Yesterday, Experian reported on the impact of that on the north east where 43 per cent of jobs are in the public sector. In Tees Valley, three council areas - Middlesbrough, Redcar and Hartlepool - all have very low resilience because they only have industries vulnerable to damage and closure, skill levels too low for easy transfer to other occupations, ageing populations and a weak enterprise culture.
Our guest writer is Vera Baird QC, who was solicitor general from 2007-2010, and Labour MP for Redcar from 2001-2010
When David Cameron said in April that the state’s share of the north east economy was too big, likening it to Soviet Russia, a Tory spokesperson quickly explained that this related less to public sector cuts and more to positive “rebalancing” towards the private sector. But that was during the election campaign. Osborne has since favoured 80% of cuts to 20% of tax increases.
Yesterday, Experian reported on the impact of that on the north east where 43 per cent of jobs are in the public sector. In Tees Valley, three council areas – Middlesbrough, Redcar and Hartlepool – all have very low resilience because they only have industries vulnerable to damage and closure, skill levels too low for easy transfer to other occupations, ageing populations and a weak enterprise culture.
At least 11,000 direct public sector job losses are predicted in a population of 650,000 and the sense is that more are bound to follow because of those factors.
The iron and steel industry started in Tees Valley – what Gladstone called “the Infant Hercules” of the industrial revolution. At its peak 40,000 people worked in steel while Tees Valley’s other industrial giant, the petrochemical sector, employed 30,000. But in the late 70s and 80s tens of thousands of jobs were lost rapidly from both industries.
Mrs Thatcher did nothing to stave off the unemployment that followed at a time when government intervention could have made a difference. Instead, her obsession with defeating both inflation and the unions brought public sector job cuts too, adding to the already massive economic and social damage.
The scale of that jobs fallout has, simply, never been fully reversed. This is a location which is remote from other urban areas where there is work, and there has never been sufficient other industry to fill the employment gap. Thankfully Redcar steelworks, mothballed by Corus last year, looks likely to thrive again under a new owner and the petrochemical sector is still in place. But they now employ only two or three thousand people between them.
The Labour Government created public sector jobs consistent with the grain of its policy to grow numbers of nurses, teachers and police and to deliver good public services. The Coalition overlooks Unison’s strong point that 70 pence in every pound earned by a public sector employee goes back into the private sector. The Northern Way strategy and the enterprising mindset of the North East Regional Development Agency supported the regeneration of the private sector too.
Though the north east is still the region with the highest overall unemployment, business start-ups have increased strongly in Tees Valley for the last five years, with new business survivals almost the highest in the UK. Following the mothballing of Redcar steelworks, £60M was invested by the Labour Government into a Tees Valley Industrial Programme. So far, a third of that cash has been used to generate 1200 new jobs, safeguard 1100 and to trigger 700 new businesses. The existing industrial base and skills pool are ideal for modern work in the offshore wind, bio-fuels and bio-pharmaceuticals sectors.
The area also has a magnificent coastline with great tourist potential. This summer saw a million visitors from the Tall Ships Race in Hartlepool, the Stockton Riverside festival and the international kite surfing championships on Redcar beach. It is no coincidence that the first Local Enterprise Partnership application this week was from Tees Valley, since local businesses and the public sector are hungry to advance ambitious bids for cash to start 1000 new businesses and to initiate a targeted 5% increase in the employment rate, positioning themselves for future growth.
However in 2010, 43% of Tees Valley’s employment remains in the public sector, largely because of those irreversible job losses and because of the historic lack of diversity in the private sector economy. There is no mountain of public sector jobs. It is the absence of significant new industry that makes the percentage so high.
Osborne’s notion, peddled in his Budget speech, that the public sector must be cut because it is crowding out the private sector is the opposite of the truth in Tees Valley. Public sector work has kept the area from bankruptcy which has sometimes seemed very near. Private development is much encouraged and is growing, but in the past it has been thin on the ground. For government to slash both direct jobs in the public sector and business support for the private sector is, in this vulnerable sub-region, the economics of the madhouse.
By analogy with the Coalition’s attacks on what, in typical Tory fashion, it characterises as the unworthy poor, yesterday’s story emerged amidst a good deal of “poor area” bashing. Tees Valley’s situation was called “state dependency”. It had to wean itself off its addiction to public support; it had to put aside its crutch and stand up. All of this is, as with the meretricious bracketing of the sick and those unable to find work with benefits cheats, used to soften up the public to support or at least tolerate the Thatcher-like brutality these cuts will bring. All of it too is an insult to the hard working, loyal and flexible public sector workforce.
Just as it is obvious to anyone but the Coalition that the poor need more help not less, it is clear that there is still a hill to climb before Tees Valley’s private sector can again be the mainstay of its local economy, if it ever can. Industrial support continues to be essential and the public sector must still hold the bridge while new work develops.
The government takes an unbelievable risk with the livelihoods of entire hardworking communities, like this one, in accelerating public sector cuts to almost double the rate that Labour and most international commentators think sufficient to make inroads to the deficit. We must point that out and we must oppose it every step of the way.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.