Article published: Tuesday, January 17th 2012
At least £1 billion in public spending was cut from the “city region” of Greater Manchester and Warrington over the last year, according to University of Manchester researchers. The study, carried out for Radio 4, anticipates a total of £10 billion to be slashed from the area over the next four years as part of the government’s austerity drive.
The report’s authors, Professor Colin Talbot and Doctor Carole Talbot of the Manchester Business School, expect unemployment across the area to “easily go above 100,000 by the end of next year with the effects of public sector job losses alone”, calculating a “reasonably conservative estimate” of 15,000 – 16,000 positions under threat.
Lost council services such as Sure Starts, libraries and adult social care make up “only a relatively small part of the overall picture” according to the study, although the authors warn their figure of £234 million in cuts to local government “is almost certainly an underestimate”. A rough figure of an 8 per cent reduction in spending for all other services aside from health and education, which have been ‘relatively’ protected by the Treasury, heaps an additional £762 million onto the total taken from the area.
Although the authors admit this is a somewhat “crude” calculation, they argue it errs on the side of caution considering some areas of spending such as economic regeneration have been wiped out by as much as 80 per cent. While Greater Manchester is less reliant on public sector employment than comparable cities such as Liverpool, Leeds or Birmingham, 23.4 per cent of the county’s workforce is still employed in that sector and in 2008/09, prior to the cuts, total public spending in the city region amounted to £22 billion, or 44 per cent of the region’s economy.
To fill the gap left by David Cameron’s axe, the government hopes private sector investment will expand and create jobs once the state is “rolled back”. In response the study warns that as of yet there is “no sign of this happening”. The public sector cuts come on top of what the authors term a “substantial” private sector recession, with 34,100 jobs and £1.5 billion in value already lost from Greater Manchester between 2008 and 2010.
The report notes how even prior to the recession Manchester suffered from a growth in “under employment”, defined as “people working part-time who wanted full-time work and people who were clearly over-qualified for their jobs”. Additional research by local think tank the Commission for the New Economy has found this issue to have worsened since the recession, with employers exploiting a “flexible labour market” to squeeze wages and reduce hours.
On the upside, this has kept unemployment lower so far than in past recessions such as the 1980s or 1930s. However, the Commission noted that any upturn would result in a “jobless recovery” as firms make greater use of the staff they retained, while continuing economic stagnation – which appears likely – risks a “tipping point” of “pronounced” increases in redundancies if firms decide they can no longer afford to maintain their workforce.
As previously reported in MULE real incomes for those in work have been slashed as wages failed to keep pace with inflation, and the report expects further benefit cuts to the unemployed and people on low incomes to kick-in over the latter half of the current Parliament. The worst of the crunch in living standards as purses and wallets empty and businesses feel the knock-on effects is still to come, as “the full impact of these cuts will not yet have been felt across the Greater Manchester economy” only nine months in to austerity now planned to continue up until 2017.
On the plus side the report argues that Manchester and its surrounding area is faring “slightly better” on average than the rest of the UK, with a “fairly diversified local economy” compared to the factories and manufacturing of the 1970s. Looking beyond the bare statistics to how different parts of the region are coping reveals a grimmer picture however. Out of the 11 local authorities in the Manchester city region only three – the wealthier suburbs of Trafford, Stockport and Warrington – are in the top half of rankings of “resilience” against the impact of cuts and economic downturn as calculated by the BBC’s Newsnight.
Of the other eight authorities Bury, Manchester and Salford are in the bottom half of “resilient” areas with the remaining five councils in the former mill towns of Rochdale, Oldham, Tameside, Wigan and Bolton in Northern Greater Manchester in the bottom quarter of the country for resilience. The ultimate impact of the various remaining or repackaged schemes for blunting the downturn in these areas remains to be seen, although interesting local responses include Manchester City Council’s decision to increase its level of purchasing spend from £87 million to £154 million in the most deprived nearby neighbourhoods.
How more standard regeneration wheezes such as Salford’s MediaCityUK are to benefit the majority of the city’s residents appears less clear, with figures first reported in the Guardian revealing that just 154 of the 529 jobs made available through the site’s “jobs bank” going to applicants from either Manchester or Salford. Of those, only 24 were from Salford according to the Manchester Evening News. The sad fact that 26,400 young people in Greater Manchester before Christmas were on the dole gives some indication as to the scale of the hole the city is in.