By Elizabeth Piper, Alistair Smout and Andrew MacAskill

MANCHESTER, England (Reuters) -British finance minister Jeremy Hunt set out plans on Monday to freeze and then cut the number of government workers to save up to 1 billion pounds ($1.2 billion), an attempt to appease some in his own Conservative Party noisily demanding tax cuts.

While admitting "the level of tax is too high", Hunt sought at the governing party's annual conference to turn attention towards efforts to boost public sector productivity in Britain, saying that was the way to reduce ballooning public spending.

Senior Conservative lawmakers, including Prime Minister Rishi Sunak's predecessor Liz Truss, have demanded a reduction in the size of the state and Hunt attempted to deliver on that while refusing to hand them any sniff of tax cuts.

He described the move as proof of Sunak's desire to show his government was willing and able to take "tough decisions" to make people better off - a bid to convince voters to back the party at an election expected next year.

"We need a more productive state not a bigger state," Hunt told the conference in the northern English city of Manchester, to enthusiastic applause from a Conservative faithful increasingly concerned about the opposition Labour Party's commanding lead in opinion polls.

"So today, I'm freezing the expansion of the civil service and putting in place a plan to reduce its numbers to pre-pandemic levels. This will save 1 billion pounds next year."

His spokesperson said the aim was to cut the number of civil servants, or officials working on government policy, from approximately 460,000 to 400,000 by 2025, and that Hunt would seek to improve productivity across the public sector.

Public and Commercial Services union general secretary Mark Serwotka said shrinking "an already-overstretched and under-resourced civil service" would result in cuts to vital services.

"As usual, a Conservative government is seeking to blame working people for the incompetence of their own ministers," he said in a statement.

RED MEAT TO CRITICS

Civil servants have long been in the sights of some on the right of the Conservative Party, who accuse them of thwarting post-Brexit policy, and Hunt's announcement seemed aimed at trying to ease their frustration over a lack of tax cuts.

Sunak's predecessor Liz Truss, prime minister for a chaotic six weeks last year, made her presence felt at conference, telling a packed venue Britain was far from a "free-market paradise" and needed to cut taxes to boost growth.