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Govt swings axe in massive public service cuts

Tech industry reflects on 'unprecedented' and 'dramatic' cuts

By Steve Evans

Chancellor George Osborne has outlined his plans for reducing Britain’s huge budget deficit with the biggest cuts in spending since World War Two.

About 490,000 public sector jobs are likely to lost as a result of the cuts and government departments will face an average 19% four-year cut in budgets and the retirement age will rise from 65 to 66 by 2020.Exact details about how the budget cuts will impact the technology industry are still emerging after this afternoon’s announcement, but a couple of interesting points are immediately clear.

HMRC is facing budget cuts of 15% but will be given an extra £900m to fighting tax evasion and fraud through "better use of new technology and greater efficiency", the government said.

As announced yesterday an extra £650m will be invested in cyber security, which is now listed as a Tier 1 threat to the UK. "It’s a threat to government, it’s a threat to businesses and indeed to personal security," secretary Theresa May told Radio 4 yesterday. "We have identified this as a new and growing threat in the UK and you just have to look at the figures – in fact, 51% of the malicious software threats that have ever been identified were in 2009."

The project to bring next-generation broadband coverage to the UK has survived the cuts. The BBC will offer £300m towards to £530m cost of funding rural broadband while the rest will come from money set aside for the digital switchover. "It will help encourage the growth of our creative industries as a key part of the new economy we are seeking to build," Osborne said.

The unprecedented cuts in public spending, and the huge job losses that are expected to follow, present the public sector, and its technology suppliers , with an opportunity to show its worth, believes Alan Banks, managing director of Adobe Systems for Northern Europe.

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"Government’s future proposals are also likely to include plans for extending the reach of ICT in order to absorb the disruption caused by the cancellation of other front-line public sector initiatives. With less staff to deal with the public, online self service could become more valuable than ever and must be an area to be further explored," he said.

"The universal truth is that in today’s web-centric world, organisations of all types are being challenged with ever-increasing customer expectations. Because of the extraordinary access the web provides, customers and or citizens expect that they should be able to interact with an organisation in any number of ways and at any time – from enrolling for a service via a mobile device, to reaching a service representative via online chat. This challenge – of creating meaningful experiences over the web for citizens – is inextricably linked with technology," Banks continued.

Andy Burton, CEO of hosted IT provider Rise, agreed that cloud is the way forward for departments forced to slash costs: "IT has the potential to deliver immediate benefits if bought ‘as a service’ or ‘on demand’ via the cloud. A service provider carries the up-front cost of set up, management, security and the user repays them on an amortised, subscription basis. Culturally that requires a major shift for the government but one driven by modernisation, not compromise. These can be services such as storage or back-up, or software as diverse as communications tools or databases. Surely in a time of austerity the greatest kind of cost saving is one which allows you to keep moving forward and simply reduces the cost – via cutting inefficiency – not the activity."

"Today the UK revealed an unprecedented and deep reaching spending review covering the length and breadth of the public sector. The timing couldn’t have been worse for the many high level government IT departments who had already begun their regular infrastructure refresh reviews. IT managers in public sector departments are now scrambling around to undertake a full infrastructure review and look at what infrastructure they have got, what has been long forgotten, what is being used optimally and what can be redeployed across disparate offices and departments. Only by understanding their hardware and software estate can public sector IT Managers work effectively within the new budget constraints," said Steve Demianyk, UK channel development manager, Network Management Division, Ipswitch.

The job losses throughout the public sector could be absorbed by the private sector, which will soften the blow, according to Paul Winchester, managing director of IT and telecoms recruiter Greythorn: "When it comes to IT and telecoms, the private sector will easily make up the jobs lost in the public sector. The private sector job market is in rude health and the industry is big enough to take care of itself. There is no reason to imagine the pace of consolidation envisaged in the Budget will undermine the recovery. The private sector should be more than capable of finding jobs to replace those lost in the public sector, and the redeployment of people to more productive activities will improve economic performance, and in turn generate more employment opportunities."

Other announcements include a 14% reduction in spending at the Royal household, police funding to see a 4% reduction and a rise in the retirement age from 65 to 66 by 2020. The BBC licence fee will be frozen for six years, which represents a 16% reduction in real terms. In the Business, Innovation and Skills sector, admin costs will be cut by £400m, the Train to Gain programme will be axed, but the science budget is to be frozen and funding will be provided for 75,000 apprenticeships a year.

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