Comprehensive Spending Review

New Economy provides an analysis of the Comprehensive Spending Review and the likely impact on Greater Manchester. Read the Thinking Paper

In yesterday’s comprehensive spending review the Chancellor, the Rt. Hon George Osborne set out the coalition government’s plans to shape the government’s finances for the next five years.

The overall challenge for the Government is to deliver £81billion savings by 2014-15.

A major impact on Greater Manchester is the likely number of public sector job losses. Nationally the loss will be in the region of 490,000 jobs. The implication for Greater Manchester is a net loss ranging between 10,000 and 20,000 of the current 390,000 public sector jobs. The risk is that the number will be higher rather than lower.

The announcement of Greater Manchester’s selection as one of the first 16 Community Budget areas is welcomed and offers a significant opportunity to drive through local public service reform focussing on families with a range of complex needs.

There are a number of announcements around investments in Greater Manchester notably the welcome investment in the Royal Oldham Hospital as well as the announcement of high speed rail network confirmed from London to Birmingham and then on to Manchester and Leeds.

The 27% cut in Local Authority funding in the four year period will have significant impact on Greater Manchester’s ten local authorities activity to support economic growth and reduce deprivation.

Greater Manchester’s five universities will be affected by the Government’s move away from public spending to becoming more reliant on greater student contributions from 2012.

The announced freeze on the science and research budget is encouraging as these areas play a critical role in Greater Manchester’s and the UK’s economy as a whole.

Mike Emmerich Chief Executive New Economy says:

“The Review headlines public service reform, redistributing power away from central government and radically increasing local authorities’ freedom to manage their budgets. Given Greater Manchester’s long-running and innovatory track record in collaboration, this is a challenge to be taken up and crafted into an opportunity albeit in a tough financial environment.

“Greater Manchester is well placed is one vehicle to take forward the “Community Budget” the Review announced. Greater Manchester is one of 16 areas the Review confirms will be given control of several government departments’ spending from April 2011. This will enable Greater Manchester’s ten Authorities and the wide variety of partners they work with to reduce duplication, e.g. through integrated commissioning, and to rely more on local evidence, experience and judgment to create better outcomes designed to produce additional revenue for Greater Manchester over the next four-year period.”

_Job losses – OBR forecasts. This starts with an assumption of 490,000 job losses nationally which equates to 5.7% of total public sector jobs (based on ONS, APS data). Given that GM currently has 390,000 people employed in the public sector, we can estimate that 5.7% of the 390,000 current total will be lost in GM, which equates to 20,463 jobs over the spending review period.

Data from the Greater Manchester Forecasting Model (GMFM) gives a somewhat more optimistic scenario of 10,000 (TBC) public sector job loss over four years._