Stephen Hollowood, executive director and head of public sector at GVA Grimley, looks at which parts of the UK will be hit hardest by next Wednesday’s comprehensive spending review:

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The much-anticipated comprehensive spending review will announce funding cuts across all parts of the public sector, although more so for some rather than others. This is inevitably going to lead to job cuts.

Even if the scale of redundancies is relatively modest, this may still amount to almost 700,000 job losses. If job reduction was more in line with the anticipated 25% funding cuts, then this would mean more than 1.4m redundancies. There could be a further 275,000 jobs lost as a knock-on effect to local economies, due to lack of spending by people who have been made redundant.

However, with an economic climate that remains vulnerable, the impact of redundancies on a scale as large as this may be reduced by a more phased process than had originally been anticipated.

Whatever the impacts, they are likely to be critical for those local authorities with a high dependence upon the public sector. The map below shows those local authorities that are particularly reliant on public sector employment, and illustrates the significant variation between authorities, even those geographically close to each other.

In fact, over 40% of all public sector employment is located in just a quarter of local authorities in the UK. It will be these authorities that are at particular risk from the planned public sector cuts.

This will be compounded if they have a high proportion of their employment in the non-education and health elements of the public sectors. As these sectors may be subject to a degree of ring-fencing from the funding cuts, it means there will be greater impact on the remainder of the public sector in such authorities.

In fact, 20% of all jobs in this ‘other’ part of the public sector are located in less than 5% of local authorities.  These local authorities could see dramatic changes to their economic well-being over the next few years.

The points above will put further pressure on local authorities to perform a critical review of how they will deliver growth from emerging and opportunity sectors in order to compensate for the likely public sector jobs cuts.  It will be essential for such authorities to pursue growth in such areas. The ‘green economy’, for example, is expected to see over 350,000 jobs created nationally by 2015.

Less obvious, perhaps, is the point that those local authorities most at risk are spread across the UK – it is not a simple north/south divide. This will put more pressure on success in delivering the ‘localism’ agenda, and will present major challenges for the local enterprise partnerships.

A key question for local authorities, therefore, is how can they avoid devastating job cuts, which may ultimately hamper their economic recovery? Saving and making money will become a key driver for local authorities.

Thus, the better management of services, as being examined under the re-freshed ‘Place Initiative’, could achieve considerable funding savings. Allied with more coordinated and coherent asset management strategies, including property disposals in its various forms, this could help deliver major cost savings. A study by HM Treasury earlier this year suggested this could be of the order of £35 billion over the next 10 years.

Such savings would go a long way to avoiding unnecessary and harmful job cuts.

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