Vince Cable: 'Just cutting jobs is not sensible'

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Simply cutting jobs was not a sensible way of downsizing Government departments because of the difference in pay between senior staff and other workers, a Cabinet minister said today.

Business Secretary Vince Cable conceded it would be "very tough" to cut his department's budget by 25% as part of the comprehensive spending review.

He told the Business Select Committee: "As a key economic department we should set an example on operating as efficiently as possible.

"There will be a voluntary redundancy programme to make sure that the process is orderly to sustain morale. It is not going to be easy, but if we are to ask for sacrifices, we have to set an example.

"Just cutting jobs is not a sensible way to downsize operations because a senior manager costs a lot more than a cleaner."

Mr Cable pointed out that 150,000 private sector jobs had been created in the last three months, fuelling hopes that cuts in the public sector will be offset by job creation in private firms.

Business groups wanted the public finances to be sorted out and expected there will be "substantial" growth in private sector employment, which Mr Cable said he agreed with.

The minister told MPs that assets held by Regional Development Agencies (RDA) will be sold off when the regeneration bodies were scrapped, but any money raised might not be enough to cover their liabilities.

"It could be that their liabilities exceed the assets - there have been a lot of very bad decisions."

Labour MP Jack Dromey (Birmingham Erdington) asked whether local RDA liabilities would be put to local use, or whether there would be a "treasury land grab."

Mr Cable replied that winding up the RDAs was a "difficult process", which was still continuing.