Private sector will be hit by cuts
Ministers and the small-state right want us to think the cuts programme will mainly bear down on what they see as feather-bedded public servants, but the the state spends half as much again on buying good sand services from the private sector as it does on the public sector wage bill.
Just 25p in every tax pound is spent on public sector staff while 38p goes to the private sector.All together the private sector gets £236 billion of custom from the state – equivalent to more than £4,000 a year for every UK adult according to HMT stats. Table 5. (Some of this, of course, will be spent on imports though we do not know how much. Across the economy as a whole imports count for 30% of GDP. My guess is that it would be a little bit lower for the public sector.)
Cuts in spending will inevitably hit the private sector. While no private sector company has any right to contracts in perpetuity – and indeed some spending unions oppose – the macro-effect of the cuts will be deep.
For stats nerds, here’s a breakdown by government function. The first column is the total expenditure in that area, and the second external procurement.
|Total expenditure on services (£million)||Total procurement on services (£million)|
|1. General public services||52,773||18,178|
|3. Public order and safety||33,628||16,142|
|4. Economic affairs||48,096||22,641|
|of which: enterprise and economic development||15,592||4,654|
|of which: science and technology||3,166||550|
|of which: employment policies||3,102||1,546|
|of which: agriculture, fisheries and forestry||5,417||1,341|
|of which: transport||20,820||14,551|
|5. Environment protection||9,627||9,897|
|6. Housing and community amenities||14,963||10,127|
|8. Recreation, culture and religion||13,142||10,192|
|10. Social protection||203,606||28,026|
Thanks to Nicola for digging out the stats.