A reopening of the North-South divide? Where public sector cuts will be felt.

August 24, 2010 at 5:41 pm Leave a comment

By Simon Bracken

The Office for Budget Responsibility (OBR) estimates that over 600,000 jobs will be lost in Britain’s public sector over the next four years, assuming that the full extent of George Osborn’s cuts are brought to reality. Whereas the cuts may be spread across the different areas of the public sector -with Health being the only department promised some form of protection- the impact is likely to be greater in some geographical areas.

Source: Local Knowledge; ONS; OBR, 2010

Forecasts by local futures based on the OBR’s estimates, displays the potential disparity of the cuts in terms of the percentage of jobs lost to local economies. It is painful reading for those in Northern England, Scotland and Wales, as well as anyone interested in bridging regional inequality.

The growth in the public sector over the last 10 years has been focused on deprived regions. Focus has particularly been on areas where heavy industries have declined. Currently, urban areas such as Glasgow, Leeds and Birmingham have the greatest number of public sector employees, and smaller centres and peripheral areas in the Scotland, Wales and the North of England have the greatest proportion of public sector employees.

Not surprisingly, it will be these areas that are predicted to be hit hardest by the cuts, with non-urban areas the least likely to be able to absorb the cuts in other sectors of the local economy. Furthermore, the move towards a post-industrial economy in these areas has been facilitated by public sector investment with many private sector jobs reliant on public sector contracts and/or purchasing power. Researchers at Oxford Economics predict that, as a result of the cuts in the public sector, a further 2.3M jobs will be lost in private sector companies that rely on public sector supply chains. Again, areas in which industrial decline has been countered by state-supported rejuvenation are in line to be affected the most.

Although the analysis is based on a equal dispersion of job cuts which is unlikely to be fully accurate, it points to the greater sensitivity that some areas of the country have where the cuts are concerned. Part of Labour’s regeneration projects allowed tax revenues from the South East’s finance-lead economy to be diverted to support public sector driven growth in more deprived areas. While this exact model is no longer possible, the question still remains as to whether a commitment to tackle regional inequality can remain in some form when times are rough as well as smooth. Without serious consideration of how, and where, efficiency savings are to be made, many areas of the country face being cut adrift.

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Entry filed under: Government Departments, Local Authorities, Public Services.

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