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Why the Tories are cheering Osborne's public sector job cull

The party believes that a smaller public sector will help it win a majority.

Chancellor George Osborne. Photograph: Getty Images.
George Osborne plans to cut 730,000 public sector jobs by 2017. Photograph: Getty Images.

Those on the right who are fond of claiming that George Osborne's cuts are almost non-existent should look closely at the latest employment figures. They show that the coalition has cut 432,000 government jobs since the election (with an additional 196,000 reclassified as private sector posts), reducing the public sector workforce to its smallest level since 2001 (see graph). And Osborne isn't done yet. By 2017, according to the most recent OBR forecast, the government will have cut a further 298,000, bringing the total number lost to 730,000. 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".

What explains this dramatic cull? Fiscal considerations, naturally, play their part. Borrowing for 2012-16 will be around £174.9bn higher than originally expected (see the Bank of England's latest summary of independent forecasts) 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 (joblessness has fallen in recent months, but forecasters expect it to rise to 2.7m next year).  But Osborne, who is both Chancellor and the Conservatives’ chief electoral strategist, also has political considerations in mind. While in opposition, the Tories frequently complained that Labour's "client state" made the election of a Conservative government impossible, so, in office, they have reduced it. As one senior Tory told the Spectator’s James Forsyth, "You create a bigger private sector, you create more Tories."

The polls certainly suggest as much. Data published last month by Ipsos MORI (see graph above) showed that while Labour enjoys a 35-point lead among public sector workers, it trails the Tories by a point among their private sector counterparts (Labour leads by 39 to 35 points among the voluntary sector). 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.

The Tories aren't naïve enough to think that they'll immediately benefit from putting Labour voters on the dole, rather they believe that, over time, a labour market in which the public sector plays a smaller role will smooth their path to a majority. Osborne may claim that his cuts are born of necessity, rather than ideology, but, as ever with the Chancellor, politics is on his mind too.

36 comments

Hugh C Markey's picture

During the Thatcher/Major period many of our group experienced transfer from public sector to private sector. Sorry, dismantling of the public sector and feather-bedding of the private.
The majority of us were made redundant at the UK state's expense. This was a financial burden from which the private sector shied well away.
Where we were offered jobs in the private sector the compensation offered was between 50% and 60% of our original salary. Pensions - forget it! That was the employees' responsibility.
Yes, some of our colleagues transferred to the private sector and found pay and conditions were not the same.
After a year in private service and having had their expertise and experience filched from them these former public servants found themselves unwanted and were declared redundant.
Those who had more durable skills were kept on but noticed procedures were liable
to short-cuts and speed-ups.
Many of their colleagues were much lower paid and temporary staff predominated.
And yet all this cost cutting did not affect the 'return on investment'?
Some of us former railway workers found that their jobs were filled by staff who did not have any experience of the work involved.
Four inch thick manuals and operational instructions which they were required to know from cover to cover were only referred to after an incident.
We were not Thatherite or Majorite as far as politics goes. But a lot of people working in the public sector are conservative with a small 'c'.
Will they be conservative even with a small 'c' after they've been in the private sector
for a year or so?

Hugh C Markey's picture

During the Thatcher/Major period many of our group experienced transfer from public sector to private sector. Sorry, dismantling of the public sector and feather-bedding of the private.
The majority of us were made redundant at the UK state's expense. This was a financial burden from which the private sector shied well away.
Where we were offered jobs in the private sector the compensation offered was between 50% and 60% of our original salary. Pensions - forget it! That was the employees' responsibility.
Yes, some of our colleagues transferred to the private sector and found pay and conditions were not the same.
After a year in private service and having had their expertise and experience filched from them these former public servants found themselves unwanted and were declared redundant.
Those who had more durable skills were kept on but noticed procedures were liable
to short-cuts and speed-ups.
Many of their colleagues were much lower paid and temporary staff predominated.
And yet all this cost cutting did not affect the 'return on investment'?
Some of us former railway workers found that their jobs were filled by staff who did not have any experience of the work involved.
Four inch thick manuals and operational instructions which they were required to know from cover to cover were only referred to after an incident.
We were not Thatherite or Majorite as far as politics goes. But a lot of people working in the public sector are conservative with a small 'c'.
Will they be conservative even with a small 'c' after they've been in the private sector
for a year or so?

test-test's picture

What's the point? Do you think Brown as Chancellor and then as PM created an ever-bigger public sector workforce, and got as many people as possible, in work or out of it, on some form of benefit or other, out of nothing but altruism?

