The public sector feels the crunch ...

October 15, 2008 1:50 PM

The fallout from the financial crises is beginning to bite in the public sector, with news that many jobs and initiatives will be lost. The Times is reporting that up to 10,000 jobs could be lost in the Ministry of Justice, as the department tries to locate £900 million in savings. Similar cut backs are expected across government.


People losing their jobs is never pleasant, particularly when the job market is set to tighten up in coming months. But if there is a (faint) silver lining to this massive storm above our heads, it is that it might finally make the government put its house in order.


With public spending at record levels, a bloated public sector and an overburdened tax base, the only viable option left to government (to avoid a state melt down) is to reassess its non-essential spending commitments and make cut backs.


The obvious retort is that taxes, rather than cut backs, should be used to shore up the state's finances. But windfall taxes on energy companies, higher taxes on the super rich and any number of ingenious new green taxes on business are not only a terrible ideas in the long term, they also won't have the desired affect, not even denting the truly massive deficit the UK now faces.


As to what is and what is not 'essential' spending, this is of course a matter of political priorities, but from initial reports it seems the government is making a few sensible choices and some predictably poor ones. Scrapping complex IT projects and the excessive use of consultants are rational moves; losing ID cards and restricting the DNA database would free up billions alone. Job cuts, while more contentious, are a necessary evil but unfortunately the government looks set to handle them badly (with prison wardens and probation officers under threat for instance). Cuts among the hundreds of 'non-essential' quangos would save millions without endangering services; abolishing the Regional Development Agencies for instance would save £2 billion pounds next year.


It is the government's failure to take such action when times were good that demands they take it now, in these less hospitable times. But as taxpayers we must hope that the Government holds its nerve and does do the right thing now. Better late then never.

The fallout from the financial crises is beginning to bite in the public sector, with news that many jobs and initiatives will be lost. The Times is reporting that up to 10,000 jobs could be lost in the Ministry of Justice, as the department tries to locate £900 million in savings. Similar cut backs are expected across government.


People losing their jobs is never pleasant, particularly when the job market is set to tighten up in coming months. But if there is a (faint) silver lining to this massive storm above our heads, it is that it might finally make the government put its house in order.


With public spending at record levels, a bloated public sector and an overburdened tax base, the only viable option left to government (to avoid a state melt down) is to reassess its non-essential spending commitments and make cut backs.


The obvious retort is that taxes, rather than cut backs, should be used to shore up the state's finances. But windfall taxes on energy companies, higher taxes on the super rich and any number of ingenious new green taxes on business are not only a terrible ideas in the long term, they also won't have the desired affect, not even denting the truly massive deficit the UK now faces.


As to what is and what is not 'essential' spending, this is of course a matter of political priorities, but from initial reports it seems the government is making a few sensible choices and some predictably poor ones. Scrapping complex IT projects and the excessive use of consultants are rational moves; losing ID cards and restricting the DNA database would free up billions alone. Job cuts, while more contentious, are a necessary evil but unfortunately the government looks set to handle them badly (with prison wardens and probation officers under threat for instance). Cuts among the hundreds of 'non-essential' quangos would save millions without endangering services; abolishing the Regional Development Agencies for instance would save £2 billion pounds next year.


It is the government's failure to take such action when times were good that demands they take it now, in these less hospitable times. But as taxpayers we must hope that the Government holds its nerve and does do the right thing now. Better late then never.

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