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Government announces 6.24 billion Cuts

The Government announces 6.24 billion Cuts Civil Service Recruitment Frozen.

Reaction from, CIPD, Alexander Mann Solutions, REC, UNITE & Bibby.

Right cuts, wrong time, says CIPD

Dr John Philpott, Chief Economic Adviser at the Chartered Institute of Personnel and Development (CIPD) comments as follows on the 6.24 billion package of public spending cuts for 2010-11 announced earlier today by the Chancellor of the Exchequer and the Chief Secretary to the Treasury:

The Chancellor and Chief Secretary have made sensible decisions on where and by how much to cut public spending. Quangos, IT, consultancy, advertising and property have long been ripe for cuts. It also makes sense to reduce less effective forms of spending by Regional Development Agencies and spending on those training and employment measures found to offer a poor return to the taxpayer. Freezing civil service recruitment is likewise the least painful way to start to reduce public sector employment. Yet while the scalpel has been applied with considerable skill, one must nonetheless question whether now is the right time to begin major surgery on the UKs fiscal deficit.

Although the Treasury document makes no explicit reference to the impact of todays package of cuts on public sector employment, the combination of a civil service recruitment freeze and reduced spending in other areas is likely to reduce total public sector employment by around 50,000 in the current financial year. In addition there will be knock-on effects into the private sector on businesses that undertake contract work for the central and local government and other public bodies, plus the wider impact on demand for labour in the economy as a whole resulting from lower net public spending of around 6 billion. Given the current weak state of the labour market this is likely to have a detrimental impact on unemployment.

Ministers clearly consider the risk of failing to take immediate steps to cut the fiscal deficit outweighs that of starting to cut too soon, citing the sovereign debt crisis in the eurozone in support of their view. Whether they are overstating their case is a moot point given the importance of the eurozone for UK exports, economic weakness across the channel should arguably make policy makers in this country more rather than less cautious about curbing demand. But either way, Messrs Osborne and Laws could be taking a risk with UK unemployment. Though they no longer dare say it, higher unemployment may be once again considered a price worth paying.

REC responds to Chancellors 6 billion public sector cuts announcement

The REC has responded to Chancellor George Osbornes announcement on where the 6 billion of public expenditure cuts will be made over the next year.

Following an earlier statement from REC Chief Executive Kevin Green before the Treasury announced where the axe would fall, Tom Hadley, the RECs Director of External Relations has given an initial response as to how the proposed cuts could affect the recruitment industry.
He says:
Todays announcement has not provided all the details on where cuts will fall, although the expected freeze on public sector recruitment was confirmed. One of the concerns here is that new skills and competencies may need to be bought in by public bodies in order to manage the change process.

One area that is expected to come under pressure is temporary staffing costs. The reality is that there are real benefits in being able flex staffing requirements to meet peaks in demand and avoid undue pressure on the permanent workforce.

"Todays announcement did include a commitment to cull the use of consultants but there will still be a need to bring in highly skilled experts to drive specific projects. This is where interim managers or other temporary staff can play a leading and cost-effective role.

Hadley concluded:
There will be huge changes in the way that public services are delivered. In the mid and longer term, these wiil require a greater need for flexible staffing rather than less. Looking ahead, we will need to monitor the impact that public sector cuts has on the UKs recovering but fragile jobs market.

Following the announcement that civil service recruitment will be frozen as part of the Governments 6bn spending cuts, I wanted to get in touch with some reactive comment from Adrian Slater, Director, Public Sector at Alexander Mann Solutions.

Adrian commented: It is no surprise to hear that one of the new Governments first cost-cutting measures to be implemented is a freeze on recruitment. Short-term recruitment freezes, reduced reliance on temporary staff and voluntary attrition have been used successfully to balance the books in previous downturns, without cutting jobs.

However, the severity of the UK debt position is likely to mean that further measures, including job cuts and wider organisational restructuring, are far more likely than in previous years. If this is the case, it is essential that any restructuring is carried out responsibly and with a long-term strategy in place. Public sector organisations need a clear view of where the talent and specialist skills reside within each team or department, so they can identify employees they can least afford to lose and make sure that any cuts are part of an intelligent, holistic approach, rather than a knee-jerk response.

Although there are undoubtedly some difficult decisions now facing public sector HR directors, the changes that lie ahead should also be viewed as an opportunity to reshape the way public sector bodies work. Workforce processes have evolved significantly over recent years with better communication and mobile technologies allowing organisations to adopt newer, more flexible ways of hiring and managing talent. If Britains public sector is to adapt to the challenges ahead, it will need to demonstrate that forward-thinking employers are not the exclusive preserve of the private sector.

6bn public sector cuts is an economic wrong turn, says Unite

The 6 billion worth of public sector cuts announced shows that the coalition has taken an economic wrong turn, Unite, the largest union in the country, has said.

Gail Cartmail, Unite Assistant General Secretary for the Public Sector said: Within a fortnight of coming to office, the coalition government has taken a fundamental economic wrong turn by sucking 6bn out of a still fragile economy.

While the cuts, such as reductions in civil servants travel, management consultants and quangos, may appear to be peripheral to the central deficit debate, this is the harbinger of some very painful cuts that will be come in the Budget on 22 June and in the comprehensive spending review in the autumn.

Unite said there were two economic models that the government could have followed - pump priming and maintaining demand by government expenditure, or axing public services to placate the City.

Gail Cartmail said: The government is paying its expected homage to the City and the so-called markets, instead of putting the full emphasis on maintaining jobs and economic recovery.

Investment to stimulate the economy has to come from somewhere. If the private sector is not investing sufficiently in communities, the only other avenue is the government.

In many communities, the public sector is the major employer. The 6bn worth of cuts will translate into job losses very quickly, which, in turn, will add to the governments financial problems by increasing unemployment and welfare payments.

Unite said that recent TUC research showed that 29% of public expenditure goes directly to the private sector therefore, a 10% cut would mean a loss of 16.9bn to the private sector.

The Association for Public Service Excellence (APSE) says that for every 1 of public money invested in public services through direct employment and purchasing of supplies and services, a further 64p is generated in the local economy.

Gail Cartmail said: In taking the axe to the public sector, the new government is starting to abandon the Keynesian economic model which is ironic given that Maynard Keynes was a life-long Liberal.

Commenting on the announcement that the civil service will undergo a recruitment freeze as part of the cuts in public sector expenditure, Edward Winterton, recruitment finance spokesperson for Bibby Financial Services, said:

These cuts will have a huge impact on the fortunes of the sector, particularly for those recruitment agencies with a sole focus on the public sector. With cuts taking effect in a matter of months, recruiters have a limited time-span in which to avoid becoming stagnant as opportunities in the sector dry up. I would urge these businesses to ensure they have enough liquidity to absorb the impact of a cut in permanent placements within the sector.

The recruitment freeze may, however, have a number of positive benefits for agencies operating in the private sector, as the freeze could prompt a number of high quality candidates who may previously have targeted public sector vacancies to look further afield. These agencies must ensure that, as business levels begin to grow, they have enough cash flow to invest in business development.


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