Efficiency Drive: Union fury over fresh Whitehall job cuts

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Unions representing public employees reacted furiously yesterday to Gordon Brown's announcement that more job cuts are on the way, and pay will be kept in check.

The Chancellor was accused of pre-empting discussion on next year's public spending review by announcing that four government departments are having to cut their budgets by 5 per cent. The departments under the axe are Revenue and Customs, the Treasury, Work and Pensions, and the Cabinet Office. The Home Office will also have to cut desk jobs to pay for extra police.

Mr Brown also announced that he hoped to bring proceeds from the sale of state assets to£30bn by 2010.

In the next few days, the Chancellor is expected to add to the misery of public employees by telling them he is rejecting the inflation-beating pay rises recommended by pay review bodies covering groups of workers including doctors, judges and senior civil servants. It is understood that the Chancellor wants to keep the overall increase in public sector pay at 2.5 per cent. With some groups such as the armed forces, nurses and dentists getting more than the average, others will have to settle for what amounts to a pay cut.

Mark Serwotka, the general secretary of the Public and Commercial Services union, said: "Pay in the civil service is among the lowest in the public sector. The intention to drive down public sector pay will do nothing but foster a culture of low pay and leaves little room for manoeuvre in addressing pay inequalities."

The TUC general secretary, Brendan Barber, warned the public would suffer from the cuts in civil service jobs. "It is simply not possible to take £1.8bn in total out of the budgets of these departments without affecting the quality of the service provided," he said.

"Nor do we accept the distinction between front-line services and back-office staff. In most cases, the two work together and these cuts will be felt by users, such as benefit claimants.

He added: "The tight target for public sector pay ... is storing up trouble for the future."

Jonathan Baume, the general secretary of the FDA, which represents senior civil servants, said: "The real cuts in spending budgets of many departments will have a significant impact on their ability to deliver government programmes. They make something of a mockery of the Comprehensive Spending Review process under way. Restricting public sector pay will do nothing to ensure that public sector organisations can recruit and retain the best managers, without whom the Government's reform programme could be undermined."

The ambitious programme of privatisation provoked a warning from the Liberal Democrat shadow chancellor, Vincent Cable, who said that by setting himself such a huge target Mr Brown was in danger of selling assets off too cheaply. The warning follows the recent uproar over the defence contractor QinetiQ, formerly owned by the Ministry of Defence. In 2003, the Government sold a 30 per stake in the company for £42m. When the company was floated on the stock market last month, it was valued at about £1.4bn.

"The Government's record on asset sales is far from impressive," Mr Cable said. "Most recently, the Treasury and Ministry of Defence have bungled the sale of its remaining stake in QinetiQ. The sheer size of the Chancellor's ambition means that it is likely he will fail to achieve value for money."

* Treasury Budget site

* Chancellor's Statement in full