40,000 jobs go

Gordon Brown today wielded the axe in Whitehall by announcing that more than 40,000 civil servants' jobs will be lost.

Another 13,500 posts will be moved out of London and the South-East in the first phase of a massive planned transfer of jobs into the regions.

The cutbacks will mainly be felt at the Department of Work and Pensions, Whitehall's biggest ministry, and at the Inland Revenue and Customs & Excise, which are to be merged into a new tax authority.

The scale of the job losses, announced by Mr Brown in his Budget speech, took staff and union leaders by surprise.

Mr Brown was accused of announcing a "day of the long knives".

Staff at the DWP will fall from 130,000 now to 100,000 in 2008 while the department's budget will be cut by five per cent under a deal agreed between Mr Brown and work and pensions secretary Andrew Smith.

Some 40,000 jobs in total will be affected - 30,000 of them going altogether with 10,000 being moved away from the capital. The merger of the Inland Revenue and Customs & Excise - a move which had been threatened ever since Labour came to power in 1997 - will see another 10,500 posts axed while 3,500 are moved.

The Chancellor also said that staff at the Department for Education and Science would be cut by 31 per cent by 2008, a move which is likely to cost another 1,500 jobs.

Mr Brown also expects cuts across Whitehall in years to come, in what will amount to the biggest cull of civil servants since the Second World War. He said a total of 20,000 posts would be shifted from London as the Governmentmoves to implement the main findings of a report on civil service redeployment by Sir Michael Lyons.

Over a longer period, perhaps 15 years or more, a total of 60,000 jobs could be moved to the regions, saving an estimated £2billion on salaries and sale of valuable buildings and land in the capital.

Union leaders called for immediate meetings with ministers to discuss the job losses and said they were shocked at the scale of the cuts. Mark Serwotka, general secretary of the Public and Commercial Services Union, said the job losses at the DWP had come "out of the blue". He went on: "It is a case of 'a day of the long knives' for the civil service."

"If the Government is serious about tackling tax evasion and the growing problem of smuggling and about delivering full employment, cutting thousands of jobs is hardly going to help."

One civil servant at the DWP, where staff are embroiled in a long-running dispute over pay and are planning industrial action next month, including a 48-hour strike, hit out at the Chancellor. He said: "To hear Gordon Brown announce in the Commons that so many of us will lose our jobs is akin to telling someone by text that they will be made redundant."

Dave Prentis, general secretary of the Unison public services union, said: "We would not want anything to happen that would undermine the cohesion of public services."

TUC general secretary Brendan Barber said: "The announcement of civil service job losses had more to do with shooting the opposition's fox than acting as a responsible employer."

Mr Barber's charge resulted from claims last month by shadow chancellor Oliver Letwin that the Tories would cull civil service jobs to help them achieve savings of £35billion.

But Mr Brown's thinking appeared to have been influenced more by a major government-commissioned efficiency report, which has yet to be published, identifying 80,000 Whitehall posts which could be axed.

Leaks of Sir Peter Gershon's 195-page report have revealed how he is urging cutbacks with the money saved spent on schools and hospitals.

Sir Peter's reforms would revolutionise Whitehall, leading to the end of the "generalist" civil servant, and a move towards higher-paid, higherskilled specialists working in competing policy and delivery groups across departments.