Page last updated at 23:08 GMT, Wednesday, 15 July 2009 00:08 UK

Cities 'reliant on public jobs'

Newcastle
Newcastle is among cities singled out as being particularly vulnerable

Some British cities have become heavily dependent on public sector jobs and must prepare for "significant cutbacks" according to a report.

Between 240,000 and 290,000 jobs could be lost between 2011 and 2014, the Centre for Cities think tank warned.

It says Swansea, Hastings, Ipswich, Barnsley and Newcastle are particularly vulnerable and must prepare for cuts.

Labour and the Conservatives have been locked in a row about public spending after the next general election.

Labour says the Conservatives are planning 10% cuts, the Conservatives say the government is not being honest about its own plans.

Recession 'stabiliser'

But Thursday's report says spending cuts are "inevitable" whoever wins and the public sector "will need to shrink".

The report says over the past ten years, one of the "key drivers" of economic growth had been the growth of public sector jobs.

More than two thirds of the 1.2m extra jobs created in UK cities between 1998 - 2007 were in public administration, education and health, the report says, while some cities have used them as a "stabiliser during the recession".

The rapid expansion of the public sector may mean that deep cuts are easier to achieve than is currently expected
Centre for Cities report

Between 1998 and 2007, it highlights Sheffield, Warrington and Luton as three cities that saw the biggest increase in public sector employment.

In the same period in Birmingham, there were 80,900 more public sector jobs while private jobs fell by 55,000. In Manchester the public sector accounted for 59% of new jobs created.

A policy to relocate central government services outside London, in an attempt to bring down costs and promote growth, has encouraged some cities to become "too reliant on public sector employment" and should be revised, it says. Instead the government should promote private sector growth as "a more sustainable option."

'At risk'

It says the vitality of many city economies is now "heavily dependent on continued high levels of government expenditure".

But it estimates local authorities and many central government departments may face annual spending cuts of more than 5% in real terms between 2011 and 2014.

Any reduction in spending will hit those cities where the public sector is responsible for a large chunk of jobs, it says.

UK cities rely heavily on public sector jobs. But the current size of their public sector workforce is untenable,
Dermot Finch

The report highlights Swansea, Hastings, Ipswich, Barnsley, Newcastle, Liverpool, Blackpool and Newport as being "highly vulnerable" because they have a lot of jobs in public sector areas considered to be "at risk" of cuts.

It says cities should "radically review" the role of the public sector in their economies, should prepare for the consequences of job losses - including helping growth in private sector "low and mid-skilled" jobs.

Meanwhile the public sector should consider alternatives to job cuts, like pay freezes and flexible working, as a short term way of cutting the wage bill.

The report adds: "The rapid expansion of the public sector may mean that deep cuts are easier to achieve than is currently expected and that spending cuts will not necessarily result in a decline in service quality."

Dermot Finch, director of the Centre for Cities said: "UK cities rely heavily on public sector jobs. But the current size of their public sector workforce is untenable, given that we need to cut public spending from 2011 onwards.

"Over the next decade, cities cannot depend on the public sector to provide the bulk of future jobs growth. Instead, private sector jobs will need to be a bigger share of future employment growth."



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