Whitehall is set for dramatic job losses in all government departments.

The chancellor used Wednesday's Budget to announce both job cuts running into thousands and the relocation of 20,000 civil jobs from the Capital.

Downing Street signalled the government was determined to press ahead.

"No-one should underestimate the government's desire to ensure that as much money as possible from the taxpayer goes into schools, hospitals and frontline services," said the official spokesman.

"What is important in management of any organisation, but particularly one as large as the civil service, is that we seek to ensure we get the maximum efficiency in services." 

Up to 40,000 jobs are set to go as part of Brown's civil service cull.

Number 10 said there was public support for the cuts.

"If in doing that we are able to release more resources for frontline services, my sense is that the public would welcome that and understand that," said the spokesman.

Losses

Across Whitehall Brown said he wanted to reduce back office costs - with job losses in departments including work and pensions and the Inland Revenue.

"The secretary for work is announcing today for his department a gross reduction of 40,000 staff posts, a redeployment of 10,000 posts to new priorities and thus an overall reduction over four years of 30,000 posts," Brown told MPs.

The use of new computer technology, merging departments and redeploying staff to the regions would bring both massive savings and deliver more cash to frontline services, Brown claimed.

"By cutting in real terms the administrative budgets of departments, by reforming procurement both nationally and locally, by unlocking productivity gains from technology and workforce improvements, departments are to achieve annual efficiency savings of 2.5 per cent a year, boosting effective front line service delivery by £20 billion a year by 2008," he told the Commons.

Single taxman

Plans to merge Customs and Excise and the Inland Revenue will streamline the tax collection process and lead to over 10,000 job losses.

"In these two departments covering 40 per cent of the civil service, there will be a gross reduction by 2008 of 54,000 posts. And after redeployment, an overall reduction of 40,500 staff," Brown said.

The Department for Education will cut its central London staff by 31 per cent and put the cash saved into the classroom.

The axe is set to fall across every department by 2008 as Brown revealed he wants all administration budgets cut by at least five per cent in real terms by then.

"Planned administration costs – which were an average of five per cent of total spending in the 1980s and rose to 5.7 per cent in the early 1990s – will fall to four per cent and then to 3.7 per cent by 2008 – the lowest level since the running costs regime was first introduced," Brown predicted.

The news follows publication of the Lyons review on Whitehall relocation and leaked extracts of the Gershon review on civil service reform.