Whitehall: Loss of jobs 'will do public finances more harm than good'

In four years time the public sector will be employing nearly half a million fewer people that it does today.

But despite talk of a winter of discontent in the public sector senior union officials were last night privately playing down the threat of widespread co-ordinated strike action. Meanwhile ministers promised to cut as many jobs as possible through retirement and natural wastage.

Most government departments won't publish details of where they intend to make cuts until business plans are published over the next month. But when Mr Osborne talks of making £6 billion of "administrative savings" across Whitehall, the majorityt of the money will be found in jobs.

Just four Government departments – Work and Pensions, Revenue and Customs, the Ministry of Defence and Justice – account for 80 per cent of civil servants. Of these, around 25,000 jobs will go at the MoD and another 14,000 are expected at the Department of Justice.

6,500 jobs will be lost in the Home Office – of which 5,000 will be UK Borders Agency staff – while the police are predicted to lose 20,000 officers. Similar levels of cuts are expected in other unprotected departments. Even the Department of Health – which is to see its budget rise – will lose jobs as part of efficiency savings. Already 15,000 jobs have been lost in the NHS and more cuts are expected in administration.

Treasury officials emphasise that the civil service has an annual turnover of 8 per cent a year which will minimise the need for compulsory redundancies. But union officials point out that people in posts which are closed may not be able to apply for posts that are available – because they are not qualified or the positions are based in different parts of the country.

"It's very hard to know at this stage just how many compulsory redundancies we will be looking at and there will be big regional variations," said one official. "A civil servant whose job is made redundant in London may not have a problem of finding another job elsewhere in the capital. But that only represents 15 per cent of the total work force. The rest of the civil service are spread around the country and it is here where it may be harder to avoid compulsory redundancies."

But the official added that he thought co-ordinated industrial action was unlikely. "I am sceptical of all this talk of strikes," he said. "People are angry and morale is very low but I'm not sure there is an appetite for all-out industrial action.

"The one thing that could change that is if public sector pension reform is seen to be very unfair, but I don't think the redundancy programme alone will do it."

The largest public sector union, Unison, described the cuts as "ideologically driven" and accused the Government of failing to consider whether there was a fairer alternative. The union said that the 500,000 public sector job cuts will prove a "false economy" and will cost the private sector a further 425,000 jobs.

"They could cost the Treasury around £4.6bn in lost tax revenue and £6.1bn in increased benefit payments - adding £10.7bn a year to the annual deficit and almost entirely cancelling out the apparent £12.5bn saving to the public sector paybill," general secretary Dave Prentis said. "The much-trailed cuts come as no great surprise, but the scale is a devastating blow to workers and their families whose jobs are in the firing line," he added.

Jonathan Baume, general secretary of the senior civil service union the FDA, said there would be great uncertainty about total job cuts until departmental business plans were published over the next month and even then it could be years before all those affected knew.

"Morale will suffer at all levels of the civil service while individuals wait to learn about the impact on their future employment and the services they provide," he said.

"Senior managers have a particularly difficult task in seeking to maintain the morale and motivation of the teams they manage, and in ensuring that services continue to be delivered to support ministers and the wider public, at a time when their own posts are also under threat. The FDA will be seeking urgent discussions with all government departments about the impact of today's announcement."