Regional Development Agencies first to go as coalition administration begins cutbacks

Interesting, challenging, tough – words everyone working in the private sector has become used to over the last two years. But its now the turn of lawyers covering the public sector to dig up the austerity-related euphemisms as the new coalition Government pushes on with its plans to reel in the UK's yawning budget deficit. As Paul Gilbert, chief executive of consultant LBC Wise Counsel, comments: "The private sector and big corporates have been through high-profile redundancies and cuts – now it is the public sector's time to see the squeeze."

Lawyers operating in the regions will have noted the announcement last month that regional development agencies (RDAs) will see their funding cut by 20% in the initial £6.2bn round of cost-running this year.

There were further developments this month when Secretary of State for Business, Innovation and Skills Vince Cable, announced plans to abolish all nine RDAs, which will be unsettling news to firms on their panels. Attention will now focus on how the bodies set to replace them – Local Enterprise Partnerships (LEPs) – will operate. The Government says LEPs are intended to be formed between local authorities and businesses at local level rather than imposed by central Government. Current indications are that the northern RDAs, generally regarded as effective, will to a certain extent be reborn as comparable LEPs. In southern England, where such entities have enjoyed less support, any new bodies are expected to look very different.

The Government has also stated that some RDA functions are likely to cease altogether, while some will be delivered at national level or via other arrangements. In particular, regional spatial strategies – one of the RDAs decision-making powers on housing and planning – are set to return to local authorities.

But it is not just RDAs that induce worry for public sector lawyers. The Government's centralised legal procurement panel, Catalist, is likely to come under renewed pressure to cut legal spend and more effectively centralise legal buying. Despite 48 law firms winning places on the panel, the majority see little work from it, with several major Government departments operating separate advisory panels. Grumbles from lawyers regarding Catalist and its predecessor, LCat, over excessive bureaucracy, low rates and failure to deliver its promise of volume for value have been growing for years.

The general feeling is that if a cash-strapped Whitehall wants to push down further on rates offered through Catalist, already very low by the standards of top 50 UK law firms, the panel will have to start genuinely delivering on volume. The alternative could be that many large law firms effectively walk away from public sector work, leaving only a small group of firms to advise public bodies.

Ironically, local authorities currently appear to be demonstrating a better grasp of executing the model that Catalist touted, with a series of councils putting together joint panels. This approach was on show again this month with the unveiling of a panel for a consortium of London and Kent boroughs, which included appointments for Wragge & Co, Pinsent Masons, Trowers & Hamlins and Dickinson Dees.

This approach has been received by law firms as a practical and workable response to the pressures on the public purse. The new Government – and Catalist – would do well to take note.