Cuts Watch #21: Cuts and Private Sector Jobs
Around 30% of public expenditure goes directly to private sector companies – and many have been expressing concern about the impact that cuts will have for their businesses. The Guardian has reported that:
The Treasury belt-tightening knocked the shares of a number of support services groups including Capita, the hardest hit, down 2.4% to 780p. Serco was down 2.5p at 603.5p and Compass off 5p at 523p.
The FT have also reported on likely private sector impacts and regional news coverage shows how local communities could be affected: in Blackburn and Darwen 1000 Capita employees are expected to ‘suffer’ and in York traders are ‘dismayed’ at cuts in regional investment.
Specific sectors look set to be badly hit.The Home Builders Federation has said that cuts to HCA budgets will reduce job creation and local economic development, as well as reducing apprenticeship numbers. And with large cuts (£95 million) in IT projects, the Recruitment Employers Confederation has warned against the future costs of cutting IT projects now. While supporting the timetable for the cuts, the EEF has warned that ‘the decision to freeze funding for frontline investments from the previous Government’s Strategic Investment Fund could have significant consequences on investments already underway’.
From a similar perspective, CIPD have highlighted that ‘there will be knock-on effects into the private sector on businesses that undertake contract work for the central and local government and other public bodies … given the current weak state of the labour market this is likely to have a detrimental impact on unemployment’.