A major shake-up of the civil service is needed to help Britain cope with “an era of instability” across the world, Keir Starmer will say on Thursday.

The prime minister will set out plans to make greater use of technology and artificial intelligence in the way the state delivers public services.

He will claim that up to £45 billion of taxpayers’ money could be saved by reducing costs and improving productivity.

But critics have warned that the government is planning to make thousands of civil servants redundant after the Whitehall workforce massively expanded during the Covid pandemic.

Speaking to workers in the north of England, the prime minister will acknowledge “the great forces buffeting the lives of working people, and an era of instability driving in their lives”.

“The need for greater urgency now could not be any clearer,” he will say. “We must move further and faster on security and renewal.

“Every pound spent, every regulation, every decision must deliver for working people. If we push forward with the digitisation of government services there are up to £45bn worth of savings and productivity benefits, ready to be realised.

“And that’s before we even consider the golden opportunity of artificial intelligence – an opportunity I am determined to seize.”

Pat McFadden, the Chancellor of the Duchy of Lancaster, has already announced plans to encourage some civil servants to leave their jobs as part of the shake-up, and to link pay to performance for senior officials.

However, a spokeswoman for the prime minister said: “It’s not about slashing the state, it’s about re-shaping the state so it delivers for working people.

“We are clear that we believe in an active state rather than an expansionist state.”

She said that while the size of the civil service has grown in recent years, public service delivery has not improved.

The spokesperson added: “We’re not taking an ideological approach to this, we want a state that’s better at delivering for working people than it has been.”

However, Downing Street rejected reports that the PM wants to take a “chainsaw” to Whitehall departments.

Starmer’s official spokesman said: “We are not taking an ideological approach to this. There is no approach here where we are taking a chainsaw to the system.

“The focus that we are taking is making the state more effective, we are making the state more agile in a way that delivers for working people.

“Part of that will obviously mean that the state must be delivering value for money for people.”

Technology secretary Peter Kyle said: “There is a £45 billion jackpot to secure if we use technology properly across our public sector – but we can’t hope to come close to securing that if we don’t have the right technical talent with us in government.

“Not only will these changes help fix our public services, but it will save taxpayer cash by slashing the need for thousands of expensive contractors and create opportunities across the country across the country.”