Page last updated at 11:52 GMT, Tuesday, 16 March 2010

Public sector told 'change working or run out of money'

Public services may need to encourage part-time working, says Gillian Body

Public services in Wales are facing cuts that will cause "considerable pain", according to an official report.

Gillian Body, the auditor general for Wales, said the NHS, councils and the police may need to cut staff hours and encourage part-time working.

She said services must work in "radically different ways" to face cuts of some £1.5bn.

Meanwhile, First Minister Carwyn Jones said the assembly government was going through its budget "line by line".

Mr Jones told AMs that the funding process "won't be easy and it won't be painless."

Ms Body's report warned that if organisations did not change, "they will simply run out of money".

Trade union Unison has warned against cutting staffing hours.

In her report Ms Body wrote: "Public services are going to have to deal with major change very soon.

"Our experience suggests that public services tend to change incrementally over time. But if they carry on with business as usual, they will simply run out of money.

Betsan Powys
Betsan Powys, BBC Wales political editor

Today's report from the Wales Audit Office will send a shiver down the spine of public sector workers and management.

It's a no holds barred examination of just where we are and where we need to get to in terms of reform - and it makes for grim reading.

It's just 36 pages long, but in its doom laden tones, it has more in common with Franz Kafka, that dark theorist of intractable bureaucracy, than the dispassionate public auditor.

The analysis couldn't be simpler - the medicine, one expects, will be very hard to stomach. Perhaps the key phrase in the report is this: "In considering disinvestment, public services will need to identify novel ways of reducing their staffing bills."

"Change will come one way or another. The challenge will be getting those changes right with good planning and timely decision-making."

The report says that as staff costs make up the bulk of most public services' spending, they will need to "identify novel ways of reducing their staffing bills".

These include flexible working, with reduced hours or moving from full-time to part-time work.

'Private sector solution'

Unison's head of local government in Wales, Dominic MacAskill , has warned against some of the suggested changes to working practice.

He said: "Transposing a private sector solution to the public sector is fraught with difficulty.

"The reason why the private sector went to short-time working and reduced hours was a reduction in demand for manufacturing goods etc.

"With the public sector the demand is high and increasing. For example, social care demographics show an increase in demand."

Mr MacAskill said that while trade unions would be "happy to discuss any initiatives which reduce the necessity for redundancies", it would be misleading to suggest staffing costs could be reduced without cutting services.

Our experience suggests that public services tend to change incrementally over time... but if they carry on with business as usual, they will simply run out of money
Gillian Body, auditor general for Wales

Ms Body said public sector organisations must use evidence to prioritise services, moving resources away from non-priority areas.

She said just focusing on cutting costs without finding new ways of working would not be enough.

'Difficult decisions'

First Minister Carwyn Jones said the assembly government was going through its budget "line by line" as part of the process of preparing for the public spending downturn.

Mr Jones told AMs: "We are looking at a very tight budget indeed, we will have some very difficult decisions to take as a government, and I don't shy away from that.

"But I would expect the public in Wales to expect us to formulate a rationale as to why some areas are seen as important and should be preserved, and other areas are seen as areas that cannot receive funding for the next year or so... it won't be easy and it won't be painless."

Jonathan Morgan, chair of the public accounts committee, said: "With significant financial cuts on the way, public bodies cannot expect to muddle through by doing the same things with less money.

"If they are to provide citizens with good quality services they need to focus more attention on finding radical new ways of working.

The auditor general's report also said public services would need to collaborate more effectively.

It argues public organisations need to do more to manage sickness absence, which has fallen among assembly government and NHS employees, but remained "fairly static" in local government.

The figure of £1.5bn of cuts over three years is an estimate drawn from Institute for Fiscal Studies forecasts, based on Treasury figures.

The actual figure could be higher if there is a so-called 'double dip' recession delaying recovery or if the UK government opts to pay off the national debt more quickly.

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