George Osborne’s plans to cut 400,000 public sector jobs should be “easily manageable”, according to a salvo from a centre-right think-tank that portrays government workers as overpaid, prone to sickness and poorly managed.

Reform, an independent research organisation chaired by British Energy’s Sir Adrian Montague, argues for significant changes to inject dynamism into the Civil Service including performance-related pay, a crackdown on sick leave and broader freedom to use professional consultants. To attract top talent, it calls for the abandonment of a restriction on public sector workers earning more than the Prime Minister’s £142,500 salary.

“We’re starting to see a corrosive employment culture where poor performance is tolerated and good performance isn’t rewarded,” said Reform’s director, Andrew Haldenby.

Reform, which was accused by a union yesterday of peddling government-orchestrated rhetoric, says that the Chancellor’s deficit cuts could comfortably be achieved through natural wastage. It calculates that if the Government declines to replace just 11 per cent of the employees who quit over the next five years, the Treasury will hit a target of job losses put at 400,000 by the Office for Budget Responsibility.

It believes that the cost-cutting blitz has barely started: employment in the public sector stands at 6.16 million, well ahead of the 5.62 million payroll a decade ago.

“For every ten that are going anyway, if only nine are replaced, that’s all you need to meet the target,” Mr Haldenby said. “It’s easily achievable.”

In an attempt to highlight waste, Reform says that sickness leave is almost 50 per cent higher in jobs funded by the taxpayer: public sector workers are absent for an average of 9.6 days annually, compared with 6.6 in the business world and 8.3 in not-for-profit organisations. Performance-related pay, it adds, is a rarity in the Civil Service, with wages more often determined by an individual’s length of service.

Arguing that job losses need not damage services, Reform highlights the Merseyside Fire and Rescue Service, which has reduced its payroll from 1,500 to 880 over a decade. By focusing on fire prevention and community outreach, it has cut hoax calls by more than half and seen fire deaths and injuries fall dramatically.

Reform’s findings were severely criticised by the Unite union, which said the report was part of a “cacophony of anti-public sector rhetoric” orchestrated by the Government. “Unfortunately, the rhetoric is turning into reality with policies designed to break up the national education and health services,” said Unite’s assistant general secretary, Gail Cartmail.