Peter Hoskin

The costs that come before savings

The costs that come before savings
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It's a simple fact of politics that many measures which would save money in the medium-to-long term incur costs in the short term.  Normally, this point is brought up in relation to public service reform - e.g. Gove's Swedish Schools agenda.  But today's FT highlights a similar effect in relation to public sector redundancies.

The important fact is that "civil servants aged under 50 can receive up to three years’ pay if made compulsorily redundant, and those who joined before 1987 more than six years’ pay".  This means that there are actually massive upfront cash costs to cutting jobs across the public sector, whatever the potential savings further down the line.

To their credit, the government are currently trying to cap these redundancy payments.  But, even so, it's this kind of thing which will make Tory plans to cut Whitehall bureaucracy that much harder to implement.