Election reality that dare not speak its name

April 27, 2010

– Neil Collins is a Reuters Breakingviews columnist. The opinions expressed are his own –

Since Labour came to power in 1997, it has pursued a policy of expanding the numbers employed by the government or its agencies. The result is that today 6.1 million people are on the state payroll, an increase of about 900,000 in 13 years.

They are also paid, if not well, then at least comfortably. The Office of National Statistics calculates that pay in the public sector is now higher than in the private sector (462 pounds and 451 pounds a week respectively). It’s also rising faster (3.7 percent, against 1.8 percent).

Add in greater job security and the final salary pension schemes which are almost extinct everywhere else, and it’s easy to see why those in a recession-wracked private sector are resentful. Yet in over 60 constituencies, more than a third of the workforce is on the state payroll. Apprehensive politicians see public sector employees, along with their families and their client base of welfare claimants, as a block vote.

The last budget sketched a path back towards fiscal stability, but published no individual spending department limits beyond next March. Behind the scenes, departments are planning for draconian measures, while Labour is hoping nobody will notice the mismatch between this silence and its plan to cut 37 billion pounds from public spending by 2014.

Scrapping aircraft carriers, IT systems, ID cards and other follies would hardly dent the problem. Cuts in school building and roads will help, but serious money saving requires frozen and means-tested benefits and, say, a 5.5 percent cut in public sector pay. Even these contentious measures save only 15 billion pounds according to an Financial Times analysis, much less than half the amount required.

No politician has dared admit that public sector cuts of this order are inevitable. The televised debate on April 29 provides almost the last chance to face reality before the vote on May 6, but the numbers are so horrible that the viewers will probably be spared them. After all, there’s an election on — although given the outlook, it’s hard to see why anyone would want to win it.

(Editing by Hugo Dixon and Aliza Rosenbaum)

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