23 June 2010
The chancellor’s measures to protect regional economies from public sector cuts do not go far enough, commentators have said.
In his Budget statement, George Osborne committed to transport schemes in Tyne & Wear, Manchester, Birmingham, Sheffield, Liverpool and Leeds to aid job creation in areas that rely heavily on public sector employment.
He also announced the creation of a Regional Growth Fund and a new tax scheme, which will exempt new employers in these areas from up to £5,000 in national insurance contributions for each of the first ten employees hired.
Paul Swinney, analyst at the Centre for Cities think-tank, welcomed the initiatives but said that their impact would be ‘questionable’ and the details were ‘sketchy’. He warned that northern cities needed an extra 625,000 private sector jobs ‘just to bring themselves up to the national employment average’.
‘The initiatives are not enough to entice the private sector employers needed,’ he told Public Finance.
Katie Schmuecker, senior research fellow at the Institute for Public Policy Research, said there was an ‘assumption that by reducing the size of the public sector, the private sector will flourish in response’.
‘The public sector in the north of England supports the private sector in a number of ways. Public sector workers spend their money in the private sector and a number of private sector companies have contracts with the public sector,’ she told PF.
