FactFiction1 FactCheck: Private sector jobs pain for PMThe claim

“Over the last three months, for every job being created in the private sector, 13 are being lost in the public sector.”
Labour leader Ed Miliband, Prime Minister’s Questions, 14 December 2011

The background

The arrival of the latest unemployment figures from the Office of National Statistics, although misery for millions in human terms was, in political terms, something of an early Christmas present for Ed Miliband as he looked to score political points in the last session of Prime Minister’s Questions of the year.

The expectation that growth in the private sector would cancel out the inevitable job losses in the public sector brought about by coalition budget cuts has been an important plank of the government’s economic strategy.

Mr Miliband reminded MPs of the Chancellor’s optimistic assessment at the time of the spending review in November last year. George Osborne said at the time that private sector job creation would “far outweigh” cuts in public sector employment.

But have those high hopes – based on forecasts from the independent Office of Budget Responsibility, been dashed?

The analysis

Mr Miliband claimed that between July and September for every job being created in the private sector – 13 were lost in the public sector. And he’s right -  67,000 jobs were lost compared to 5,000 gained in the private sector – that’s a ratio of around 13 to one.

And the situation has deteriorated considerably in comparison to the previous quarter, where the ratio was about 2.5 to one. Some 111,000 jobs went in the public sector and around 41,000 were created in the private sector between April and June.

So we’re heading increasingly rapidly in the wrong direction, something even the Prime Minister eventually acknowledged, despite deploying his classic “move the start line” defence to make the situation sound a lot less bleak than it is.

Mr Cameron said: “Since the election, in the private sector, there have been 581,000 extra jobs. In the public sector, he’s right – we have lost 336,000 jobs.”

Regular readers will recognise this immediately as a well-worn ploy we’ve taken issue with before.

What Mr Cameron habitually does is pull the time-frame back to before the election to cover the changes that took place in the second quarter of last year – when there was a massive spike in private sector growth.

But as the election came in the middle of that quarter, we don’t know how many of those jobs were created before Mr Cameron can reasonably claim the credit.

If we look at the most recent year-on-year trend, we see that private sector jobs are up 262,000 compared with the third quarter of 2010, and public sector employment has decreased by 276,000. So that’s a net loss of 14,000 jobs over the last 12-month period for which we have figures.

At the end of PMQs Mr Cameron offered a more frank assessment when he said: “The reason that unemployment is going up is because we’re losing jobs in the public sector and not growing them fast enough in the private sector, so we need to do everything we can to get our economy moving.”

The verdict

Mr Miliband is right about the failure of private-sector growth to make up for the effects of slashed budgets for public bodies, and Mr Cameron didn’t argue with his numbers.

There’s a lot less optimism around on the coalition front bench now than in November last year, when the government’s cuts plan was backed by 35 business leaders.

In a letter to the Telegraph at the time, the group of CEOs and chairmen said: “The private sector should be more than capable of generating additional jobs to replace those lost in the public sector.”

FactCheck wonders how many of these captains of industry would put their names to a similar letter now?

By Patrick Worrall

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Category: David Cameron, Ed Miliband, Fact, FactCheck, Fiction, George Osborne, Labour
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