The Health Service Journal says that the report, which was delivered to the Government in March 2009, includes numerous other recommendations designed to produce cost savings, including a recruitment freeze and an early retirement programme, both to start in the next two years.

The BBC reports that the Government has rejected the proposed job cuts (external website). Health minister Mike O'Brien is quoted as follows:

Ministers have rejected the suggested proposals in the McKinsey report and there are no plans to adopt these proposals in the future. The government does not believe the right answer to improving the NHS now or in the future is to cut the NHS workforce.

Nonetheless, the severity of McKinsey and Company's proposals underlines the blunt fact that the NHS - and indeed the public sector as a whole - must face up to the prospect of swingeing cuts in public spending over the coming years.

Some extent of public sector job cuts is inevitable. As XpertHR head of salary surveys and data benchmarking services Mark Crail. notes in the latest monthly economic commentary from salary survey specialists CELRE (part of the XpertHR group):

We can expect to see some substantial reductions in jobs in the public sector whoever wins the next general election as the Government looks for ways of clawing back the huge sums it spent preventing a general collapse in the entire economic system at the start of the year.

Another area in which it is likely that the impact of public spending cuts will be felt is in public sector pay awards. Public sector workers are likely to see their 2010 pay awards radically constrained. Chancellor Alistair Darling has stated that he is in the middle of making tough decisions on the future course of public sector pay awards (external website).

• See also: Public sector pay: storm clouds gather for 2010.