Budget review recommends up to 60,000 public jobs cut

Up to 60,000 people working in the public sector in Scotland could lose their jobs, according to an independent review commissioned by ministers.

The panel which considered options for future expenditure recommended a fall in public sector employment of between 5.7% and 10% by 2014-15.

It called for reductions to be made as far as possible by natural wastage.

The panel was created in February to detail which cuts could be made in the face of a £42bn squeeze over 16 years.

It set out options that Holyrood may want to consider “in the face of the most challenging public spending environment since the Second World War”.

The report recommended subjecting all services – including the NHS – to scrutiny. It said there should be “no overriding presumption of protection for any of the major services”.

Universal or subsidised services like free eye tests, personal care for the elderly and bus travel for pensioners and disabled people should be reviewed, the panel said.

Ministers should consider suspending the final stage of the prescription charge abolition, it concluded. The fee – which currently stands at £3 per prescription – was due to be scrapped altogether in 2011.

The report also called for a reduction in the number of public bodies, a review of public sector pensions and a two-year pay freeze from 2011-12 “as the first essential step to constrain growth in the public sector pay bill”.

On the issue of higher education, the three-man panel said the government should consider whether to maintain current funding arrangements or implement a system similar to England, such as up-front tuition fees.

It said the status of Scottish Water – currently publicly owned – may have to be reconsidered.

The panel was led by ex-Scottish Enterprise chief Crawford Beveridge and its recommendations could shape the Scottish budget for 2011-12.

The proposals comes as ministers prepare for deep cuts in the block grant from Westminster later this year.

The Scottish government said it would “inform” debate in advance of the UK government’s Comprehensive Spending Review, which is expected in the autumn.