600,000 public sector jobs could go
Updated on 30 June 2010
Official employment predictions show the state will shrink by 600,000 jobs. Cathy Newman's FactCheck finds that David Cameron's claim that unemployment will fall every year requires a big leap of faith.
New figures published today give the independent Office for Budget Responsibility's forecasts for employment on both Labour's plans, and after the budget.
These showed that there will be 40,000 fewer jobs this year than under Labour's plans.
In 2014-15, the last year for which the pre-budget forecasts run to, there would have been 30.02 million jobs under Labour; but 50,000 fewer under the coalition's plans.
Overall employment increases steadily each year under both Labour's and the coalition's plans.
But public sector employment is dealt a bigger long-term blow by the budget, meaning more of the increase is down to an assumption of private sector growth.
Cathy Newman writes on her FactCheck blog:
David Cameron accurately quoted official figures in parliament, so he gets a green light from the factometer.
But his claim that unemployment will fall every year requires a big leap of faith. He'll only be able to meet that promise if the private sector roars ahead.
If taxes and interest rates are kept low, that might happen, but it's a big if. Research by the consultancy Oxford Economics just this month found that 2.3m private sector jobs were dependent on state contracts in areas like IT, defence and hospitals. As public spending falls, those employees are in jeopardy.
Read more on FactCheck
Under Labour, government jobs are projected to be slashed more quickly in the short-term - from 5.53 million this year to 5.4 million next year, 70,000 fewer than under the coalition's plans.
But in 2014-15, there would have been 5.07 state jobs under the last government. Under the coalition, this is 30,000 lower, and it falls again the next year, to 4.92 million.
This means a total of 610,000 fewer public sector jobs by the end of the parliament.
The OBR does point out that it assumes average pay will rise more quickly under the coalition's plans; this on its own would give a lower prediction for public sector employment under the new government.
A leaked Treasury document today suggested 1.3 million jobs will be lost as a result of the budget. The document, reported in today's Guardian, showed that an average of 100,000 to 120,000 public and 120,000-14,000 private sector jobs would be lost each year as a result of the budget.
But government assumptions that 2.5 million extra jobs would be created on top of the cuts still leave overall employment up by 1.3 million in five years' time.
How realistic are the OBR's figures?
The Office for Budget Responsibility predicts overall employment will increase every year for the next five years, despite the public sector headcount shrinking by more than 10 per cent.
This means 1.95 million extra private sector jobs being created over the next five years.
This seems "very optimistic", John Philpott, chief economist at the Chartered Institute of Personnel and Development, told Channel 4 News.
"You've got to offset not just for a lot of public sector job losses but also private sector job losses," he said.
"We have had periods of fast private sector job growth - but that's often over a fairly long period of growth," he said.
The CIPD forecasts unemployment will rise from around 2.5 million to a peak of 3 million in 2012. It predicted earlier this month that 725,000 public sector jobs could go as the government cuts spending to reign in the country's bulging overdraft.
At Commons question time, acting Labour leader Harriet Harman seized on the "secret Treasury analysis" to attack the government's strategy of cutting public services, repeatedly calling on Cameron to publish the document.
But Prime Minister David Cameron accused her of scoring a "spectacular own goal", insisting unemployment was forecast to fall "every year under this Government".
He said that, under Labour's plans, there would have been 70,000 fewer public sector jobs next year.
Cameron said the Office for Budget Responsibility's publication of full tables for employment in the public and private sectors was "something that never happened under a Labour government".
But Harman called for the leaked documents to be made public, saying: "I know you've published some figures today but it's the figures you haven't published that I'm asking about - the figures that say that 1.3 million jobs will be lost."
Cameron later said: "You don't seem to understand. Unemployment is going to be falling during this Parliament. We've published the full figures. But it's not now us publishing the figures. It's the OBR."
OBR forecasts: what does it mean?
Today's forecasts of what's going to happen to employment over the next five years according to the Office for Budget Responsibility (OBR) shed more light on how the new coalition government's deficit-slicing plans will hit those working in the public sector, writes Neil MacDonald.
It also poses some difficult questions for both the government and the opposition. The OBR says more public sector workers will lose their jobs under David Cameron's government, and it says much of the expected increase in overall employment would have occurred under Labour as well.
But it also says that the scale of public sector job losses under Labour would have been only a shade better than under the coalition.
Read more
