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Fears that public spending cuts could plunge parts of the UK back into recession were raised by the Audit Commission this week. Warning a ‘slash-and-burn' strategy would devastate weaker local economies, the commission warned: ‘Some places and some people will suffer more than others. In many parts of the country, councils, schools, police, fire and the NHS are among the largest employers. As they look to cut costs, they must consider the impact of job losses on their communities.' Almost half of local government spend is on staff, and around three-quarters of public sector staff are women. On average, 16% of employment in a community is in police and fire services, councils, schools or the NHS. The commission's report, Surviving the crunch, adds: ‘There is a risk that public sector staff who are made redundant and cannot find other work will become clients for housing benefit and debt advice and, potentially, long-term unemployed.' It urged councils to focus on reducing the pay bill, using freezes or even pay cuts. Commission chairman, Michael O'Higgins, told The MJ: ‘There are some authorities which are not looking forward far enough. Regardless of the outcome of the election, finances are going to become tight, and they need to plan now for things further down the line.' Mr O'Higgins warned councils against adopting a ‘slash-and-burn' approach, and highlighted Solihull MBC, which had offered staff reduced working hours. He said: ‘Rather than assume cutting wage bills must mean job cuts, councils need to look at other ways at being flexible around this.' The report noted for most councils, up to early this year, the recession ‘has been manageable', thanks to the 4.1% increase in the three-year settlement, although income has fallen in districts where 60% is generated locally. It said good leadership from elected members was important, but warned ‘some are unwilling to take radical steps without clarity on future funding' But LGA chairman, Dame Margaret Eaton, hit back. She said: ‘Councils are determined not to rest on their laurels, but are being held back by the costs of centralised red tape, inspections and bureaucracy. ‘It is only radical reform of the way local public spending is structured that will deliver the necessary savings.' A CLG spokesman said councils would have tough choices ahead, but there was no reason to lower service quality. lsquo;The Government is working hard to make sure councils have explored every possible option before resorting to wholesale budget cuts that will affect frontline services and jobs.' Tony Travers, director of the Greater London Group at the London School of Economics, told The MJ: ‘It's very difficult to imagine the scale of expenditure cuts local government faces without significant job reductions. lsquo;Whether local government is making cuts or delivering efficiency savings, it is bound to lower the number of people working for it. lsquo;The commission is right in saying councils need to plan. The problem is, it's difficult to do so in a world where no political party will say what these cuts will be. lsquo;Until we know total public expenditure for [2011 to 2014], then the whole public sector has to plan in emergency mode, and that means it needs to be more cautious than might be necessary.' TUC general secretary, Brendan Barber, called on politicians to spell out the full implications of cuts to public spending.

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WHITEHALL

'Double-dip' threat over council job cuts

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