The politics of Osborne's public sector job cull

Why the Tories believe that cutting public sector jobs will help them win.

Few noticed it but buried deep in the Office for Budget Responsibility’s latest set of forecasts was the revelation that another 20,000 government jobs will be cut by 2017, bringing the total to 730,000.

It’s often said that George Osborne’s cuts have barely begun but that doesn’t apply to to public sector employment. Since Osborne entered the Treasury, 350,000 government jobs have been scrapped, with another 460,000 due to go by 2017 [the 730,000 figure refers to cuts from 2011-2017]. The public sector workforce is now at its smallest level since 2003 [see graph]. In the words of the usually restrained Chartered Institute of Personnel and Development we are witnessing “a tectonic shift in the underlying structure of the labour market”.

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By 2017 the number of public sector workers will have declined from a peak of 6.3m in 2009 to 4.9m, the lowest level since comparable records began in 1999. What explains this dramatic cull? Fiscal considerations, naturally, play their part. The deficit is forecast to be £126bn this year [£10bn higher than originally expected] and Osborne wrongly believes that slashing the state is the best way to reduce it. In an inversion of Keynes, he thinks that if you take care of the deficit, unemployment will take care of itself. But Osborne, who is both Chancellor and the Tories’ chief electoral strategist, also has political considerations in mind. The Spectator’s James Forsyth quotes one senior Conservative thus: “You create a bigger private sector, you create more Tories.”

The polls certainly suggest as much. Data from Ipsos MORI shows that while Labour enjoys a 28-point lead among public sector workers, it trails the Tories by six points among their private sector counterparts [see graph].

Logic says that if you reduce the former group and expand the latter [the OBR forecasts an extra 1.7 million private sector workers by 2017] , the Tories will benefit. A smaller public sector means fewer people with a vested interest in high levels of state spending. Even if the private sector fails to pick up the slack, studies show that the unemployed are among the least likely groups to vote. Putting Labour voters on the dole is win-win for the Tories. Osborne may claim that his cuts are born of necessity, rather than ideology, but be in no doubt about the political nature of his project.

George Osborne plans to cut 730,000 public sector jobs between 2011 and 2017. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.