10/20/2010 4:10:52 PM
Comprehensive Spending Review: 490,000 jobs at risk
Tough times, tough decisions. This is the stance the Coalition
Government has taken in its first Comprehensive Spending Review,
with perhaps the biggest headline being the potential loss
of 490,000 public sector jobs. But what else was
announced?
Key highlights (or rather lowlights) included:
- An average of 19% four year cuts in departmental budgets
- Structural Deficit to be eliminated by 2015
- £7bn in additional welfare cuts
- Police funding down 4% a year
- The retirement age to increase from 65 to 66 by 2020
Why is the government doing this? Well, according to Mr Osborne
the UK's public debt interest repayments are £120m A DAY (that is
£43bn per year...just on interest payments!).
How is the government trimming its expenditure? In a nutshell
the core government departments will make cost savings of £6bn a
year over the next four years - the average is 19% but the Foreign
Office is the biggest loser with a budget cut of 24% (I bet a few
diplomats are quaking in their Brogues right now!).
So, the key headlines sound scary - big numbers, people losing
their jobs with all of the ramifications that fall out of such a
programme of cuts, but is there any upside? Yes there is, read
on....(it won't take long, this piece is, after all, about
'cuts').
The NHS is protected with an extra £2bn for social care; school
budgets increase every year until 2015 and £30bn capital
expenditure on transport (key projects include a new bridge over
the River Mersey, upgrade to the Tyne & Wear Metro and the
Crossrail project WILL continue) has been announced.
So what were the alternatives? Labour pressed for raising taxes
with more modest spending cuts (with a 33/67% split), while other
more radical think-tanks have come up with all sorts of
alternatives including one, Compass, who proposed introducing a 50%
income tax at a lower threshold. Yikes!
Finally, what of the Unions?? The government states that the
490,000 jobs at risk will be through natural turnover with 'some
redundancies' - will the Unions buy that, or could they justify a
general strike - are we in for another 'Winter of Discontent'
(according to my parents I am a product of the electricity strikes
of winter 1969...(we'll leave it there, although we now all know
how old you are - Ed).
There is a lot to consider. How will these job losses be
absorbed? Is the private sector strong enough to act as a sponge?
Is a double dip around the corner? At ARM we are feeling a very
positive mood amongst our clients, with no sign of abating
at the time of writing. Cross your fingers!
Damian Hicklin
IT
Security & Communications Manager
Follow me on Twitter
ARM