Sir Jeremy Heywood anger over reports of civil service cuts
One of the UK's top mandarins, Sir Jeremy Heywood, has said he was "angry" at reports suggesting huge cuts were being considered to the civil service.
Recent newspaper reports, said to have emanated from former No 10 adviser Steve Hilton, suggested that civil servant numbers could fall by 70%.
But the cabinet secretary told MPs this was not "remotely" government policy.
While relations between ministers and civil servants were good, he accepted that some ministers were "frustrated".
Sir Jeremy is one of the two most senior mandarins in the country, responsible for policy implementation within No 10 and across government.
Questioned about his responsibilities by MPs on the Commons Public Administration Committee, Sir Jeremy said Culture Secretary Jeremy Hunt could face "further action" in relation to his handling of the Sky takeover bid and the actions of his special adviser following his appearance at the Leveson inquiry.
Sir Jeremy said he would expect Prime Minister David Cameron to seek his advice - including over the issue of any breach of the ministerial code - if Mr Hunt's questioning next week produced any new evidence which "warrants further investigation".
On the issue of the size of the civil service, Sir Jeremy told the cross-party committee he did not "definitely" know if Mr Hilton was behind the stories suggesting civil service numbers could be slashed by between 70% and 90%.
Mr Hilton - a longstanding aide to Mr Cameron who has left to work in the US - is said to believe that innate conservatism in Whitehall was frustrating government attempts at reform, particularly on the economy.
Sir Jeremy said the stories were "unauthorised" and did "not remotely reflect the prime minister or deputy prime minister's view of the civil service".
"Wherever it comes from it does not reflect the policy of the government and that is all there is to be said about it frankly," he said.
Asked what impact such stories had on the morale of civil servants, Sir Jeremy said David Cameron and Nick Clegg were "just as frustrated and angry as myself... when that is put in the newspapers apparently as an authorised briefing when it wasn't."
Asked about Mr Hilton's input in Downing Street, Sir Jeremy said he was "a challenging person" and it had been his job to "challenge" ministers to think differently.
More than a quarter of the 3,700 senior civil servants employed at the time of the last election have since left while Ian Watmore, the top official at the Cabinet Office, recently became the latest in a number of senior mandarins to say he was departing.
Conservative MP Bernard Jenkin said there was clearly "tension and mistrust" between some civil servants, ministers and advisers which needed to be addressed.
But Sir Jeremy said there was no evidence of tension at the highest levels, saying Mr Cameron and Mr Clegg had a "very good relationship" with civil servants, respected the institution and were happy to take the advice of mandarins.
"I certainly do not feel, in my daily job, any great problem here," he said. "But I have to acknowledge there has clearly been briefing in the newspapers and some sense of that and it is true that some ministers and advisers have been more frustrated".
The cabinet secretary said the civil service had to demonstrate its day-to-day competence, dedication and "can-do attitude" and play a constructive role in discussions over future reforms to the structure and focus of the organisation.
Asked by Labour MP Kelvin Hopkins whether internal contradictions within the coalition had led to recent "paralysis", Sir Jeremy said he did not accept that at all.
Chancellor George Osborne's Budget had been "quite bold when it did not need to be", he said, while the business of government was continuing despite "newspaper rhetoric" suggesting major differences over the Beecroft report into employment laws.
He added: "I don't recognise the word paralysis in the current context at all. The government has achieved a huge amount. It set out many hundreds of commitments and it has made very good progress in developing them."
However, he said the civil service could do more to consider the long-term, strategic challenges facing the UK and he had asked John Day, chairman of the joint intelligence committee, to look at how the government could improve its approach to "horizon scanning".
Sir Jeremy was also questioned about his involvement, as a member of the forfeiture committee, in the decision to strip former Royal Bank of Scotland chief executive Fred Goodwin of his knighthood.
He said the committee reached its decision unanimously, stressing that the case was looked at in isolation because Mr Goodwin - unlike others in the world of finance - had been given his honour specifically for services to banking.
But he said that the matter was a "thankless task" and he believed the committee would have been "severely criticised" by people from either side whatever their decision was.