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Economy class: public or private?

The Tories blame a bloated public sector for economic stagnation in parts of Britain—but the private sector won’t automatically step in

by Tim Leunig / July 21, 2010 / Leave a comment
Published in August 2010 issue of Prospect Magazine

Everyone agrees that the economic disparities between north and south need to be tackled. It is unacceptable that a child born in one part of Britain has hugely different life chances to one born a few hundred miles away. The chancellor, George Osborne, was careful to state that the recent emergency Budget would “promote job creation in all parts of the country.” The government is rightly sceptical of the record of public-sector regeneration schemes, but goes further in seeing the size of the public sector as a barrier to regeneration.

The state is certainly a heavyweight employer in some places. More than 40 per cent of workers in Middlesbrough, in the northeast, have jobs in public administration, education and housing—far above the national average of 27 per cent and far, far above the 12 per cent in places such as Crawley, in the southeast. The private sector fails to thrive in Middlesbrough, the argument runs, because the public sector—with its generous national salary scales, cushy pensions and long holidays—snaffles up all the staff.

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About this author

Tim Leunig
Tim Leunig is reader in economic history at the LSE
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