IT Contractors Feel Effects Of Public Sector Budget Cuts

In the Chancellor’s recent statement on budget cuts, Mr Osborne announced measures to save £95 million through a reduction in IT spending, £120 million through a civil service recruitment freeze and £1.2 billion from local government.

Although the proposed cuts in Public Sector Expenditure are not ideal the majority of IT contractors would prefer significant spending reductions over any increase in taxes. The Chancellor is currently working on an emergency budget which is expected to reveal the full extent of spending cuts and changes to the UK taxation system. Details of the emergency budget are due to be announced on the 22nd June 2010. The recent Queens Speech included plans to remove barriers to flexible working, promote equal pay and make the taxation system fairer and simpler; moves that will be well received by the UK Contracting community. Issues such as IR35 and the Agency Workers Directive could be addressed by the new Government.

Speaking on the cuts the chair of the Recruitment and Employment Technology, Jeff Brookes, said that “Public sector budgets were expected to be cut regardless of who formed the government after the election. We would advise the new Government not to sever critical IT investment projects indiscriminately. IT can help the government and public services to function more efficiently but if we start randomly dropping IT projects now, that could act to add costs rather than eliminate them in the long run. There is also a concern that local authorities, who have to find their own savings, will contribute to the cuts package announced today by scrapping key IT improvement projects at a local level. These actions could act to add costs and could also put the jobs recovery at risk. IT professionals who are worried about their position should speak to IT recruiters who are well placed to discuss their career options and help them find work elsewhere.\”

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