Union warning over 500,000 public sector jobs axe

Spending review in full

Chancellor George Osborne also signalled changes to the pensions of public sector workers with the aim of making savings of 1.8 billion a year by 2014/15.

He confirmed the Office for Budget Responsibility had estimated 490,000 jobs could go over the four years covered by the comprehensive spending review.

"Much of it will be achieved through natural turnover, by leaving posts unfilled as they become vacant. Estimates suggest a turnover rate of over 8% in the public sector," he told MPs.

"But yes, there will be some redundancies ... that is unavoidable when the country has run out of money. We feel responsible for every individual who works for the Government, and we will always do everything we can to help them find alternative work.

"In fact, in the last three months alone the economy created 178,000 jobs."

Unison described the cuts as "ideologically driven" and accused the Government of failing to consider that there was a fairer alternative.

The union said 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 4.6 billion in lost tax revenue and 6.1 billion in increased benefit payments - adding 10.7 billion a year to the annual deficit and almost entirely cancelling out the apparent 12.5 billion saving to the public sector pay-bill," said general secretary Dave Prentis.

"For CSR read Cuts Strangle Recovery. The Tories' ideologically driven, no hope, no ideas, cuts agenda is poisoning the country's chances of recovery, infecting the public sector and costing 425,000 jobs in the private sector.

"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.

"The Chancellor has tunnel vision, there are realistic alternatives that will get the country back on its feet. Make no mistake, there is no way that frontline services will escape his heavy-handed tactics."

Unions said tens of thousands of jobs had already been cut in local government, warning no more could be lost without hitting frontline services.