The public sector should not panic, even if projected cuts in public spending top £100bn in the next two years, Audit Commission chief executive, Steve Bundred, told last week's SOLACE conference in Brighton. But he did warn that cuts in regions heavily dependent on public sector employment could help tip the economy into another downturn. Mr Bundred told chief executives: ‘This recession comes after a long period of unprecedented growth in public spending, in which local government has seen a 56% real-terms increase. ‘We've been very well fed, and ought to be ready for the diet. We don't know the exact scale of the cuts, but £130bn is a realistic estimate of the structural deficit, and £100bn cuts are not unrealistic. ‘But even if we take £100bn out of public spending, we will still be spending, in real terms, more than in 2005/6. There is no cause for panic and it's perfectly manageable.' But he warned: ‘There is a real concern that the recovery is ‘W'-shaped. It's possible that, given the scale of the cuts in those places with a heavy concentration of public sector employment, there could be a double dip. We welcome action by those councils which are thinking seriously of making their economies less dependent on the public sector. In some regions, the public sector as a proportion of the entire economy is greater than in Cuba.' But he also criticised politicians for excluding health and education from cuts, saying: ‘It's a mistake to treat the NHS or schools as beyond this exercise. These two services have been the most well-funded and under least pressure to deliver value for money.' Total Place supremo, Sir Michael Bichard, told the conference: ‘The traditional response to a downturn, such as the efficient control of budgets, isn't sufficient. The debt is too great to be bridged by efficiency alone.' He also urged councils to be more innovative saying: ‘The system is still too risk-averse. That means getting a better balance between innovation and accountability.'
