Public spending cuts will hit regions

IF IMPLEMENTED, proposed cuts in public expenditure will have a devastating effect on most regions of the UK, according to new research.

The new study from the Centre for Research in Socio Cultural Change (CRESC) at University of Manchester revealed how huge swathes of the country, apart from the South East, rely directly or indirectly on the state for employment and welfare.

The report’s lead author Dr Sukhdev Johal said: “The UK relies on the state to generate employment outside London and the South East.

“The private sector has more or less completely failed to create jobs in the old industrial regions.

“Consequently, moves to reduce the size of the public sector will be very damaging.”

Using new estimates based on government statistics, researchers added together the numbers of those directly employed in the state sector and those indirectly employed in the para state sector where private employers depend on state support.

Nationally, state and para state together account for 7.5million employees out of a total 26.6million workforce.

State and  para state together account for 57% of the 2.24million extra people employed from 1998-2007 across the UK.

Regionally, there is marked contrast between the old industrial regions and London and the South East.

Between 1998-2007, state and para state together accounted for 73% of new jobs in the Midlands, 64% in the North and 58 and 64% respectively in Wales and Scotland.

The comparable figures are 38% for London and 44% for the South.

The state also played a key role in sustaining part-time female employment, accounting for a huge 81% of the 1.1million increase.

Dr Johal believes that the question for the election campaign is not only about whether public expenditure cuts will compromise service delivery.

“We also need to carefully examine the implications of public expenditure cuts on employment, especially on employment for women and in the ex-industrial regions,” he said.

The weak response of the private sector, say the researchers can be attributed to the way the economy developed in and after the Thatcherite boom of the 1980s.

According to CRESC researchers, claims that newly established sectors such as finance and the creative industries would create more jobs and economic growth are wrong.

Prof Karel Williams, director of CRESC, said: “As we have argued in earlier work, especially CRESC’s report on banking reform, the employment base in the finance sector is limited and finance was never an important creator of new jobs out of sector.

“So the total employed in the finance sector and by finance out of sector is no more than 1.5million and that’s heavily concentrated in London and the South East.

“The number employed in finance has also been dead flat since 1991.”

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