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Impact of the Spending Review on Public Services

The four year public spending plan was introduced by the Coalition Government this month (20 October 2010). The much publicised Review details how Britain’s deficit can be dealt with in order to restore economic stability. In an attempt to achieve the reduction in deficit, the Coalition Government announced in June 2010 that public spending would face the most dramatic reforms and as a result, Britain can expect to see a reduction in general government employment of 490,000 by 2014-2015.

It is likely that for many public sectors, redundancy will not be enough to achieve the cuts required and therefore it is inevitable that public sectors will have to be slightly more forward thinking. Possible ways in which public sector organisations are likely to deal with the spending cuts could include:

  • Change to employment terms;
  • A recruitment freeze;
  • Pay reduction;
  • Outsourcing; and
  • Partnership arrangement (sharing of services between public bodies).

Concern has been expressed that much of the spending reductions within the public sector will have a greater effect on specific groups. For example, it has been reported that women are likely to be hit harder than men with 65% of the public sector workforce made up of women. There is also the potential that the spending cuts could have a disproportionate impact on the disabled and ethnic minorities. In response to the spending review and its implications, the Treasury has set out how it intends on complying with it legal obligations, which focuses primarily on gender, ethnic minorities and disability. (See ‘Overview of the impact of Spending Review 2010 on equalities’).

It is also envisaged that such spending cuts will put significant pressure on HR personnel as they will be required to ensure that redundancy exercises or any other proposals are handled appropriately in an attempt to reduce the risk of Employment Tribunal claims.

It is expected that each government department will be required to prepare a business plan setting out the details of their plans for reform and reduce the deficit.

Date: 01.11.10

For more information on the implications of the Spending Review 2010 on the public sector please contact Jane Sinnamon (jane.sinnamon@collingwoodlegal.com.)

The information given in this article is up to date at the time of preparation. However, Collingwood Legal can accept no liability or responsibility for any loss incurred as a consequence of actions taken based on this report. We would recommend that you take legal advice. We would be happy to help.

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