The Conservative cabinet minister in charge of trying to save jobs in the steel industry is considering plans to cut up to 4,000 employees in his own department and its agencies, and slash costs even more deeply than George Osborne’s austerity requires, according to official leaked documents.

Sajid Javid, the business secretary and former banker, ordered a review of the Department for Business, Innovation and Skills (BIS) from management consultants McKinsey soon after taking on the job after the election.

The department has repeatedly refused requests to provide more information about McKinsey’s advice but a leaked strategy paper marked “official, sensitive” shows BIS is already planning to cut a minimum of 1,526 posts before 2020.

The job losses could go as high as 4,103 at the top end of the scale if it takes the advice of McKinsey, whose proposals are under consideration. This would involve cutting the core staff of BIS by almost 40%.

The aim of the strategy paper is to save BIS £350m, which goes further by £100m than the department needs to cut to stay inside the Treasury’s spending controls.

The leak also reveals how BIS is planning major cost-cutting in agencies that support apprenticeships, with plans to shut down the Commission for Employment and Skills entirely and reduce staff at the Skills Funding Agency by 40%.

BIS said it would not comment on leaked documents but a spokesman added: “To be clear, there have been no changes to the plans already announced and discussed extensively with parliament.

“We have a responsibility to the taxpayer to ensure as much of the department’s funding as possible is focused on front line services. We have deliberately set ourselves challenging savings targets consistent with the spending review and we will continue to explore options in detail before making decisions.”



Whitehall sources stressed any future decisions on restructuring would be taken by the permanent secretary and board of BIS rather than Javid himself. They also highlighted extra resources have been made available for the team working on the steel crisis in recent months.

The strategy paper has been leaked in the week that Labour called for Javid to be sacked over his laissez-faire approach to Tata’s withdrawal from UK steel operations, arguing he is ideologically wedded to small government and a hands-off approach to industry.

Javid came in for particular criticism for flying to Australia for a trade trip and short holiday when Tata revealed it was pulling out of Port Talbot and other UK sites. He later admitted he was aware Tata was in trouble but had not realised executives would go as far as threatening to shut down the sites if a buyer could not be found.

Louise Haigh, a shadow civil service minister, said his officials working on the steel crisis will be devastated by the admission that the “secret cuts go further than even the chancellor thought possible”.

“As his dedicated civil servants are working all hours to get to grips with the steel crisis, Sajid Javid is concocting a secret plan to lay them off,” she said.



“Sajid Javid now has to come clean and explain why he is single-mindedly pressing ahead when his Department is in crisis mode, with steel is on its knees, productivity in free fall and millions of apprenticeships yet to be created.



“If he doesn’t rethink this ill-conceived agenda it will raise serious questions about his judgement.”

Gordon Marsden, a shadow skills minister, said it underlines the “inability of the government to match its grand designs for apprenticeships with the necessary resources to deliver them”, given it is meant to deliver 3 million places by 2020.