“Over half of all jobs created in the last 10 years [are] associated in some way with public spending.”
David Cameron MP, speech on transforming the British economy, 28 May 2010
Cathy Newman checks it out
David Cameron’s fond of telling us about the perils of Big Government. He paints a picture of a Labour government doling out public money to overpaid, over-cushioned pen-pushers, letting business and enterprise wither on the vine. But can he do any better, and was the last Tory government any less reliant on public sector jobs to support the economy?
Over to the team for the analysis
A decade ago, there were 5,221,000 public sector employees. In 2009, there were 6,070,000 – an increase of 849,000.
At the same time, the total number of private sector jobs went up from 21,895,000 to 22,806,000 – a jump of 911,000.
The figures are pretty similar, but suggest just under half (849,000) of the additional 1.8m jobs were in the public sector, rather than – as the PM said – over half. However, he did give himself a bit of wriggle room, by saying the jobs were “associated in some way with public spending” rather than exclusively those on the public payroll.
So how do these public sector jobs break down? Unsuprisingly, those working in government departments, agencies and quangos are counted as part of the public sector workforce, as are teachers, police, NHS workers and the armed forces. But universities and further education colleges aren’t classified as public sector jobs; an ONS spokesman did not know why.
The big state total, does, however, include companies controlled by the government, such as Royal Mail and London Underground. These get more than half of their income from consumers rather than the public purse. The BBC and Channel 4 are also classed as adding to the public sector workforce – and in the past couple of years, employees from nationalised banks such as Lloyds TSB and Bradford & Bingley have swelled the headcount.
After the recession, the economy has become more dependent on the public rather than private sector. Private sector employment was hit hard between 2008 and 2009, but public sector employment increased, mostly because of the nationalised banks.
But David Cameron might not care to admit that the last Tory administration ended up as reliant on the public sector as Labour was before the credit crunch. In 2008, 19.6 per cent of all jobs were in the public sector. In 1997, it was 19.5 per cent. Even today, the proportion of public sector jobs remains lower than it was at the end of the early nineties recession: 23.1 per cent of jobs were in the public sector in 1992, compared with 21 per cent now.
There is, though, one big difference. While under Labour the number of jobs in both the state and the private sector increased, with John Major in charge the recovery was powered by business not government. Between 1991 and 1997, around 800,000 public sector jobs disappeared, while around 1.7 million private sector jobs were created.
Cathy Newman’s verdict
Cameron’s claim conveniently ignores the extent to which the previous Conservative administration depended on the public payroll. The Tories have promised that 80 per cent of their deficit reduction plans will come from cutting public spending. So that’s bound to mean hundreds of thousands of public servants losing their jobs. So whether we like it or not, the economy is going to become less dependent on the public sector. The big challenge for the coalition government, though, is to stimulate private sector employment – as John Major did.