Bernard Ginns: Can public sector show flexibility of private workforce?

"Cut their wages," he replied, "by 10 per cent. The private sector has had to adapt during the recession. So should the public."

It has been a key feature of this downturn that we have not seen the levels of unemployment originally feared in the private sector. This is because we have a flexible workforce which has recognised the need to embrace change.

It is something that the nation should be proud of. It shows that people have the foresight to make sacrifices to keep their jobs.

I worry whether there will be the same flexibility of approach in the public sector. Will sabre-rattling unions be prepared to accept such propositions? They might have to, unless they want to see swingeing cuts that leaves staff with no jobs at all.

Another proposal to help balance the books came yesterday from Interim Partners, the fast-growing recruitment company, which believes that more Whitehall functions should be outsourced to the private sector.

The Harrogate-based firm polled 1,475 interim executives with experience of dealing with organisational change.

Doug Baird, managing director, said: "From their hands-on experience of implementing cost saving programmes across thousands of public and private sector organisations, interims say that the best way of balancing savings against service is through outsourcing.

"A lot of interims have spent the credit crunch implementing belt-tightening measures for businesses so they are definitely a constituency worth listening to."

Alongside greater outsourcing, the interims said the government could reduce headcount by increasing investment in IT and increase productivity by introducing tougher targets.

Mr Baird added: "It may be popular amongst the unions to knock consultants and contractors but when it comes down to brass tacks using experienced interims to drive through efficiency measures in an organisation can be very cost effective."

IF you harbour feelings of antipathy towards the big banks, expect those feelings to multiply tenfold when tax rises and public spending cuts kick in next year.

Bank bashing will continue into 2011 and beyond as the UK economy struggles to get itself back in the black and the inevitable stories of banker bonuses will have the effect of pouring petrol onto the fire.

Amid the fear and loathing in the financial world lies some hope for the building society sector, which like its plc rivals has been through a difficult time in the last couple of years.

Speaking at last week's Building Societies Association conference in Manchester, Iain Cornish, chief executive of Yorkshire Building Society, told me: "As building societies, yes we have to learn some lessons, but I think it is a huge opportunity for us to position ourselves as customer champions."

Hope was relatively abundant during the annual get-together. Around 500 people attended the BSA event and organisers were encouraged by the 30-or-so exhibitors who took stalls, showing an appetite for investment is returning.

The mood among delegates was certainly better than last year.

Among the presentations was a talk by Robert Parker, senior adviser to Credit Suisse. It was one of the more upbeat economic forecasts I've heard in recent months.

In summary, Britain is clearly out of recession and there won't be a double-dip.

There are unlikely to be any sharp rises in inflation. Households are saving more and consumer debt is being brought down, as consumers sort out their balance sheets. Commodity prices will be stable for the next year or so.

"Exporters will benefit from the strong growth in emerging markets. Big business is in generally good shape.

"The level of corporate cash is at a record high; the level of corporate borrowing is at a record low. There will be three or four years of public spending cuts as the state goes through the same rebalancing programme as the rest of us.

On the less positive side is the "very high" probability that Britain will see its credit rating being downgraded from triple-A to double-A, which would make it more expensive for the country to borrow money.

But, said Mr Parker, the credit rating system is fundamentally flawed and needs radical overhaul. "I don't think we should worry too much about that," he said.

What he is worried about though is the amount of exposure to the commercial property market. "There's 250bn in real estate lending to be refinanced.

"A lot of those deals were done at the top of market on very high levels of borrowing. There are going to be some really nasty writedowns there."