Of course not! The whole idea was to get enough people dependent on the state that Labour could go around saying "Don't vote for those nasty Tories, they'll cut all that. Don't forget you need the bountiful state and only Labour can give you all that free money." Now that's working in reverse. Boo hoo.

Daniel J's picture

If the ex-public sector workers are unemployed or taking lower paid private work because of Osborne's ideological policy, are they going to vote Tory? It kind of sums up the Tory mentality - they are out of their depth.

We are in a depression and the only way out is to boost demand in the economy. If the private sector can't do it (which it can't for obvious reasons) then the State must. Simple.

Head Bayles's picture

No he will not sack his employee's that take care of pensions for politicians.

He is a gentleman farmer more interested in the multinational food suppliers based abroad for taxes and importing workers to pay farmers less for milk.

As I said a gentleman farmer of Tatton, and hang on have been reading the script for Noddy goes to war.

Robert Taggart's picture

Good-o Gideo !

bill23's picture

If we ever see managers in the council, quango parasites, and all the other civil service non-job freeloaders signing on, then we may not go the way of Greece.
Personally my plan is to get as far away from the EU as possible, and watch Europes decline from the relative high ground of the USA.

Indu Pendent's picture

Thats like running from one end of the Titanic to the other.

Indu Pendent's picture

George
You dont have a basic grasp of economics.

Increasing the supply of labor into the market causes labor costs to fall. It means over the long term that in the home and overseas markets people will buy more British goods and services --- its jobs before pay and not pay before jobs (I hear you booing me).

Hilter was a keynesian fundamentalist (go read up). He borrowed massively and used the money on work creation in particular roads and arms. A flaw with Hitler (Gordon followed the same economic policy and like Hitler did it to win votes and power) was that huge borrowing and spending are inflationary in respect of wage rates relative to the unit added values of production. Just as we saw they were in the UK under Labour. Hilter had no choice but to go to war to avoid the german economy collapsing --- in the UK, Labour lost power and the truth about what they did now haunts our kids.

Labour borrowed £600bn. Did this take care of the economy and did they take care of their debts?

Daniel J's picture

Hitler was not a 'keynesian fundamentalist'; it's just that he and many other people realised that the State-planned economy of the USSR was immune to the effects of the global depression. Moreover, not only was it immune, but was growing at a huge rate like contempoary China is today.

BTW - Hitler came to power and pursued his economic policy before Keynes published his seminal work. Also the British govt adopted Keynesian economics when it's debt to GDP ratio was far higher than it is today - it was running at over 150%, and today it is merely 70%!

AAMVN's picture

I think if true then Osborne is really a fool. People who lose their jobs due to tory cuts will not vote tory next time and probably not for a long time if ever. They are paving the way for a massive backlash and another long period of Labour (New 2.0 or whatever) govt.

It may be foolish but they are desperate. Despite more than a decade of Blair/Brownism and a lot of scandals etc they couldn't win an election and had to cosy up to the Lib Dems. So they have to do something radical - this may be their last chance for 20 years or more.

Indu Pendent's picture

But George is saying the silent majority of private sector tax payers support the coalition.

There have been very few involuntary redundancies by the coaliation. Nearly all the job cuts have been achieved by slowing down (not even stopping) the annual recruitment into the state. I think the state recruits about 600k people per year.

Public sector workers are most upset about the pay freeze and having their pensions aligned with those of the people who have to work hard to pay for generous public sector pensions.

Is Labour not going to do anything about public sector pensions and pay? Is Labour not going to make cuts?

