The £81 billion cuts in government spending announced this week will put half a million jobs at risk and force Whitehall departments to overhaul their budgets in quite radical ways.
Chancellor George Osborne announced the cuts on Wednesday, in a bid to eliminate the structural deficit in the public finances and bring Britain back from "the brink of bankruptcy".
For public sector CIOs, it's not a blanket cut-back though with some departments making IT investments in order to find efficiencies elsewhere. Chancellor George Osbourne referred to building IT resources in HMRC to fight tax evasion and fraud in his address to the House of Commons today, for instance.
But for many departments it will mean lean years well into the decade. Local Councils will have to make cuts amounting to 28 per cent over four years. £6bn will be taken off Whitehall budgets. Investment in policing will be cut by levels which some pundits believe will hurt front-line law enforcement. Back-office functions will likely be targeted in both these areas before front-line services are touched. Expect an acceleration of shared services initiatives.
Some specific departments have been hit hard – Culture Media and Sport will have its administration budget cut by 41 per cent. This is a relatively small department though. On the other hand, the Treasury is facing cuts of 33 per cent. The MOD is expected to lose 42,000 jobs. It is expected that half a million people will lose their jobs throughout the sector.
The private sector will also be affected, through the knock-on effect of less public spending filtering through and through direct regulatory measures. There will be a permanent bank levy, which will probably impact on investments in infrastructure and people in the industry. Many other industries will that depend on public sector organisations as main customers will find it hard to find new business. This will affect large companies, which have found it easier to navigate arcane government procurement processes, than small or medium businesses.
There is also an impact on training and employment across public and private sectors. The Train to Gain initiative, adopted by many businesses to help fund training will be scrapped, but 75,000 more apprenticeships will be created. University funding will be cut, impacting the regeneration of the nation's skill-base, but government investment in science education and research will be protected at £4.6bn a year – providing a ray of sunshine for IT department recruiters.
Wherever you work, staff morale is likely to be dampened, not least by the prospect for anyone retiring after 2020 of having to work an extra year. Many organisations on both sides of the tracks face daunting change programmes to cope with the new economic landscape. This is going to be made all the harder with a disenchanted, poorer, more anxious workforce.
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