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The problem with cutting costs is that it costs money. What can Government do to make the investment needed to cut costs?

Gemma Tetlow of the Institute of Fiscal studies (www.ifs.org.uk) has found out that the budget does actually include a cut in public sector spend. What was labelled as a 17% cut in Government 'investment', will in fact be a 0.1% cut in the total budget. Avoiding the parts of the budget that can not be cut (benefits and loan repayments), departments are likely face an average cut of 2.3% in 2011/12 and 2013/14.

It is unlikely that these cuts will fall evenly across the board. Given the pressure to protect health and education budgets, it seems likely that the axe will fall heavily on Local Government. Given that incomes are falling and demands for services are increasing, the next few years promise to be extremely challenging for Local Government finances.

More on the 2.3% cut can be found at the Health Service Journal.

The IFS is a politically independent research institute established in 1965 in oder to undertake thorough analysis of the country's fiscal strategies. 

In recent article, The Economist cited improved procurement practices as the 'silver lining' that will be gained from the downturn (see here and here). Basically they mean outsourcing, but there's a problem with this silver lining that is real challenge for procurement staff. The problem is quite a simple one: skills. Too many procurement managers in local government simply haven't managed outsourcing tenders of this scale before, as a result they're going into shared services tenders 'out-gunned' by the suppliers.