RH47's picture

I just love the self-condemnation behind these arguments for Tory policies :

"Vote for us and we'll drop standards of living to the lowest common denominator. Onward to the poverty of the future (except for the big snouts)."

Public sector pensions are not particularly 'generous' - the problem is that the big snouts have impoverished pensions in much of the private sector.

Daniel J's picture

You are correct RH47. The rich have more or less raided these final salary pensions and it was all legal. One example of this is that private companies are supposed to pay in to the pension pot, but if the company's share value has increased they can put off paying until later. Lo and behold, the share value has gone down and now there is a huge deficit in the pension pot. Who pays? You guessed it, the workers.

If the companies paid into the scheme like they promised there would still be many decent final salary pensions around. It's all a legalised Bob Maxwell pension grab.

Indu Pendent's picture

OMG a 21st century class worrier.

Have you ever run your own business and employed people so know what its actually like to be a "big snout"? Its hard work. The only big snout is yours which you turn up at everyone expecting a free lifestyle .

Gordon cut the tax credit on pensions which was a massive mistake for the average working person. It destroyed the value of contributory pension schemes for everyone. That is a key factor which created the huge disparity between the state and private pensions.

Dont bother saying public sector pensions are not generous because they are and give people an comfortable retirement -- the people who pay for it enjoy less

matthew fox's picture

Do you mean a " warrior "?

You really do worry me.

Mike Cox's picture

Public sector pensions in the UK are probably the most generous in the world, they are unfunded, have no assets and rely on the private sector taxpayer, in any other walk of life they would considered a ponzi scheme and therefore illegal.

Every single penny that a public sector worker gets in pension above an beyond their own individual contribution comes from the private sector tax payer. This is made worse by the fact that Gordown Browns 1997 pension raid is now accepted to have taken £100bn from private sector pensions and is the main reason so many final salary pension schemes have closed.

I do not degrude public sector workers their pension but until they accept a funded money purchase scheme this problem will not go away.

At the end ofthe day you cannot have a scheme that pays an incredible return but has no assets or any means to generate a return above what is contributed.

mamamia's picture

No! Weigh out what is happening - Austerity + culling public services, is no more than creating opportunities for some to strip assets.

Lucidus's picture

A basic error of confusing correlation with causation. People entering a public service profession, such as nursing or teaching, might be left-leaning to begin with; putting them on the dole isn't magically going to make them right wing.

Herbert's picture

The thing is, though, that most people in the public sector aren't 'professionals' - doctors, nurses, teachers, lawyers etc. They are admin staff and manual workers.

Lucidus's picture

Irrelevant to my point.

Posh Tosh's picture

Just cut out all the staff that adjust their MPs allowances and other fiddles.

Cut away their pension rights people in Whitehall sweeping cuts, reduce the number of MPs to an 100 and make them work for their Ivory Towers. Send all those that are dismissed other than the 100 to fight abroad for the UK and do mine-clearing.

ManWithNoName's picture

The logic is the wrong way round.
Those on the left have a greater social conscience and so are more likely to work in the public sector as they place a greater value on enriching society as a whole rather than just themselves. Right-wingers tend to be money-obsessed, self-centred egotists and as the private sector actively cultivates this type of person it's no surprise they shun the public sector.

To say that sacking public sector employees will make them thankful and vote Tory is typical right-wing stupidity.

john woods's picture

"Those on the left have a greater social conscience and so are more likely to work in the public sector as they place a greater value on enriching society as a whole rather than just themselves. Right-wingers tend to be money-obsessed, self-centred egotists and as the private sector actively cultivates this type of person it's no surprise they shun the public sector."

Please excuse me while I lose my lunch. What you mean is that they want a cushy number where they don't have to work that hard and can get the pension while those in the real economy have to do real work.

