Stark warning about impact of Budget on the North East

Mar 25 2010 By Adrian Pearson, The Journal

ALISTAIR Darling's Budget has put the North East on standby for a "decade of pain".

The Chancellor would not reveal the full extent of the cuts needed to pay back the debt built up by the Government as it spent its way out of the recession.

But his warning that the next spending round, whereby cash is earmarked for each department, will be "the toughest in decades" has made it clear that billions of pounds could be wiped off the North East economy.

Senior public sector accountants said there would be a "decade of pain" as council bosses admitted they are preparing for a damaging shake up in spending.

David Faulkner, deputy leader at Newcastle Council, called for a renewed effort to safeguard frontline services but agreed the coming cuts threatened to knock the North East back into a regional recession. "There is the risk of a double dip, we have to be realistic here," he said.

"If we see a reduction in public spending along with our huge reduction in capital spending it will be felt.

"That money we spend is sustaining the private sector as well, the people who improve our houses or modernise our schools or fix up our roads.

"When this money dries up it will have an effect on the regional economy, a disproportionate effect.

"And we just hope that the support announced for small businesses will soften the blow."

Union leaders last night added their warnings, predicting a "triple whammy" for the North East as cuts lead to council job losses, a drying up of contracts for businesses across the region and a damaging blow to frontline services

Kevin Rowan, regional secretary of Northern TUC, said: "It would be extremely difficult to make significant cuts to public spending and not expect to see job losses in other businesses.

"And because we have a greater need for some public sector services, in some of the more deprived parts of the region, we will suffer more than most."

Despite claims that the budget would be one designed to stabilise the economic recovery there was little specific help for a region preparing for savage cuts.

Iain Hasdell, Government advisory partner at KPMG in Newcastle, warned of a "decade of pain" following the Chancellor’s Budget.

He said: "There is a risk that this Budget announcement will lure public sector organisations into a false sense of security.

"We are still facing a decade of pain and efficiency programmes on their own will not be enough to close the gap.

"This budget is a missed opportunity to prepare the public sector for a radical programme of large scale transformation which will be painful but which is clearly on the cards."

Gill Hale, regional secretary at Unison, said it would be foolish to believe the Chancellor when he says billions of pounds can be wiped off council spending without affecting services.

"We are already feeling the impact of these cuts, or efficiency savings, across the North East.

"We can see it in vacancies not being filled and jobs going already, and we have today been told this will get worse.

"We’re grateful that the Government did not follow the Tory advice to just slash spending but we are still preparing for the full impact of Labour’s cuts."

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