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Public spending cuts will hit regions

01 Feb 2010

Cuts in public expenditure proposed by all the main political parties will have a devastating effect on most regions of the UK - except the South East - according to new research.

The new study from the CRESC Research Centre at The University of Manchester reveals how huge swathes of the country rely -directly or indirectly -  on the state for employment and welfare.

Using new estimates based on Government statistics, they add 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 7.5 million employees out of a total 26.6 million workforce.

State and  para state together account for 57 per cent of the 2.24 million 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.

Over 1998-2007, state and para state together account 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 1.1 million increase.

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.”

He added: “So 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.”

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.

Professor 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.”

Notes for editors

The academic paper is written by a permanent team of researchers based at the ESRC funded Centre for Research in Socio Cultural Change (CRESC) at The University of Manchester. The researchers are best known for their work on Financialization and their recent public interest report, ‘An Alternative Report on UK Banking Reform’ (www.cresc.ac.uk).

Undisclosed and Unsustainable: problems of the UK national business model (Working Paper no.75) is free to download from the CRESC website

For media enquiries contact:
Mike Addelman
Media Relations
Faculty of Humanities
The University of Manchester
0161 275 0790
07717 881567
michael.addelman@manchester.ac.uk