Gareth's picture

Real work? Let the doctors, nurses, teachers, Police, firemen. refuse collectors and border security staff stay at home, and we'll see how long it takes you to complain.

andyg's picture

Well said Gareth. Not too long ago I was following the story of refuse collectors in Yorkshire who went on strike. 3 weeks into the strike the stories began to circulate of bacteria build up and vermin in the streets. How these hard working people are so readily taken for granted. BTW, some of the services became part of the private sector collectable items but soon collapsed due to the low returns and complaints.
As for the private sector paying for the pensions of the public sector, the author appears ignorant of the fact that the vast majority of people in the pension scheme actully work in private sector industries. They'll vote tory, I don't think so, they probably wont vote at all. They've been let down and sold out by all the parties over the years untill they were left with vote for A or vote for urrrm A.

Eddy S's picture

The cuts are a lot lower than believed Osborne would like us to think further cuts are being made but nearly half are simply a reclassification of employees. We do need to make cuts to current spending on services and benefits and we need to spend much more on growth enhancing infrastructure, this is what will help the UK in the long term.

Herbert's picture

Try reading the article before commenting: '... the coalition has cut 432,000 government jobs since the election (with an additional 196,000 reclassified as private sector posts)...'

kenelmist's picture

Obviously the Tories are not going to be elected. They haven't managed it in twenty years.

tory troll's picture

As Eaton's own graph shows so, well, graphically, there was a massive increase in public sector "employees" under NuLab. This did not result in higher productivity or a more efficient civil service, as anyone who has had any dealings with what we laughingly call the "public service" over the last twenty years can testify

This was done as an entirely cynical maneouvre to create a Labour client base by creating large numbers of non job sinecures - of the type which we see almost stereotypically represented by in the Grauniad Jobs Page.

Osborne is right to cut. These are not real jobs, just padding.

Orthodoxcaveman's picture

The Guardian's jobs page? Our whole capitalist economy produces vast quantities of unproductive labour if only you'd care to look - banking, financial services, advertising, marketing, public relations, the armed forces, weapons manufacturing and on and on. These industries, to name just a few, are indicative of an irrational and anti-social economic system.

bill23's picture

Just like Greece! But you know because this is about money, nothing will change unless they are pushed. The only solution (other than violence) that I can see is to stop paying council tax, and have this money taken from general taxation.

Gareth's picture

We can spend ages trading anecdotes about the efficiency of our encounters with the public and private sectors; I can think of public services which have been highly effective, and private companies who demonstrated sheer incompetence. Policy making needs a higher level of evidence than that, and cuts to public services a more detailed justification.

When Theresa May claimed that cuts of 20% to the Policing budget could be absorbed by efficiency savings. In reality, there are 9,600 fewer Officers on the streets. Cuts to the Border Agency did not lead to efficiency improvements (how could it? The same number of people were still coming into the country!) It lead to longer queues and fewer checks being made. Is this more efficient, or just a worse quality of service?

But this slightly misses the point: the public sector generally delivers services which the private sector cannot , will not, or would under-provide. The private sector cannot deliver an unbiased judicial system, universal Policing or a strong armed forces. We benefit as a nation from having an educated and healthy population, a well-maintained road system, secure borders, tended parks and so on. Many of the publicly provided stem from a moral sense that a civilised society should not see people sleeping rough, the disabled destitute, the elderly penniless and the vulnerable subject to abuse.

These things are not purely about efficiency. If we want them provided, we need the personnel to do so. If we cut the Public Sector, it won't necessarily do things more efficiently, it will just do less.

RichardM's picture

This analysis is laughably simplistic

RichardM's picture

George, your and Osborne's analysis is laughably simplistic.

Jeevan's picture

> Putting Labour voters on the dole is win-win for the Tories.

I'm not so sure. Is it likely that someone employed in the public sector, as soon as they are made unemployed, are going to start voting Conservative? Further down the line, if they become employed in the private sector, will they suddenly change their beliefs from left wing to right wing?

I think the link between voting intention and sector employment is more complex. You have to ask other questions, such as why people choose to be teachers or doctors or police officers, for instance.

And don't forget how huge the private sector is compared to the public sector. It would be worth breaking down by industry a bit more to get a better view of the situation. I can easily see some private sector workers, such as cleaners, voting a different way to others, such as lawyers, for extremely different reasons than who pays their wages.

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