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Public sector workers keep fragile peace

David Walker
Tuesday 15 October 1996 18:02 EDT
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The season of mists and mellow fruitfulness is usually punctuated by the agonised screams of teachers, doctors, civil servants and council employees who have been tipped off about how much less the Government proposes to spend on them during the year to come.

But this autumn the silence is deafening. Despite Kenneth Clarke, the Chancellor, warning public employees there will be no extra money for pay rises, despite the Government's affirmation that total public spending can rise by only half a per cent next year, the usual parade of "bleeding stumps" is missing.

True, the head of the Prison Service has complained publicly about the gap between the cost of accommodating the rising numbers of prisoners and the finance allocated to jails. University vice-chancellors, too, have been muttering ominously. Unless more is allocated them, especially for capital spending, they have threatened to impose "top-up" fees on students.

But all in all public spending is far less of a problem than might have been predicted. One reason is that just before and after the last election there was a (politically useful) splurge. Between 1991-92 and 1995-96 spending rose by almost 2 per cent a year in real terms. Since then a new system of control through a Cabinet committee chaired by Michael Heseltine, the Deputy Prime Minister, seems to have been effective in keeping outlays inside planned totals.

Another reason is that the pay of public employees has largely kept up with the private sector - but the Government has been able to accommodate the increases by gradually whittling away at the total numbers employed, for example, through contracting out services.

But how long will this autumn's relative peacefulness persist? The answer depends on how tightly the Government sticks to its ambition of pushing downwards the proportion of national output that moves in and out of government coffers. It wants by the century's end to push this figure down to 38 per cent, from its current level between 42 and 43 per cent (about the same as when the Tories took office in 1979). That will require real pressure.

But a growing proportion of all spending is in health and education where where people seem to want more, not less, spent. Moderate growth in health spending could very easily come to look like cuts.

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