It is not news to people working in the public sector that our fortunes are dependent on spending decisions made in Whitehall. But it is beginning to dawn on us just how vulnerable we are going to be in 2011.
In 2007, the government published the long awaited (and delayed) Comprehensive Spending Review. This set out and guaranteed public spending across a range of services including health, education and local government. But the guarantee runs out in 2011.
The years since 1997 have been fat for the public sector, but this generous period is likely to come to a dramatic end in April 2011. A number of factors will come together to produce a significant cut in public spending:
- The end of the CSR07 guarantee
- The (likely) presence of a Conservative government
- The need by any government to cut public spending in light of the enormous public debt accumulated in trying to tackle the economic downturn
Approximately one fifth of the population is employed in the public sector; in Northern Ireland the figure is 30%. Given a UK workforce of 29m, this means 5.8 million people are employed by the public sector.
I don’t think cuts in public spending in the region of 10% are unrealistic, and assuming these translated into a 10% reduction in the public sector workforce, that would mean 580,000 people losing their jobs. I am not an economist, but I think a cut in spending / rise in unemployment on this scale could trigger a second recession, just as we are recovering from this one.
2 comments:
I'm not sure the CSR process is quite as doom-laden as you imply. Actually it's really handy to know for three years at a time what the budget is going to be - an awful lot better than the bad old days (pre-97) when it was an annual fight for resources. As for the 1/2m people out of work are we confident that they are all contributing the value of their full cost to the nation? If not, then maybe some redistribution between public and private sphere is not necessarily a bad thing.
I don't think CSR is a bad idea at all, and I understand the many benefits a three year settlement brings. I only meant that it makes sudden changes more likely because smaller, more frequent, changes are less possible - and especially when a new party comes to power.
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