“I don’t accept that any particular regions should do worse out of the government’s economic policy.”
Chancellor George Osborne, Evidence to the Treasury Select Committee, 4 November 2010
The background
Today Chancellor George Osborne faced a grilling from MPs about the cuts announced in the Spending Review. The cuts are “credible and deliverable” he told the Treasury Committee, amid warnings from the Public Accounts Committee.
And he defended his policies against criticism that regions in the north of the country would suffer more than those in the south, insisting that the government wants to balance the economy more across the country instead of having industries just focused around London and the South East. But will the Spending Review leave some regions worse off?
The analysis
Liberal Democrat MP John Thurso quoted evidence at the committee submitted by the Joseph Rowntree Foundation. In it, they say the Spending Review will be “particularly damaging for northern towns and cities, where the public sector is a major employer as well as a major source of private sector, voluntary sector and social enterprise contracts, and grant funding for community and voluntary sector organisations”.
The Joseph Rowntree Foundation is in good company with their warning. PriceWaterhouseCoopers also updated recent research after the Spending Review to show how different regions would be affected by job losses in the public and related private sector industries.
The PwC figures estimate that on top of the 490,000 public sector jobs which will go as a result of the June budget and the spending review, according to the government’s own numbers, another 435,000 jobs will go in related private sector industries.
Across the UK that amounts to 925,000 job losses, or 3.2 per cent of the total jobs. But that proportion rises to 5 per cent when you look at Northern Ireland alone – more than any other region – and falls to around 3 per cent in London and the South East at the other end of the scale, because of their respective dependence on public sector jobs.
In England alone the region that will face the greatest proportion of job losses is the North East at 3.9 per cent.
If you look at the actual number of job losses, London and the South East will lose 230,000 jobs, PwC estimates, whereas 5 per cent equates to 35,000 job losses in Northern Ireland, but that doesn’t take away from the fact that Northern Ireland has a higher proportion of public sector workers.
Of course, there is no certainty at the moment that the cuts will be spread across all regions in this way, as these are estimates. PwC also acknowledges that “some public sector expenditure (e.g. on national defence) cannot be meaningfully split by region.” And the Chancellor, in answer to the Select Committee, pointed to extra capital spending on things like transport – which could be spent more strategically according to where they felt it was needed.
The verdict
So the Chancellor may not accept that any particular region will do worse than another under the cuts, but that hasn’t quelled concern from those regions that are more dependent on the public sector for jobs.
