I’ve recently taken up scuba diving (pursuing the PADI qualification) in my spare time (not that there’s much of it!). One of the key skills for a novice scuba diver (like me) is to achieve equilibrium, often referred to as neutral buoyancy. This is an underwater state of suspended animation – neither floating nor sinking and the ideal position for the scuba diver. As I occupied a state of watery suspended animation five metres below it made me reflect on other events this week…as I sought to master the ‘fin-pivot’ manoeuvre and the ‘hover’.

“So what the heck has scuba diving got to do with anything else?” I can hear you say.

Well…as I bobbed along in the deep I thought about this week’s Emergency Budget – 22 June. It seems to me that there has been considerable emphasis placed on cutting the deficit by cutting public service expenditure. Not that I have any issue with this and it creates necessary conditions for re-thinking our whole approach to the provision of public services (see ‘Necessity the Mother of Invention’ blog post). However, I’m not convinced the equilibrium is yet right.

All the balance seems to be tilted towards cutting cost as we sink ever downwards. However, what about growth? Another way to reduce the fiscal deficit is to energise growth. I just hope the VAT increase to 20% doesn’t dent consumer confidence and inhibit much-needed spending so that the economy is kick-started with robust economic growth following.

The idea of using expansionary fiscal policy to combat recessions was introduced by John Maynard Keynes in the 1930s, partly as a response to the Great Depression. Keynes understood the perfect equilibrium between economic cuts and growth.

I’m now off to practice the CESA – Controlled Emergency Safety Ascent. Let’s just hope we come out of the Challenging Economy Safely Affluent (CESA).

Dean

Chancellor Alastair Darling made his budget statement this week on Wednesday 24th March. There are some glimmers of hope for public sector services and possibly the axe we’ve been expecting didn’t fall as heavily as we had feared.

EMPLOYMENT IMPLICATIONS

Of most significance from this year’s Budget, from an employment perspective, was the Chancellors’ announcement that ‘The Young Person’s Guarantee will be extended until the March 2012. This means that for the next two years no-one under 24 will need to be unemployed for longer than six months before being offered work or training’.

I see this as a positive announcement in the support of young people not in employment, education or training (NEET), as we know this recession has had a particularly adverse impact on young people and their prospects of finding meaningful employment and a meaningful place in society. This will help support our work in the public sector to stimulate jobs and training for 16-24 year olds, in particular via apprenticeships and work experience.

PUBLIC SECTOR AND PUBLIC SPENDING

Borrowing this year should be £11 billion less than forecast at £167 billion. This will mean that debt is £100 billion lower than was expected at last year’s Budget. The government will stick to planned levels of overall departmental spending in 2010-11 to help support the economy.

PUBLIC SECTOR PAY IMPLICATIONS

As we expected measures announced in the budget included:

• a new code of practice on setting pay for senior public sector workers, following the pay freeze for these workers in 2010-11. Whilst this is financially prudent, it may have challenges for us when it comes to competing for the best leaders and the recruitment and retention of them
• the government will seek a 1% cap on increases in public sector basic pay for 2011-12 and 2012-13. Again this may create some recruitment and retention issues
• halving spending on consultants, reducing the number of quangos and using online systems to provide information and advice to the public. The use of different communication channels to provide greater efficiency for tax payers makes sense. Employing consultants is not always necessarily bad, but this is an area that requires careful review

The government aim to make savings will be made by moving civil servants from more expensive London offices to other places around the country. In the long-term, the number of civil servants in London will be reduced by a third. Step one, 15,000 posts will be relocated within the next five years. I have some concern about whether this will actually be a false economy, as locating employment in London and the South East tends to have the best return on investment, given the general levels of economic vibrancy in that region - so we will have to see how this pans out.

In total, over £20 billion worth of savings have been identified to reduce borrowing and the government aims to protect front-line services. As we enter a period of significant public service retrenchment, it is axiomatic that front line services to our vulnerable citizens should be prioritised.

It would be great to get your thoughts on this week’s Budget. Leave a comment on this blog post or become a PPMA fan on Facebook and post a response there.

Have a great weekend!

Dean Shoesmith - PPMA President