London-based civil servants 'may be relocated'

Liam Byrne will set out his plans ahead of the pre-Budget report

Thousands of civil servants could be moved out of London and the South East of England if Labour wins the next election, according to The Guardian.

Many of the South East's 132,000 civil servants and 90,000 quango employees would be relocated to save money and boost regional jobs, under the plan.

The Treasury said the story - based on a leaked report by chief secretary Liam Byrne - was "speculation".

The Tories and Lib Dems both plan to slash quango and civil service jobs.

A Treasury spokesman declined to comment on the contents of Mr Byrne's Smarter Government Report ahead of its publication in a fortnight's time.

General election

He said: "Following Sir Michael Lyons' report on relocation in 2004, the government announced plans to relocate 20,000 posts out of London and the South East by March 2010.

"In the Budget, the government announced that 19,000 relocations had already been achieved and as a result the Government would increase the target to 24,000 posts by 2010-11."

The Smarter Government review is expected to recommend an assessment of the scope for relocations in time for next spring's Budget - the last before a general election.

According to The Guardian, Mr Byne's review will be guided by the principle that only those civil servants "required for ministerial support or personal interaction" should remain in the South-East of England.

The leaked extracts of the report also suggest a planned reduction in the cost of the senior civil service, which has grown from 3,100 to 4,300 since the 1990s.

It also proposes a cut in the number of quangos, along with new guidelines to make it more difficult to set up new quangos - including a new rule that would see quangos disbanded within a year if they failed to perform their intended role.

It also suggests merging backroom functions in some government departments, but stops short of saying whole departments should be scrapped.

Both the Conservatives and the Liberal Democrats have extensive plans for cutting the cost of government.

Under the Conservatives, all quangos and regulators would be subject to a "sunset clause" where they would have to prove their usefulness or be scrapped.

They have also pledged to slash the cost of running government departments by a third and give ministers more power over the civil service.

The Lib Dems have plans to reduce the number of government departments from 24 to 14 and axe dozens of quangos.