More than 10,000 civil servants could lose their jobs after ministers were told to make savings of 5%, Sky News has learned.
Government sources said the civil service had become too large and unwieldy after it saw an expansion due to Brexit and the COVID pandemic.
There are currently 513,000 full-time civil servants in Whitehall, an increase of 133,000 from a low of about 380,000 in 2016.
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Chancellor Rachel Reeves this week ordered departments to make 5% savings, which she said she has “no doubt” they can find.
Departments have been told it is up to them to find the savings.
The sources said ministers are planning to cut more than 10,000 staff from central government to meet the ordered cuts.
Cabinet Office Permanent Secretary Cat Little told staff on Thursday 400 roles will go as part of a voluntary exit scheme from its current total of 6,315 full-time staff.
A Cabinet Office spokesman said it is moving to “a smaller, clearer structure” that will remove “duplication and unnecessary bureaucracy, empower teams and individuals to be creative and innovative in their work and improve delivery”.
A government source told Sky News: “The number of civil servants cannot keep increasing year after year.
“But we will not set an arbitrary headcount target.
“The Tories tried that and ended up spending loads on more expensive consultants.”
After winning the election in July, Labour dropped the Conservatives’ target to cap the civil service to its October 2023 headcount of 488,000.
Fran Heathcote, general secretary of the civil servants PCS union said: “We hope that after a week of unacceptable civil service-bashing from members of the new government, these rumours are untrue.
“People voted for change, not for a continuation of damaging plans to cut civil service jobs. We expect better from a Labour government.”
Cabinet Office minister Pat McFadden refused to say earlier this week if there was a target for staff reductions, but said he wants them to use solutions like AI to make them more productive.
He said the civil service needs to have a “start-up” mindset as he called on “disruptors, innovators and creative thinkers” to help make the civil service more productive.
Last week, Sir Keir Starmer accused “too many people in Whitehall” of being “comfortable in the tepid bath of managed decline”.
Mike Clancy, general secretary of the Prospect trade union, said: “We need a clear plan for the future of the civil service that goes beyond the blunt headcount targets that have failed in the past.
“This plan needs to be developed in partnership with civil servants and their unions, and we look forward to deeper engagement with the government in the coming months.”
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What is a spending review?
June will see the first-ever strategic workforce plan for the civil service, which will look at the size and shape of Whitehall and whether it is fit for modern government.
Asked if that would mean fewer civil servants, Cat Little, the Cabinet Office’s permanent secretary, told MPs last week: “It is absolutely imperative that the civil service becomes more efficient, more productive and takes advantage of technology to become less dependent on people.”
Pressed on whether that might mean a smaller headcount of redeploying people, she said: “Exactly, and it has to work in tandem with the work we are doing on reducing consultancy and contingent labour.”
Ms Little said some departments have already begun “voluntary exit schemes” but said it was key that high-performing staff were not encouraged to leave.
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A government spokesman said: “Under our plan for change, we are making sure every part of government is delivering on working people’s priorities – delivering growth, putting more money in people’s pockets, getting the NHS back on its feet, rebuilding Britain and securing our borders in a decade of national renewal.
“We are committed to making the civil service more efficient and effective, with bold measures to improve skills and harness new technologies.”
