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Government spending review: analysis
Feature: 26/10/2010

We’ve put our heads together at Director-e to review the key points of the government’s spending review and what it will mean for the workwear and company clothing industry. With some of the biggest cuts in decades and about 940,000 jobs expected to be lost, we need to understand what this programme will mean for us as businesses and as an industry.


About 490,000 public sector jobs are likely to be lost. It’s also been estimated that this will have a knock on effect of removing around 450,000 jobs from the private sector. Given that one in three workers in the UK wear some form of job related clothing, we’d estimate that 333,000 fewer people will be wearing workwear, protective clothing or uniforms by the time the cuts take place.


Many of the private sector jobs that go will be lost in supply firms undertaking public sector contracts. Construction will be particularly hard hit, with the budget for building new social housing being slashed by 60%, although the government hopes that 150,000 additional council and housing authority homes will be built by 2015.


According to Steven Law, President of R3, the insolvency trade body, “30% of small businesses say they are "very reliant" or "fairly reliant" on public sector contracts and 10% of all small businesses say they would become insolvent if they no longer had supply contracts to the public sector. We calculate that 148,000 small businesses are at risk of failure, but of course not all businesses will lose all of their public sector work. The effect on the current levels of corporate insolvency is likely to be pronounced in any case - given that business failures ran to 26,000 for the whole of 2009.”

“Our members predict that 2011 will be a difficult year for small businesses and factors such as loss of public sector work will see company insolvency numbers start to rise, potentially making 2010 the year of the calm before the storm. Although numbers have decreased over the course of this year, insolvency practitioners are expecting 27,540 corporate insolvencies in 2011. The same survey found that almost half (45%) of the UK’s practitioners expecting corporate insolvencies to peak in 2011. Businesses with a diversified customer base will clearly be better able to weather the storm.”

As we detailed yesterday, some 17,000 front line jobs in the armed forces will also disappear with the army expected to shed 10,000 additional posts upon withdrawal from Afghanistan. An additional 25,000 MOD civilian staff will go, meaning an estimated loss of 38,000 uniform wearers.

The department of Business and Industry will see its budget cut by 25% to 2015. It will have funding to create 75,000 adult apprenticeships, which will tend to be in trade and craft skills sectors and could mean around 45,000 workers with a requirement for job related clothing. Cuts to university funding could mean that the current shortage of engineering skills in the workforce fails to improve, leading to medium term growth restrictions in the recovery of the manufacturing sector.

 

Councils will see a 7.1% fall in their budgets, leading to a raft of redundancies and a reduction in frontline service levels. Many councils are expecting to shed up to 10% of their employees in an attempt to accommodate the cuts. Again, it is anticipated that many of the workers who lose their jobs will be amongst the lower paid, uniformed posts, with cleaners, street sweepers, traffic wardens and dinner ladies being earmarked for cuts.


The department for Energy and Climate Change is to spend £200 million on wind power development and a further £1 billion will be set aside for a green investment back. It is hoped that these will create an unspecified number of new green jobs, but the impact of this, in job creation terms is impossible to quantify.


The NHS, once of the country’s largest users of work-related clothing is expected to find £20 billion in efficiency savings by 2015, but will also receive a small increase in funding over the period.


The police will see their budgets cut by 4% each year, with experts anticipating the loss of up to 18,000 police jobs. The police forces have been told to focus on cutting admin rather than the number and visibility of uniformed officers. The prison service is also expected to shed uniformed jobs with 3000 fewer places for inmates planned for 2015, with a proportionate reduction in staff numbers likely.


Budget cuts to the devolved regions, Scotland, Wales and Northern Ireland, which have a relatively high percentage of public sector employees are likely to see around 30,000 jobs go, with 12,000 of these being in Scotland.


The entire spending review can be read here.

Download Spending Review

 

Author: Alison Daniels
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