The size and efficiency of government departments is under increasing scrutiny, as the government tries to cut costs and search for growth after the number of civil servants has grown by more than 130,000 people since the end of the pandemic.

In a speech at the Reckitt campus, Sir Keir Starmer set out how the government will implement AI across the whole of government to reduce departmental staff costs and improve productivity.

In his speech, the prime minister repeatedly stressed the word ‘change’, which was so common in the run up to the election in July 2024.

‘The good news is, technology can massively help, if we push forward with digital reform of government, and we are going to do that, we can make massive savings, £45bn. AI is a golden opportunity,’ enthused Starmer.

The government is putting its trust in AI to solve the productivity problem, albeit this will take some years to realise.

Starmer said the government would employ the ‘best of the best’ on AI, saying that ‘AI teams’ are being sent into every single government department to improve efficiency and promote innovation. However, he did not address whether staff with these skills are already working in government.

One of the major announcements was the decision to close NHS England, putting over 13,000 jobs at immediate risk, in an organisation which has already been carved out in the last 18 months. The PM claimed the savings would go towards funding front line NHS staff instead, and pointed to duplication with the work of the Department of Health for the rationale for the closure.

With civil servants feeling under fire, Starmer pointed to the ballooning departmental workforce, adding: ‘At the moment the state employs more people than we’ve employed for decades. And look around the country, do you see good value everywhere? Because I don’t.

‘I actually think it’s weaker than it’s ever been, overstretched, unfocused, trying to do to much, and doing it badly, unable to deliver the security that people need. I believe the working people want an active government.’

This came after Pat McFadden, Cabinet minister said that the size of the civil service ‘would and can’ be reduced, hinting at sweeping job cuts last weekend.

Starmer added: ‘We’re not saying that civil servants haven’t got the right mind frame, we’re trying to analyse why is it that we’re in this place.

‘You realise there’s a stack of regulation, there’s no end of agencies and arm’s length bodies which have accumulated over the years and most importantly and crucial for me the power of government has gone.’

Yesterday the government announced the closure of the Payment Systems Regulator with its responsibilities absorbed by the Financial Conduct Authority (FCA).