25% cut in public sector - the biggest headline?

FATBALLZ

Gorgeous_George wrote: »

You will notice the increase in VAT.

GG

Actually I really don't think I will. It's ridiculous such a trivial thing is being made into such a big issue.

robin_banks

hugheskevi wrote: »

The cut is a real terms cut of 25% over 4 years.

Over that period, the Office for Budgetary Responsibility think RPI will increase by 14%, so that means a cut in nominal expenditure of about 10% over 4 years that has to be found.

And the cut is in terms of budgets, not staff.

Salaries are already frozen for two years. Add to that not upgrading IT, not recuiting new staff, an early retirement exercise and not increasing salaries by much in the two years after the freeze ends should deliver those savings fairly easily without the need for any redundencies. I think it is too early to say there will be definate job losses at this stage.

Well over half the costs are salary related, so it is inevitable that some jobs losses are going to go.

With regard to salary increases it is only the inflationary increases that are being frozen. Staff that are on spine points will continue to get thier annual increments till they get to the top of the pay scale.
This seems to have been convieniently forgotten.

IT is bound to need upgrading, just look at the changes in tax and benefits for a start, staff will have to be suitably trained (you'd hope anyway), and this will need to change year on year.

Little mention on capital expenditure really, so I assume PFI is still somewhere in the mix.

Conclusion: you want to cut by 25%, posts will need to be cut, and a lot of them. Till you get to a point where posts cannot be cut any further. I doubt Osborne has the scope to cut posts in HMRC for example, they've already lost 20,000 in the last 4 years.

robin_banks

FATBALLZ wrote: »

Actually I really don't think I will. It's ridiculous such a trivial thing is being made into such a big issue.

As a personal consumer I agree it has little consequence, for businesses it's a very different ball game.

markharding557

I don't understand why they want to protect health and overseas aid!
If they try to shield anything it should be education because this produces tomorrows professionals and business people-health and aid do not so i think they should reconsider the balance in the cuts

FATBALLZ

markharding557 wrote: »

I don't understand why they want to protect health and overseas aid!
If they try to shield anything it should be education because this produces tomorrows professionals and business people-health and aid do not so i think they should reconsider the balance in the cuts

For political reasons, you know what the papers would be saying about the Tories attitude to the poor and sick if they cut aid or the NHS!

michaels

The vast majority of the 'jobs miracle' under labour were new public sector jobs - putting us back to the previous share of public secotr in the economy will presumably mean all these jobs will disappear. If the private sector added few net jobs during a credit boom what are the chances of it absorbing the extra unemployed during a fiscal retrenchment?

robin_banks

markharding557 wrote: »

I don't understand why they want to protect health and overseas aid!
If they try to shield anything it should be education because this produces tomorrows professionals and business people-health and aid do not so i think they should reconsider the balance in the cuts

The argument used to be aid brings trade, I don't know if that holds true though.

michaels

The scale of the cuts to departmental budgets are way outside anything that has been achieved historically even by supposedly extremely fiscally conservative govts such as the early Thatcher years - can anyone really see them happening? And if they do is there really any prospect that the economy will be flexible enough to soak up all the excess labour?

I am not arguing that a rebalancing is undesirable (and even essential given bond market pressures) I am just not sure I can see it happening at the rate proposed with out a major recession (depression?) given the time-scales proposed and the flexibility of the economy.

A._Badger

robin_banks wrote: »

As a personal consumer I agree it has little consequence, for businesses it's a very different ball game.

Businesses reclaim VAT. It will make no difference to them.

robin_banks

A._Badger wrote: »

Businesses reclaim VAT. It will make no difference to them.

you mean reclaim input VAT, pay output VAT.