Top civil servants could face losing their jobs if they fail to deliver savings for the taxpayer, under new rules announced by the Government aimed at increasing productivity.

The rule is part of a drive by Cabinet Office minister Pat McFadden to create a more “agile and modern” state, and includes creating new collective performance standards such as securing value for money.

The changes will also reward high performers but could lead to dismissal for those who do not measure up.

McFadden, the Chancellor of the Duchy of Lancaster, said the public “must be confident we are spending every pound of their money well”.

He added: “It is vital that senior leaders are not just encouraged, but held responsible for this.

“We need them to build productive and high performing teams, to deliver on our plan to put more money in people’s pockets, get the NHS back on its feet and rebuild Britain.

“We will introduce new checks to identify and tackle poor performance where we find it, and to recognise the good work of senior leaders across the civil service.

Departments have already been told to find efficiency savings worth 5% of their budgets as part of the spending review due to be published in June, and could face tougher cuts if the economy does not grow and the cost of borrowing rises.

Among the other changes introduced in the new performance policy published by the Cabinet on Thursday will be new measures to better identify poor performance and a greater focus on delivering the Government’s five missions.

McFadden is not the first Cabinet Office minister to attempt to improve performance in the Civil Service.

In May last year, then-Conservative paymaster general John Glen said high performance on Whitehall wasn’t “recognised, rewarded or incentivised properly”, and suggested linking civil service pay to performance.

But he also warned he would crack down on poor performance, saying it was “all too easy for leaders to let people move to another team, to let the poor performer become someone else’s problem”.