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Whitehall plans to support local economies hardest hit by public sector job cuts could end up rewarding inefficient businesses with little benefit to taxpayers, the director general of SOLACE has warned. David Clark said ‘special measures' for parts of England hardest hit by public job cuts under the coalition government's plan to reduce UK debt ‘begs one or two questions'. It follows indications from deputy prime minister Nick Clegg, the Liberal Democrat leader, that Whitehall is preparing a support package for local economies heavily reliant on public employment – such as Yorkshire, the North West and North East – and facing major cuts. In an interview this week, Mr Clegg promised the Government would not leave such regions ‘high and dry'. ‘What you will see over the next few weeks and months is a series of measures that we are taking to ensure that, as the black hole is addressed, it's done in a way which is sensitive -–much more sensitive than in previous recessions – to the particular needs of those parts of the country that are very dependent on the public purse,' he said. Measures under consideration are thought to include job creation schemes which, rather than supporting local public bodies to retain staff, could see private sector employers subsidised to take on new staff. But Mr Clark claimed that could be counter-productive: ‘Healthy and competitive businesses should not need an effective wage subsidy and surely those that accept it are moving into being taxpayer supported, and thus presumably guilty of the faults that are said to be the province of the public sector.' Mr Clark also argues the benefit to taxpayers of supporting redundant public workers through a taxpayer-funded subsidy to firms – having already covered their redundancy costs and an increase in benefit payments – is uncertain. ‘Has anyone done the maths? It would be a shame if hardworking public sector employees are put through all this pain and the Exchequer is no better off.'

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WHITEHALL

Whitehall 'Special measures' may fail

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