Whitehall departments are being asked to draw up plans to save up to 40 per cent by 2019-20 as a spending review is launched.
The review, to be published in November, will set out how the government aims to deliver £20 billion of savings, on top of the £17 billion already announced through welfare cuts and a tax avoidance clampdown.
Letters are being sent to departments asking them to model two savings scenarios of 25 per cent and 40 per cent of resource budgets by 2019-20.
“Departments will also be asked to examine their assets and consider how they can be managed more effectively, including considering the role of privatisation and contracting out where assets do not need to be held in the public sector,” said a Treasury report.
The Treasury said it wanted to sell surplus public land and it would ask departments to identify “how they will help to achieve the government’s target of disposing of public sector land for at least 150,000 homes by 2020”.
Chancellor George Osborne said: “We’ll invest in our priorities like the NHS and national security. Elsewhere in government, departments will have to find significant savings through efficiencies and by devolving power, so people have a greater say over the issues that affect them and their communities. We’ll deliver more with less.”