Centre for Cities highlights the cities most vulnerable to public sector job losses

Date: 16/07/2009

A new report by the Centre for Cities highlights the cities most vulnerable to public sector job losses in a public spending squeeze.  The report finds that cities like Swansea, Newcastle and Ipswich are currently too dependent on the public sector for jobs - and cities must plan now for reduced public spending from 2011. 

Public sector expansion helped boost the economic performance of UK cities during the boom years.  69 percent of the 1.2 million jobs added to city economies between 1998 and 2007 were public sector positions. One in four jobs in urban areas is now in public service.

Relatively high public sector employment has cushioned cities like Swansea, Newcastle and Ipswich from business closures and private sector job losses. But these cities will be exposed to further job losses in a public spending crunch from 2011 onwards.  Centre for Cities estimate that up to 290,000 public sector positions across the UK could be lost by 2014.

Vulnerable cities: public sector growth and losses

A large public service workforce in quangos and regional civil service outposts, coupled with a high number of medium to low skilled positions mean that these cities are particularly vulnerable to job losses. 

The Centre for Cities is calling for:

• UK cities to radically re-think the role of the public sector in their economies.  While the public sector will remain a major employer in UK cities, it will not drive jobs growth over the next decade.
• UK cities to support more low to medium skilled jobs in the private sector, rather than looking to Government office relocations to fuel jobs growth in the recovery.
• The Government to phase any public sector job cuts carefully while the economy recovers and to consider alternatives, like pay freezes and flexible working, to reduce the Government's wage bill in the short term.

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."

Professor John Philpott, Chief Economist, Chartered Institute of Personnel and Development said,

 "The Centre for Cities report provides the most comprehensive analysis so far of the scale and geographical spread of jobs cuts set to hit the public sector after the general election. Politicians of all parties should openly acknowledge that major public sector downsizing is inevitable and prepare managers, workers and local communities to meet the pressures this will create."  

David Frost, Director General of the British Chambers of Commerce said:

"It is clear that the enormous growth in public sector employment has masked a decline of the private sector in many parts of the country.

"We will need to re-invent economies across the UK and there must be a focus on enterprise, self employment and ensuring local businesses are given every assistance to grow."

For more information, please contact:

Rosamund Taylor, Centre for Cities

Tel 07876 175 426 / 020 7803 4316 /r.taylor@centreforcities.org

NOTES TO EDITORS

Public sector cities: Trouble ahead is available at www.centreforcities.org/publicsectorcities

The projected range of 240,000 to 290,000 public sector job losses of between 2009 and 2014 is a conservative estimate made by the Centre for Cities. It would represent a four percent decline in employment in public sector activities.

The projection is based on Centre for Cities' assumptions of the potential job losses in three of the sub-sectors of the public sector. These are local authorities, public bodies and the civil service. It assumes no losses in health and education; this may prove an optimistic assumption.

Total employment in UK Cities grew by 1.2 million jobs between 1998 and 2007. Employment in public sector activities grew by 840,300, 69 percent of the net additional jobs.

Excluding the manufacturing sector, which declined over this period, 2 million jobs were added to UK cities. On this measure the public sector contributed 43 percent of the new jobs created

Other statistics from the report:

• 21 percent of the public sector works in public administration, 34 percent in education and 45 percent in health and social work, using the wider public sector definition (7 million).
• In England, 40 percent of local government expenditure is on employees (£61.7 billon), 77 percent of this is on pay. 44 percent is spent on local authority staff, 33 percent is spent on teachers.
• In England, 13 percent of local government's income comes from sales, charges and council rents.
• Managers and senior official make up 8 percent of public sector employment, professionals make up 24 percent.
• 60 percent of civil service employment in England is based outside of the Greater South East.
• The Lyons review has relocated 19,090 jobs out of London since 2004.
• If spending on health, education and international development were to be held constant at 2010-11 level, spending in all other departments would have to fall by 4.8 percent per year in real terms.

Public sector cities: Trouble Ahead is part of the Centre for Cities' Surviving Recession series.  Surviving Recession papers focus on the impact of recession on city labour markets and what UK cities can do to mitigate the damage from the downturn.

The Centre for Cities will be conducting further research on future sources of economic growth for UK cities later in 2009.  Agenda for Growth aims to help urban areas identify the policy tools required to grow their economies in the recovery. 

The Centre for Cities recently published a report on the Belfast's dependence on its public sector for employment growth and the need for a more dynamic private sector to support future economic development.   Belfast: Tipping the Balance by Hannah Brown