Magazine article Public Finance

Watch Where the Axe Falls

Magazine article Public Finance

Watch Where the Axe Falls

Article excerpt

Earlier this year the BBC conducted in-depth research among 49 councils in England to assess the implications of public sector funding cuts on staffing levels. It found that 180,000 jobs are expected to be lost in the next three to five years, some 10% of the sector - a significant figure that, if realised, could fundamentally change the shape of many council services.

Cuttingjobs might seem to be a natural, if drastic, response to the mounting pressures councils face in a climate of squeezed funding. Certainly many private organisations have had to take this difficult measure during and post-recession to manage within a tough economic environment. Now, faced with similar decisions, local authorities might have much (o learn from the experience of the private sector.

One of the main risks when planning for job cuts, particularly if they are large-scale, is external and internal reputational damage. Within an organisation, job cuts can have a negative impact on staff morale, affecting the productivity and engagement of remaining employees and in turn jeopardising delivery and return on investment. Disengaged employees are expensive employees - in any sector.

At the same time, job losses might be perceived as a knee-jerk reaction, even if detailed and lengthy planning and consultation happen behind the scenes. This risk is even more pertinent in areas where local authorities or other public organisations are major employers for the region. The people losing their jobs will also be consumers in the local area; a loss in income and consequent reduction in spending couid trigger losses across the local economy.

The forthcoming election (in which the future of public sector service delivery is likely to play a starring role) and the continuing debate about the likelihood, shape and pace of economic recovery, mean there is a heightened public awareness of local authority spend and impact. Any sign of job cuts - however justified or well communicated - might give local communities cause for concern about a council's ability to deliver services. A sceptical or distrusting authence is a big risk for councils, potentially causing increased scrutiny and backlash over service delivery, decision-making and prioritisation.

The only way to mitigate future delivery challenges is to undertake detailed risk assessments incorporating all relevant issues. In particular, councils forced to make cuts should invest in appropriate advice to ensure compliance with employment law and union regulation. …

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