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Laws: 'public sector will see job losses'

By Alice Tarleton

Updated on 24 May 2010

Chief Secretary to the Treasury David Laws tells Channel 4 News that the government's plans to save more than £6bn "will see a reduction of jobs". Alice Tarleton writes.

David Laws on Channel 4 News

"Some parts of the public sector will see a reduction of jobs and there will also be parts of the public sector which will jobs pressures as well," Chief Secretary to the Treasury David Laws told Channel 4 News.

"However I'm asking everyone else to acknowledge that in helping to hold interest rates down and in helping to avoid an increase in the tax on employment there will also be beneficial impact of this announcement too."

Among the savings unveiled by the coalition this morning are a civil service recruitment freeze, reduced spending on consultants and the less money for quangos.

Job losses 'inevitable'
When questioned this morning about the impact of the deficit-reduction measure on jobs, the chancellor of the exchequer said the "vast majority" would take the form of unfilled posts.

George Osborne said the objective was to get the economy growing and create jobs, but that it would have to be a "private sector recovery".

"Those jobs need to be created by businesses that at the moment lack the confidence to invest in new people," he said.

But public sector trade unions said it was "inevitable" that the plans would lead to job losses.

"About 20 per cent of public sector investment is actually invested directly in the public sector and large proportions of public sector budgets go on employing public servants to deliver vital frontline services," said Nicola Smith, senior policy officer at the TUC.

"When we're talking about cuts of this scale, over this short a timescale, we're inevitably going to be talking about job losses, which will mean rising unemployment, increased benefit payments, reduced tax revenue and a real risk of a double-dip recession," she said
The government expects to save up to £120m this year by freezing recruitment across the board in government departments, agencies, and quangos.
Exceptions will only be made for a graduate recruitment programme which is already underway and individual "business critical" and "key frontline" posts which get top level sign-off.

Hugh Lanning, deputy general secretary of the Public and Commercial Services Union which represents civil servants, said the recruitment freeze was an "indiscriminate measure" which would have an effect on the public immediately.

"If you look at the places that serve the public - JobCentre Plus, Revenue and Customs, tax offices locally, DVLA - they've had cuts for many years," he said. "In five years, we're lost 100,000 jobs, so they've only been filling essential jobs and if they don't fill vacancies that come up now, there'll just be less people to serve and deal with the public."

Ministers and Treasury officials will work on further cuts plans over the summer, before setting out departmental budgets for the next three years in the autumn's spending review. Today's announcement has been described as a "downpayment" for the heftier fiscal repair job to come.

Jonathan Baume, general secretary of FDA, which represents senior civil and public servants agreed recruitment freezes were an "imperfect tool" - although he said the civil service has been "a bit hasty at times in recruiting externally when there are good people internally".

"I think it will be the autumn, with the three-year spending review, when we start to see the real detail and get a feel for the real pain that the cuts will cause," said Baume. "At the moment, it's very difficult to make immediate savings in the middle of a spending year and I think a lot of this is to do with market confidence - in terms of finding an immediate pot of money that can be saved."

Osborne said this morning that he "did not recognise" figures estimating that 300,000 public sector posts could be lost over the next few years.

Although today's announcement did not spell out comprehensive details of exactly how the cuts will be made, £320mn will be cut by scrapping what the government calls "ineffective elements" of employment programmes.

This includes ending funding new jobs for young people under the future jobs fund, and removing recruitment subsidies to employers who took on unemployed young people from the six-month offer programme. The schemes were part of Labour's plan to stop long-term youth unemployment by guaranteeing young people a place in work or on a training scheme after six months.

The government is also reducing the number of new university places for next year from 20,000 to 10,000, although it is also planning to reinvest £150mn of savings in 50,000 new apprenticeship places.

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