Tory chancellor Oliver Letwin’s plans to slash £35 billion from government spending during the course of a parliament have been overshadowed by a leaked government report.

Under proposals included in the government’s efficiency review, Sir Peter Gershon outlines potential savings of up to £10-£15 billion a year over the next three years.

The savings would be met by cutting up to 80,000 civil service jobs as well as other administrative jobs in local government and health.

Extracts from the confidential review, published in Monday’s Financial Times, revealed that the government is planning the biggest shake-up of public services in a generation.

Mr Letwin unveiled his six-year economic blueprint yesterday. Chancellor Gordon Brown slammed the Conservative Party’s proposals, accusing them of jeopardising crucial public services.

Sir Peter, head of the government’s efficiency review, has suggested a series of reforms that would create a civil service moving away from the idea of the “generalist” civil servant in favour of higher-paid, higher-skilled specialists working across departments.

His recommendations would also transform the regulation, inspection and funding of the private and public sectors and include plans to ensure that local authorities join forces to “purchase” services, so that goods and services can be procured more efficiently.

Under Sir Peter’s proposals savings would be redirected to frontline services, such as education and health. The Tories hope to redirect potential savings into tax cuts.

Sir Peter, jointly commissioned by the Treasury and Downing Street, reportedly submitted the 195-page draft of his review to the prime minister and chancellor in December, although the final report will not be submitted until April, when it will feed into the July spending review, which will set departmental budgets up to 2007.

The government has refused to comment on the leaked report. However, Tony Blair will underline the need for reform next week in an address to 200 civil servants.

“This (the leak) was clearly designed to pre-empt the Tories’ launch and did so rather effectively,” Vince Cable, the Liberal Democrat Treasury spokesman, commented. “But I think it may have done the government some harm because it raises the obvious question: if there were all these efficiency gains waiting to be made, why haven’t they done so?”