The real story of the Spending Review was the absence of any shocks

October 20, 2010

BRITAIN-SPENDING/In the end, the ‘leaks’ worked. The various snatched photographs of briefing documents leaked in the past couple of days meant that the real story of the Spending Review was the absence of any shocks. The government managed our expectations, so political new junkies and the money markets were not really surprised as Chancellor George Osborne outlined the cuts today.

Some benefits, such as the winter fuel payment and free entry to galleries and museums, had been considered low hanging fruit, almost certain to go, but the Chancellor surprised the gallery by throwing out a few spending commitment trinkets as he wielded the axe elsewhere.

Based on these figures, it looks like 490,000 public sector jobs will have to go in the next four years. As I mentioned in my last blog post, that will have a knock-on effect to the private sector, so you can probably double this to a million jobs vanishing from the UK over the next few years. I’ve already seen some commentators suggesting that the private sector has the ability to mop up any public sector jobs losses, but these are often the comments of recruitment consultants trying to talk up their own market without foundation to get their talking head appearance on the TV news. The Sky news team, based in Merthyr Tydfil today, don’t seem to be interviewing many private sector firms creating jobs in South Wales – the jobs so desperately needed to replace the Newport passport office earmarked for closure.

The opposition says that the government is going too far, too quickly. It’s hard to call who is correct yet, but the department for Business, Innovation and Skills is finding their own budget cut by 28.5%. That’s not really sending out a strong message of private sector regeneration and I heard precious little today that would be helpful to entrepreneurs.

One of the main focus areas that the rolling TV news channels have picked up on is the 25.2% cut to the Home Office budget, which includes policing. The Home Office already said they are ‘hopeful’ that bureaucracy can be cut so frontline officers remain out on the street. I’m surprised to hear the Home Office sound so indecisive on this when they should be aware that just three months ago, Cleveland was the very first police service to entirely outsource their back office to the private sector. Cleveland contracted with Steria, and I met Sean Price, the Cleveland Chief Constable, at the time so you can hear what he said to me on their decision to privatise their administration by clicking here. []

I’m not suggesting that Steria is the only company offering a back-office admin function, but Cleveland is certainly the first police service to enter into this kind of deal – perhaps the Home Office needs to get up to Middlesbrough to take a look at what is going on in their own backyard?

But it’s not all doom and gloom. In many places, the public sector is being revived and regenerated. Reducing administrative jobs does not necessarily lead to a decrease in service to the citizen. SOCITM is the main trade association representing technology professionals in the public sector. I just called their president Jos Creese and asked him if these budget changes can be interpreted in a more positive way. He said: “We are creating a strong willingness to change that will be, in many respects, good for public services, so it will force us to question what we should be doing and what we don’t need to do. It will force us to modernise and transform – particularly through technology. Enabling the public to do more for themselves is also a very positive move, not just for cost, but a lot of the public can – and want – to look after many government transactions themselves – like renewing a library book online rather than needing to go the library.”

I think Jos is right, but he is talking about a channel shift, a complete change in attitude in our relationship with government services. In the long term, saving money in the public sector is not about slashing jobs or outsourcing to private sector suppliers, it’s about questioning how the citizen interacts with the government. If there are new ways to deliver important services then that’s where our future focus needs to be.

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