Chancellor George Osborne today (Monday 24 May 2010) announced details of some £6.2 billion worth of public spending cuts to be enacted by April 2011. Consequences of the public spending cuts include a civil service recruitment freeze for the rest of 2010/2011, a review of civil service pay for some civil servants, and £1.15 billion worth of savings on consultancy and travel costs.
Full details can be seen in a seven-page PDF document (115.1K) (external website) which can be downloaded from the HM Treasury website. The document states that these measures represent "the first step in the Government's efforts to tackle an unprecedented £156 billion deficit and focus on driving out Whitehall waste [...] while protecting the quality of key frontline services."
Speaking ahead of Osborne's speech, Deputy Prime Minister Nick Clegg described the cuts as "painful but necessary" (external website).
The public spending cuts are certainly generating controversy, with some commentators arguing that they represent a high-risk strategy, given the fragile nature of the UK's economic recovery.
Indeed, the CIPD's John Philpott says that the impact of today's cuts on public sector employment (and consequently on unemployment) could be severe (external website). Philpott says:
[T]he 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. In addition there will be knock-on effects into the private sector on businesses that undertake contract work for the central and local government and other public bodies, plus the wider impact on demand for labour in the economy as a whole resulting from lower net public spending of around £6 billion. Given the current weak state of the labour market this is likely to have a detrimental impact on unemployment. [...] Messrs Osborne and Laws could be taking a risk with UK unemployment. Though they no longer dare say it, higher unemployment may be once again considered a price worth paying.
However, the Guardian reports that Osborne is confident that the cuts will not result in a double-dip recession (external website). It reports that he told the BBC Today programme this morning that "[c]utting spending will restore confidence in the British economy."
- Chancellor George Osborne outlines £6.2bn public sector cuts in detail Personnel Today reports.
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