It has been reported in the Comprehensive Spending Review that Ã‚Â£83bn of savings need to be made from the Public Sector; and the Office for Budget Responsibility (OBR) has estimated that this will equate to 490,000 public sector jobs lost by 2014-15. The government also believes that these jobs are capable of being replaced with private sector jobs.
Judith Barnes, partner and head of local government at law firm Eversheds, commented: “As expected, some of the detail outlined in the Review still needs to be worked through. Whilst headline spending figures have been provided, involving CLG funding reductions of around 7% per annum over the 4 year spending review period (26% in total), local authorities will need to absorb what the CSR actually means for them and how they will be able to tackle the cuts required. What is clear is that salami slicing of services will not deliver the overall budget reductions required and there will be a need for unpalatable decisions around cuts to services as well as a complete transformation of some services, concentrating on user need and prioritising resources within the available funding.
“Whilst redundancies make the headlines, and for obvious reasons, it presents just one means of cost reduction and needs to be carefully thought through in terms of maintaining service delivery particularly before allowing senior expertise and capacity to leave. Organisations will be, and are, asking fundamental questions about which services will be required, to what degree and by whom they should be provided. Such longer term strategies are likely to pay dividends over short-term responses. Increasingly also, we are finding that public sector employers are prepared to look beyond more ‘traditional’ measures to innovative approaches and wholesale service transformation. New approaches, such as strategic partnering arrangements between authorities and the private sector are key to this approach, for example the Cleveland Police project, Edinburgh, Bournemouth and others where we have direct experience of what is involved.
“Constructive and innovative approaches to spending are likely to prove the key for many, from reviewing job roles, terms and conditions of employment to hours of work and involving voluntary severance as well as compulsory redundancies.
“Alternative methods of service provision will also need to be examined and a recent survey of HR Managers by Eversheds LLP demonstrated that in local government 24% expect services to be outsourced in the forthcoming year compared to 11% in the previous year and 33% of managers are looking at shared service delivery.
“Further to this the Eversheds survey also revealed that even before any formal Government announcement of cuts in expenditure through the Comprehensive Spending Review, a large number of employers (our survey suggested 69%) have already taken steps to reduce staff headcount. Public sector HR professionals clearly need to stay close to forthcoming redundancy exercises to ensure that managers involved understand their legal responsibilities, not least since challenges to the fairness of redundancy selection methods and the adequacy of consultation have risen significantly according to recent Employment Tribunal figures.
“As each local authority is different then the solutions will be bespoke, however, the next budget round and council tax setting will be a challenging time for many authorities. It may be some comfort to know that this level of cuts whilst not seen since the war is anticipated only to bring local government spending back to 2006/7 levels.”