Comprehensive Spending Review: Chancellor confirms 490,000 jobs will be cut

The Chancellor today confirmed that an estimated 490,000 public sector jobs will be cut over the next five years, as he unveiled the Government’s Comprehensive Spending Review (CSR).

George Osborne also announced that the planned rise in state pension age for men and women to 66 by the year 2020 will be brought forward, with a gradual increase in the state pension age from 65 to 66 starting in 2018.

The Chancellor confirmed that the Train to Gain programme will be abolished, while vowing to create 75,000 new apprenticeships per year by 2014.

Each government department will publish a business plan next month setting out its reform plans for the next four years.

Mike Emmott, employee engagement adviser at the Chartered Institute of Personnel and Development, warned that the unprecedented scale of change set out in the CSR cannot be delivered without “a concerted and committed focus on supporting, bolstering and improving public sector management capability”.

“Front-line commitment and industrial harmony can only be delivered by persuasive messages about why the cuts are needed, and an unswerving focus on excellent day-to-day management of the ‘survivors’,” he said.

“Effective and sustained change will only happen in organisations where senior leaders show a sustained commitment to building staff engagement to ensure there is buy-in to change and new ways of working.”

Ian Tomlinson-Roe, HR services partner at professional services firm PricewaterhouseCoopers (PwC), said the planned job cuts will present significant problems for public sector employers, which have little experience of managing mass redundancy programmes.

“Any failure to understand or work within the complex framework of contractual obligations, statutory requirements, union agreements and existing custom and practice will almost certainly lead to legal challenge,” he said. “These challenges will prevent downsizing programmes being delivered on time and on budget.”

PwC estimates that the cost of cutting 100,000 civil servants over the next four years ranges from £5.3 billion to £9 billion, depending on whether this will be conducted over 12 months or 48 months. Every month lost in implementing the redundancies could cost the Government £100 million, it said.

Brendan Barber, TUC general secretary, warned that the spending review “is likely to fail on its own terms”.

“These cuts will depress the economy by causing a million job losses and undermining business and consumer confidence,” he added. “There will be plenty of pain, but little to gain.”

Stephen Menko, managing director of HR recruiter Ortus, said the cuts could represent an opportunity for HR.

“The ‘scorched-earth fiscal policy’, savage as it is, has been well-flagged,” he said. “That’s given HR professionals the chance to be involved in ground-breaking transformation and change – or to look at their own job prospects.”

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