Chancellor Alistair Darling today told Radio 4 that there would be a ‘transfer’ of public sector jobs into the private sector as the economy recovered. On the day the second quarter GDP figures were shown to be a meagre 0.2% (down from 0.4% in the previous quarter), Darling wanted to use the relatively low growth number to re-emphasise the gap between Labour (and the Liberal Democrats’) desire to maintain public expenditure in 2010-11 as compared to the Conservatives’ desire to cut £6bn from spending before the end of the year.
In the second leaders’ debate, Labour continued to use this £6bn figure as the clear dividing line between the government and its Tory opponents. David Cameron’s response is that the £6bn spending reduction is a necessary preparation for avoiding most of the proposed National Insurance increase next year. This struggle over ‘six thousand million pounds’, as Gordon Brown likes to call it, is now the easiest-to-understand difference between Labour and the Conservatives.
However, looking ahead, there is no real disagreement about what will happen to public spending after April 2011. When asked by the BBC if non-protected services might face reductions of up to 25%, Darling today replied: 'No one would ever accuse me of being optimistic, of painting a picture that's other than realistic’. This can only be interpreted as a ‘yes’. So now we know. Unprotected provision, which includes social services, environmental provision, fire, arts, culture & libraries, transport and housing, can expect cuts of approaching 25%.
Saying that ‘as you get a rebalancing between the public sector and the private sector you will get a transfer of jobs’ is just another gentle way of accepting the reality of public sector job reductions. There have been press stories this week quoting the Chartered Institute of Personnel and Development, which believes there could be reductions of up to 500,000. Like the endlessly-discussed ‘efficiency savings’ issue, politicians are seeking to find non-challenging ways of telling us that bad things lie ahead. It is a pity they cannot be more direct.
The ratings agencies, money markets and bond markets remain strangely peaceful as they watch the three major parties avoid and evade hard questions about the future of Britain’s public finances. It is assumed that, somehow, after 6 May, either a majority or minority government will manage to come clean about the need for spending cuts. Either that, or as Kenneth Clarke argued this week, there will be a risk the IMF will have to be called in.
Step by step, politicians fighting the general election are beginning to spell out the realities of what lies ahead. But if they have to do so in such a careful and implicit way, their behaviour only emphasises the challenge the country faces. It will not be possible to remove several hundred thousand public service jobs without anyone noticing – even if the private sector grows strongly to take up the slack.
Tony Travers is director of the Greater London Group at the London School of Economics
