Government departments will not have to axe 40% from their budgets - despite being ordered to plan for cuts on that scale, a cabinet minister has said.

Transport Secretary Phillip Hammond said some departments may see cuts "a bit higher" than the 25% announced in the budget and some "a bit lower".

Trade unions claim ministers are using the 40% figure to make eventual cuts seem more acceptable.

Labour said the plans went too far and would hit frontline services.

In his budget last month, Chancellor George Osborne said departments would face average cuts of 25% when the government's public spending review is completed in October - potentially bigger than anything attempted by a previous UK government.

Health and aid spending will be ring fenced, while defence and education will face cuts of between 10% and 20%.

But Mr Hammond said other departments have been told to go through their budgets "line by line" for savings of between 25% and 40%.

He said ministers wanted to avoid a "salami slicing" approach, with each department taking an equal hit.

The purpose of asking departments to suggest cuts of up to 40% now was to help the government decide its overall spending priorities and it was unlikely any would be forced to make savings on that scale, he said.

Mr Hammond told BBC One's Andrew Marr show: "I don't expect any departments will see a 40% cut but some departments may see cuts a bit higher than 25%...some departments may then see cuts a bit lower than 25%."

He added: "We are going to look at the priorities of the coalition. We are going to look at the individual impacts on departments - and that's why departments are being asked to prepare not only a 25% case but also a 40% case".

He said departments will be asked to "present the case for individual lines of expenditure in that range, between 25 and 40, and then we can look collectively at where our priorities lie, where that marginal pound of spending that is available should be directed."

He admitted it would be "challenging to take out even 25%" from budgets but added "that does not mean we should not look at each line of our budgets and ask the difficult questions".

In his own department, transport, he said the cuts would effectively mean a halt to new road building - but he said big infrastructure projects that helped the economy would still be prioritised.

And he said the emphasis would be on making the existing road network work more effectively by tackling bottlenecks and road works.

He accused his predecessor as transport secretary, Lord Adonis, of announcing "all sorts of eyewatering projects without funding them".

Shadow Home Secretary Alan Johnson, for Labour, said any suggestion that the scale of cuts being proposed by the coalition government would not affect frontline public services was "fantasy land".

He told Andrew Marr the coalition had added an extra £40bn in cuts to the £70bn proposed by Labour to halve Britain's record £156bn annual budget deficit over four years.

He said the government was going "far too far" and there was "no need to do this".

Public sector unions are threatening "co-ordinated industrial action" if ministers try to implement cuts as deep as 40%.

Mark Serwotka, general secretary of the UK's Public and Commercial Services union, said there was "no economic case to put people on the dole queue".

"We are already drawing up plans with other public sector unions to ensure that if the government attacks our pensions, our jobs and public services, they will face resistance the like of which we haven't seen in this country for decades," he said.

"We will see not just co-ordinated industrial action by unions but campaigns in every community."

Philip Hammond, the transport secretary, confirmed that cuts in his department’s budget will inevitably mean that plans for new roads and rail lines will be scrapped.
New railway carriages for busy commuter lines are also likely to cancelled.
Mr Hammond said: “We will not have as much money to spend on rail enhancements, on new road projects, as we did in the past."
The minister, who drew up the Conservatives’ spending plans in opposition, insisted that the Treasury demand for plans for 40 per cent cuts did not mean such large reductions would be enacted.
Instead of “salami-slicing” Whitehall, each department’s budget would be determined individually, he said. “I don't expect any departments will see a 40 per cent cut but some departments may see cuts a bit higher than 25 per cent. Some departments may then see cuts a bit lower than 25 per cent.”