Spending squeeze ‘could cost more than 10,000 Civil Service jobs’

Ministers will not set an arbitrary cap on the number of civil servants amid reports more than 10,000 jobs could be lost as the result of a spending squeeze.

Sir Keir Starmer has been warned by a trade union not to impose “blunt headcount targets” for the size of the Civil Service but Government sources insisted there would be no set limit, although the number “cannot keep growing”.

Departments have been ordered to find 5% “efficiency savings” as part of Chancellor Rachel Reeves’ spending review, potentially putting jobs at risk.

Any reduction under Labour would be more modest, with the Guardian reporting more than 10,000 jobs could be lost.

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.”

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.”

A Government source said: “The number of civil servants cannot keep growing.

“But we will not set an arbitrary cap.

“The last government tried that and ended up spending loads on more expensive consultants.”

The Government is already risking a confrontation with unions over proposals to limit pay rises for more than a million public servants to 2.8%, a figure only just over the projected 2.6% rate of inflation next year.

Unions representing teachers, doctors and nurses have condemned the proposals.

In the face of the union backlash, Downing Street said the public sector must improve productivity to justify real-terms pay increases.

Asked whether higher pay settlements to staff would mean departmental cuts elsewhere, the spokesman said: “Real-terms pay increases must be matched by productivity gains and departments will only be able to fund pay awards above inflation over the medium-term if they become more productive and workforces become more productive.”

TUC general secretary Paul Nowak said: “It’s hard to see how you address the crisis in our services without meaningful pay rises.

“And it’s hard to see how services cut to the bone by 14 years of Tory government will find significant cash savings.

“The Government must now engage unions and the millions of public sector workers we represent in a serious conversation about public service reform and delivery.”