Commenting on public sector measures outlined in today’s Budget, Caroline Haynes, director in KPMG Public Sector markets, says:
“Further squeezes to departmental budgets in the next two years will heap more pressure on government. Despite the commitments made to ring-fence key areas it appears that only defence, transport and NHS remain completely unscathed, but the government hinted that further welfare squeezes may be on the horizon.
“In addition, by introducing a spending framework that caps annual managed expenditure (AME) spending, prioritisations between different AME recipients will have to be made. However, we will need to see the detail to understand the details of how this will work.
“In order of magnitude it looks as if the communities and local government budget, education, DWP and Home Office now need to find new ways to reduce costs in 2013/14 and 2014/15. As all these departments have significant reform programmes underway, doing so will be a huge challenge.
“The answer lies in accelerating the reform agenda. We hope the tax incentives that were put in place to encourage employee spin-outs will kick-start the government spin-out revolution. “
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