Spending cuts claim 10,000 jobs 'but worst yet to come'

Wales has lost 10,000 public sector jobs in a year despite "getting off relatively lightly" from spending cuts so far, a report has warned.

Accountants PwC said that with faltering economic growth, there was a risk of a double-dip recession.

The report marks a year since the UK government set out how much it plans to spend over four years.

It comes a week after the Wales Audit Office said up to 21,000 public sector jobs could be lost over four years.

The report said private sector jobs across the UK have offset public sector losses, but highlighted that most new jobs were part-time.

Together with Scotland and Northern Ireland, it said Wales is yet to feel the full impact of spending cuts imposed by the UK coalition government. The 10,000 jobs were lost in the 12 months to June.

The report marks the first anniversary of Chancellor George Osborne's comprehensive spending review (CSR), during which he laid out how much the government would spend in the run up to 2014/15.

The PwC report said public sector job losses have come much faster than anticipated, with north-east England and the West Midlands hardest hit.

'Delay'

It found that the devolved administrations may be shielded by traditionally higher levels of public spending per head, but the picture "may also reflect the fact that job losses have been delayed".

All parts of the UK have seen job cuts "with devolved territories getting off relatively lightly so far", it went on.

"The question arising is - will these patterns continue once spending cuts begin in earnest, including in the devolved administrations?"," it said.

Private sector job creation means total employment has grown since the recession, but part-time jobs "disproportionately" account for the gains.

In Wales there was 1.3% reduction in full-time workers and a 3.7% growth in part-time jobs between April 2010 and March this year. The number of temporary employees grew by 9.2%.

An earlier prediction by PwC estimated combined private and public sector job losses of up to 51,000 jobs in Wales as a result of the spending squeeze.

'Sticking to our plan'

During a visit to Wrexham on Thursday, UK Employment Minister Chris Grayling said business confidence in the UK would fall if the government did not tackle the deficit it inherited when it came into office.

"If we followed this so-called Plan B and let borrowing rip again, as the previous government and the Labour Party seem to want, actually we would end up with higher unemployment rather than low unemployment," he said.

PwC's chairman in Wales, Rob Lewis, said: "This year has seen considerable turmoil in the world economy and in financial markets leading to significantly slower UK growth than had been expected a year ago.

"This may have been amplified by public sector job cuts coming though much more quickly than projected in some regions and particularly in English local authorities."

Lyn Hine of Pwc in Wales said the situation was better in Wales.

"Across the UK up until the end of March 2011, we did see private sector gains coming back quite strong and were outstripping public sector losses, but for the first time in the quarter, March to June across the UK, we see public sector job losses outstripping private sector gain," she said.

But Dominic MacAskill of the public sector union, Unison, believed worse was to come.

"This is year one of a multi-year cuts programme, and Unison did warn last year at the time of the comprehensive spending review, when we published our own report, that predicted up to 30,000 job losses in Wales if the Conservative-led government continue with their programme of cuts as planned over the course of the parliament.

"It maybe slightly better than England at the moment, but we face worse to come of these policies are maintained."

A Wales Office spokeswoman said the risks in the global economy underline the importance of sticking to the UK government's plan which was essential for sustainable growth.

She added: "We have made no secret of the fact that the deficit inherited by this government means that tough decisions affecting the whole of the UK have had to be made."

Public spending per head is 12% higher in Wales than in England, she said.

Undermines

"The UK spending review was a fair settlement for Wales and in the CSR, the overall cut to the Welsh resource budget was less than the UK average," she added.

The Welsh government says it has reduced its headcount by 1,000 posts through voluntary early release schemes.

A spokesman said: "We have been open about the challenges we face in responding to the UK government's budget cuts.

"While we have had to take tough decisions on public spending, we have taken steps to mitigate the worst impact of these spending cuts."

The spokesman urged the UK government to "re-think" its economic policy, adding: "Ensuring as many people as possible remain in their jobs is a priority for this government - in both the public and private sectors.

"The UK government's decision to cut public sector jobs in Wales - such as those at the Passport Office in Newport - severely undermines our efforts."