freeze is expected to be recommended by Sir Peter Gershon, the Government's efficiency adviser, in a report to the Treasury this summer. On Wednesday, Mr Brown said 30,000 posts would be lost at the Department of Work and Pensions and 10,500 at the Inland Revenue and Customs and Excise, which are to merge.

Other Treasury targets include the Home Office, which employs 15,640 people, the Department of Constitutional Affairs (1,874) and the Ministry of Defence, which has 89,750 civilian staff.

Departments facing a squeeze in the government-wide spending review will also come under pressure to shed jobs. Although Mr Brown promised to increase spending in several areas where the Tories would freeze budgets for two years, he did not make such a pledge for departments including Trade and Industry, which employs 4,351 people in London, Environment, Food and Rural Affairs (7,802) and Culture Media and Sport (478).

Mr Brown said it was "regrettable" that such a large number of jobs had to go, but many clerical posts were no longer needed.

The Tories accused Labour of "reannouncing" moves to slim down the Department of Work and Pensions, recalling that it said last year the workforce would fall from 131,000 to 112,000 by 2006. David Willetts, shadow Secretary of State for Work and Pensions, said: "We need tough decisions, instead of which we've got Labour's familiar trick of reheating old announcements."

Andrew Smith, the Work and Pensions Secretary, insisted it was a new announcement to reduce staffing levels to 100,000 over four years. He admitted there had been no prior consultation with the unions. Mr Smith did not rule out some compulsory redundancies but said he would try to avoid them, adding that 9,000 of his department's staff leave each year. Angry trade union leaders demanded urgent talks on the jobs cull. The TUC warned that the proposed cuts could cause "a collapse of morale among remaining staff and, counter to the key objective, could have a serious impact on the frontline services to be delivered".

Paul Noon, general secretary of the Prospect union, said: "If a private-sector employer behaved in this way and announced 40,000 job losses without consultation there would be uproar. Although we are in favour of genuine efficiency moves, a pre-election 'slash and burn' policy in the Civil Service will be fiercely opposed."