Public sector cities

I was in Sheffield last weekend. The city centre skyline there is very public sector, with lots of buildings adorned with logos like UfI and Sheffield Hallam, alongside the massive DWP and DCSF base at Moorfoot (pictured).

Sheffield has seen a 55% increase in public sector employment over the last decade - just one of the findings in our latest report.    

Over the past decade, the growth of lots more UK cities has been boosted by big injections of public cash. Almost 70% of the 1.2 million net additional jobs created in UK cities between 1998-2007 were public sector jobs. Right now, the public sector provides one in four jobs in UK cities - even more in cities like Swansea.

Our latest report Public Sector Cities warns that UK cities are too dependent on the public sector. Over one-third of jobs in Swansea (38%), Barnsley (35%) and Hastings (42%) are now public sector jobs. Sheffield (31%), Newcastle (32%) and Ipswich (33%) are not far behind.

Over the last decade, public sector job creation has outpaced private sector job creation in cities like Hastings, Ipswich and Newcastle. In Barnsley, for example, 6k net additional jobs were created in the public sector (1998-2007) and 6k net jobs were lost in the private sector.   

Given that public spending is going to contract from 2011 onwards, the current size of these cities' public sector workforce is untenable. Public sector employment is bound to shrink. Gus O'Donnell gave strong hints about that in The Times today.

We're projecting that 240k-290k public sector jobs could go in UK cities, between now and 2014 - and that's a conservative estimate. Here's a side paper, explaining how we got to that projection.

Cities like Swansea and Newcastle are going to be most vulnerable to these public sector job cuts. Instead of assuming permanent large public sector employment, these cities should start planning for a smaller public sector.

Our report today is a wake-up call to cities that have depended too much on the public sector. The public sector cushion will get smaller over the next spending period 2011-14 and beyond. All three parties need to acknowledge that public sector downsizing is around the corner. And cities will need to find ways to support more private sector job creation.

See coverage of today's report in the FT, Independent and BBC Online.