Quango redundancies – A kick start to the economy?

Quango staff strike for fair pay (off)

This is not meant as any form of political comment, just an observation. I don’t believe any of the parties would have acted any differently, all would have made savage cuts to the government run/funded quango staffing levels.

There are a huge number of people who were given notice soon after the election. Their quango was closing or they were just put on notice to reduce headcounts. An awful lot of them have reached the end of their consultation period and will be out of work by the end of February.

This is NOT the case with most everyday public sector employees and and I have been told in no uncertain circumstances by a friend that most local government employees will only receive the standard 1.5 weeks per year if they are over 40, but with a max of £380 per week,

The quango redundancies do create a few interesting economic scenarios.

1. Some of them will be getting thumping big pay off’s

Government Quango redundancy doesn’t seem to work quite the same as private sector or local government sector. Over here, if we are between 21 and 40 years old, we get a week per year served. Some may choose to enhance it a little. At 40+ years old, this is ramped up to 1.5 weeks per year. Ten years gets you 10 weeks pay. 22 years, may get you 30 weeks. This may be subject to that limit of £380 per week, so hardly get rich quick stuff.

In the Quangos, the person I know will get a cumulative redundancy allowance. So for ten years service they get 1+2+3+4+5+6+7+8+9+10 = 58 weeks. Wow! The first £30k is tax free too. This will be a big outgoing for the public purse in one single month.

I’d love to know how many people get this deal and how many get the normal one like the rest of us.

2. The respend may be the kick the economy needs to get it going

With that much money swilling about in the economy, a huge amount will be respent.

Mortgages will be paid off, freeing bank cash to lend again – maybe to first time buyers?

Building work will be done, helping boost the skilled trades economy

Lots of cars, and gadgets will be bought – most of which is exported cash, but at least a boost for UK retailers after a dodgy Christmas.

3. Tough to cope with

The biggest concern has to be that many of these services that are being removed will just be subcontracted to the private sector and some of the people made redundant taken on to do the actual work. Audit work is likely to be taken over by the accountancy firms and I can’t believe they will be able to deliver the same level of independent scrutiny for less money. Can they be truly independent if they are in danger of losing their contract renewal?

Thanks to elhamalawy for the cool image