Forecast suggests 600,000 public sector jobs to go

Harriet Harman and David Cameron sparred over the issue of job losses at PMQs

Some 600,000 jobs are expected to be lost in the public sector over the next six years, the Office for Budget Responsibility (OBR) has said.

The OBR has forecasted 490,000 job losses by 2015 and 610,000 by 2016.

During a Commons exchange, David Cameron said unemployment would fall during the coalition government's term.

Denying Labour's claims that more would be "pushed into abject misery", he said: "There are going to be more people in work."

Mr Cameron said the Office for Budget Responsibility (OBR) had produced full tables for employment in the public and private sectors - "something that never happened under a Labour government".

During prime minister's questions, he said: "What's interesting from the tables is that you can see the effect of Labour's policy before the Budget and the effect of our policy after the Budget.

Job cut estimates

  • 610,000 public sector jobs lost over the next six years
  • 490,000 public sector jobs lost over the next five years
  • But 1.34m extra jobs overall in the public and private sector during the next six years

Source: OBR

"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."

Earlier, the Guardian said leaked Treasury figures predicted that up to 120,000 public sector jobs and 140,000 private sector jobs could disappear annually for the next five years.

The newspaper said the figures came from a slide which was part of a Treasury presentation on the Budget.

It claimed the chancellor would have seen the presentation before delivering his Budget last week and said the leaked documents suggested that the Budget could result in a 1.3 million increase in unemployment.

During the question time, Labour's acting leader Harriet Harman told Mr Cameron: "We were very concerned this morning to read reports that, as a result of your Budget, 1.3 million jobs will be lost.

"Can you confirm this was an estimate produced by Treasury officials?"

But Mr Cameron said Ms Harman did not understand that unemployment was "going to fall" and said the government was no longer responsible for publishing the figures.

Start Quote

A lot of heat and very little light was generated by today's PMQs exchange about rival statistics”

End Quote Nick Robinson BBC News Political Editor

Downing Street defended the OBR's decision to publish the details of its latest employment forecasts earlier than planned.

The prime minister's official spokesman said the OBR was an independent body and added: "It was due to publish these figures [on Thursday] but, given the article in The Guardian which was obviously misleading, they decided to bring that forward."

The Treasury elaborated and said The Guardian's figures were "wrong".

In a statement, it said: "They are draft figures from early June that do not show the impact of final Budget measures on employment.

"They do not reflect the OBR's judgement about the economy's response to the action announced in the Budget and they are annual, not cumulative.

"The OBR's Budget forecast was for employment to rise in every year of this parliament.

"The further figures they published today confirm this, with 1.3 million more people in employment by 2015-16, and show their view on public sector employment from their pre-Budget and Budget forecasts."

'Question mark'

The Chartered Institute for Personnel and Development's chief economist John Philpott said the government needed to be careful.

He said: "The government thinks that just by ...tackling the deficit, there will be a vent for growth because the prospects for investments and exports will be greater.

"If you look at both demand in the UK economy and more globally, there is a question mark over that and if that doesn't pay off then we're going to have a much weaker employment outlook."

Last week Mr Osborne announced cuts across all government departments of 25% over four years - except health and foreign aid which are ring-fenced.

He did not say how many public sector jobs were expected to go - but the government has previously insisted that the bulk will come from not filling vacant posts, rather than by making redundancies.

At the same time, the government is predicting that 2.5 million jobs will be created as a result of private sector growth by 2015.

But TUC general secretary Brendan Barber said that was "absurd", given the reduction in the availability of government contracts and the likely fall in public spending as a result of the austerity measures.

Start Quote

The Tories did not have to take these measures. They chose to take them”

End Quote Alistair Darling Shadow chancellor

"This is not so much wishful thinking as a complete refusal to engage with reality," said Mr Barber.

"Much more likely are dole queues comparable to the 1980s, a new deep north-south divide and widespread poverty as the Budget's benefit cuts start to bite."

His RMT union counterpart Bob Crow warned the cuts could lead to widespread strikes with Britons following the examples made by Europeans hit by cuts.

RMT's Bob Crow: "Working people are going to pay the price for the banking crisis"

Shadow chancellor Alistair Darling said that "far from being open and honest", the chancellor had "failed to tell the country there would be very substantial job losses as a result of his Budget".

"The Tories did not have to take these measures. They chose to take them," Mr Darling said.

"They are not only a real risk to the recovery but hundreds of thousands of people will pay the price for the poor judgment of the Conservatives, fully supported by the Liberal Democrats."

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The Budget, June 2010

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