Experts say public sector services in the Midlands are being hit by a double blow from the economic downturn – a reduction in income and increased take-up of services.
Michael Kitts, public sector leader at PricewaterhouseCoopers (PwC) in the Midlands, said the public sector is not immune to the effects of the recession. He believes the credit crunch will eventually lead to spending cutbacks.
Mr Kitts said: “The public sector is feeling the impact of economic downturn in a variety of ways. The recession is affecting the viability of services by raising costs and reducing returns at the same time as increasing demand for services within local communities from businesses and citizens. Services in areas like healthcare, housing, education and local authorities are all feeling the strain.”
The public sector is facing significantly increased financial demands for services like housing benefits and education to help get people back into work and healthcare as a consequence of the social impact of the recession, said Mr Kitts.
At the same time, its ability to pay for these services is diminishing as income from fees and charges is down, interest receipts from investments are reduced due to market rates and council tax and business rates are more difficult to collect.
Charles Turner, director and debt advisory specialist at PwC in the Midlands, said: “With creditors jostling for position, meeting council tax and business rate payments may not be as high on their priority list.”