Fundamental change in the public sector a must – report

THE delivery of public services needs to be completely transformed if the UK is to tackle the budget deficit. In a new report, accountants KPMG say radical changes will have to be made ahead of what it said could be a decade of austerity.

UK public sector organisations are much slower than those in other countries in implementing the measures necessary to cope with the financial crisis, according to the advisory firm.

In the report Tough Choices Ahead: The Future of the Public Sector it recommends a three-step programme: cutting expenses, improving efficiency and "strategic transformation" – identifying new sources of funding.

Jenny Stewart, head of public sector at KPMG in Scotland, said: "We must start to consider the long-term effects of the economic downturn on the public sector.

"By now it should be clear to everyone that the financial pressure which is coming along in the public sector cannot be faced with the traditional cost-cutting and efficiency programmes.

"The public sector protracted downturn does not require the same immediate response as that of the private sector, but a long-term strategy that is seeking fundamental change."

• A survey of the top law firms in Scotland has found that Scots firms suffered a greater fall in profits than their English counterparts, with net profit margins of 31 per cent, down from 33 per cent in 2008.