More evidence of public sector cuts

More evidence has emerged of the financial squeeze set to confront the public sector, as policy makers turn their attention to how to plug budget deficits across the country.

• A report in the Herald newspaper has revealed that Scotland’s largest local authority is to spend £100 million in early redundancy payments on the 2,200 staff who have opted for voluntary redundancy. In 2009, the council announced plans to shed 4000 jobs as part of efforts to save £34 million over the coming year;

• On the Isle of Man, Health Minister Eddie Teare has warned of possible cuts to front line health services unless £8.5 million can be found to fill the overspend in staff pay rises and the costs of sending patients to the UK for treatment; and

• BBC South West’s Inside Out programme has reported that Cornwall county council has been left having to find £10 million to fix school buildings following the collapse of a major contract with a consortium called NewSchools Cornwall.

These developments come after the auditors, KPMG and the Chartered Institute of Personnel and Development, warned that a third of public sector bodies were looking to make staff cuts, with the defence and public administration sectors likely to be badly hit.

In a bleak assessment, KPMG’s head of public sector Alan Downey said:

“These figures clearly show that the starting gun for a public sector recession has been fired. It is now only a matter of time before we are faced with the deepest and most prolonged cuts in public expenditure that anyone can remember.

“In fact, many public sector bodies have already started to feel the pain and are drawing up clear and radical plans to reduce costs. By definition that means identifying those services that are of lower priority and must be scaled back or terminated altogether.“

Unions, however, were hostile to the findings, with Unite’s assistant general secretary for the public sector saying:

“Public services and their staff are integral to the UK’s recovery from the global recession caused by reckless banking practices. According to TUC analysis, a 10 per cent cut in 2007/2008 public sector expenditure equates to 200,000 jobs.

“In cities, such as Newcastle where two thirds of the economically active are employed in the public sector, the impact of such cuts would be devastating to the local economy – reduced taxation, reduced spending and, ironically greater reliance, on public services such as Job Centres and increased government expenditure on supporting the unemployed and their families.”

The news came as Nigel Jump, chief economist of the south west regional development authority warned that if public sector cuts are brought forward too soon it will be difficult to prevent unemployment increasing across the region.

He said:

“I would be surprised if we got rid of the level of unemployment built up over the past 12 to 18 months. The main danger is it could be higher, because of the cuts to the public sector.”