Public sector cuts announced today to save £6.2bn were “sensible decisions”, employers’ groups have admitted.
Earlier today, chancellor George Osborne revealed how the government would create £6.2bn savings this financial year, which included Whitehall departments, local government and quangos having their budgets slashed by hundreds of millions of pounds each, while the Civil Service will face a recruitment freeze to save £120m this year.
IT spending will be cut by £95m, and £1.15bn will be saved by slashing consultancy fees, advertising and travel costs. Meanwhile, employment programmes such as the Young Person’s Guarantee and the Six Months Offer will take a £320m hit.
John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD), said: “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.”
But Philpott added about 50,000 government jobs could now be lost this financial year. The CIPD previously warned 500,000 jobs could go over the next five years due to the cuts.
“Although the Treasury document makes no explicit reference to the impact of today’s 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,” he said.
He warned there would also be a knock-on effect on recruitment in the private sector across businesses that work on government contracts. “Though they no longer dare say it, higher unemployment may be once again considered a price worth paying.”
Richard Lambert, director general of the CBI, described the cuts as “painful but necessary”, adding there was “still considerable scope” for future savings.
He said: “The measures announced by the chancellor, including departmental spending cuts and a Civil Service recruitment freeze, are painful but necessary steps to demonstrate the UK’s seriousness about tackling the deficit.
“Just as private sector firms had to take strong action to cut costs during the recession, so too must the public sector.”
Earlier today, the CBI encouraged the public sector to learn from the way private firms had handled making efficiencies during the recession by working with their staff to create change, rather than imposing it.
The manufacturers’ group the EEF acknowledged the business department could not be immune from the cuts needed, but called on the Conservative and Liberal Democrat government to outline precisely how the required £636m savings would be realised.