Controversial plans to axe 40,000 civil service jobs has led to a hiring freeze on the government’s biggest department, union leaders claim.

The Public and Commercial Services union (PCS) warned of industrial action and attacked the government over the ‘disgraceful’ way the job cuts were announced in Gordon Brown's Budget.

General secretary Mark Serwotka said it was ‘outrageous’ for the government to have announced the job cuts on live television. The cuts include 30,000 in the Department of Work and Pensions; 10,500 in the Inland Revenue and Customs; and almost 1,500 at the Department for Education and Skills.

He said: “It was a disgraceful sight to see a Labour chancellor cheered on by ministers in the House of Commons announcing over 40,000 job cuts. What is obvious to anyone in these areas is that cutting jobs will affect the service.”

Chief secretary to the Treasury Paul Boateng denied services would be hit: “We are making savings at the centre so that we can increase investments at the frontline.”