The public sector recession is on its way

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With the recession apparently coming to an end, 2010 promises to be a game of two halves for the UK.

The private sector will be heartened at the prospect of increased capital flows and customers finally loosening the purse strings. For the public sector on the other hand, things don’t look half as rosy.

In fact, it is fair to say that the public sector’s recession hasn’t even begun yet. But it will soon, that’s for sure, and it doesn’t look like we’ll have to wait for the predicted Tory rout for this to happen.

The extent of repercussions of the UK government’s banking bailout could become clear as early as the Pre-Budget Report on Wednesday 9 December. Sources tell us that a ‘Comprehensive Spending Review’ is on the cards, setting out departments’ budgets for three full years from April 2011.

Figures currently being bandied about are truly alarming, but also in-line with what needs to be done. The spending review is predicted to include 30 percent reductions in resources and 50 percent in capital spends, and local government will not escape with much better terms.

The private sector has already suffered the first round of consequences of the recession and they have made the necessary changes cutting staff and spending to the bone. For them it now depends on whether the recession really is over, or is just being held a bay (the cynics would say until after the UK general election in May).

Out of prudence the private sector is looking at outsourcing to help them contain costs and improve services through volume based contracts. This is also allowing them to focus on recovery and growth without the risks and investment of fixed assets and full time staff.

It is clear that the private sector has already learnt the recession’s harsh lessons and now the public sector must do the same.

Those on the front line of public sector procurement should be taking advice, speaking to their private sector counterparts and working to understand the sizeable part that outsourcing will have to play in their survival now and in the future.

And what better place to learn than at the NOA’s Annual Sourcing Summit next Wednesday and Thursday. It’s time for the public sector to think private and, with end-user case studies from Aviva, Easyjet, Zurich, BP and more, I can think of no better place to start.

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