Official analysis of Budget impact on jobs revealed

Fewer people will be in work in five years' time because of the coalition Government's austerity plans than under existing Labour proposals, official figures showed today.

Job losses in the public sector are expected by the Office of Budget Responsibility (OBR) to total more than 600,000 by 2016 as massive spending cuts are imposed in a bid to cut the UK's record deficit.

And although extra private sector jobs will see overall employment rise by just over a million by 2015 - that is slightly lower than forecast by the independent watchdog before last week's Budget.

The OBR rushed out its calculations a day early after leaked figures appeared to show the Treasury expected unemployment to rise by 1.3 million because of the austerity measures.

Clashes over the impact on jobs dominated exchanges at Commons question time, where acting Labour leader Harriet Harman warned of "abject misery" in the jobs market.

Prime Minister David Cameron repeatedly declined to comment on the leaked figures - which The Guardian newspaper said were on a slide from a Treasury presentation on the Budget.

The OBR figures were the official analysis of the effects of the Budget, he said, and showed unemployment falling every year.

And, in what he said was a Labour "own goal", he pointed out that the OBR expected fewer public sector workers to face the axe over the next two years because of a pay freeze.

The rate will accelerate after that however - with 30,000 more expected to suffer the effects of cutbacks by the time of the scheduled next general election in 2015 than under Labour's plans.

According to the OBR, overall employment will be 29.97 million by 2014/15 - compared with the 30.02 million it forecast before Chancellor George Osborne unveiled his tough measures.

That equates to an extra 1.57 million more private sector jobs.

The Government has said it is vital to "rebalance" the economy away from an unsustainable reliance on the public sector if the economy is to recover from the recession.

The Guardian said the figures it obtained suggested as many as 140,000 private sector jobs could be lost in each of the next five years as well as 120,000 public workers.

Treasury sources said they had not seen the document so were unable to comment.

Instead, they pointed to the OBR figures - insisting the new regulator set up by Mr Osborne, not the Government, had taken the decision to bring forward publication in light of the story.

The OBR forecast - released in time for Mr Cameron's weekly Commons clash with Ms Harman - showed overall employment at 28.89 million in 2010, rising every year to reach 29.97 million by 2014/15.

Before the Budget, it expected the number in work to be higher in each of those years.

It said the figure could reach 30.23 million by 2015/16.

The newly-created body also set out for the first time the scale of the job losses expected across the public sector as the austerity measures bite.

It showed the numbers employed by the state plunging from 5.53 million this year to 5.04 million in 2014/15 and then dropping further to 4.92 million by the following year.

In its pre-Budget analysis, based on Labour's plans, it expected the number to drop more steeply initially but slowing to reach 5.07 million by 2014/15. It gave no figure for 2015/16.

The Government's pay freeze on those earning over £21,000 in the next two financial years would help slow the slew of posts in the short-term, it suggested.

In the Commons, Ms Harman repeatedly pressed the PM to confirm the leaked figures had been produced by Treasury officials.

"Can you confirm that secret Treasury analysis shows that under your Budget half a million jobs will be lost in the public sector but even more will be lost in the private sector?" she asked.

"You should know what abject misery this unemployment will cause to individuals, families and communities," she told him - demanding to know the extra cost in benefits.

Mr Cameron hailed the detailed OBR figures as "something that never happened under a Labour government" but did not comment on the leaked document.

Unemployment was forecast to fall every year by the OBR, he said.

"What the figures show is that under Labour's plans next year there would be 70,000 fewer public sector jobs and the year after that there would be 150,000 fewer public sector jobs," he said.

"I know we've all been watching the football but that's a spectacular own-goal."

The political row over the impact of cuts on the jobs market came as one trade union leader called for mass strikes in protest at the "savage assault on jobs".

Bob Crow, general secretary of the RMT transport union, said the Government "started this fight with the working class and we are up for it".