Public sector employment rises to eight-year high

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The Independent Online

The Government is creating new jobs at more than four times the rate of the private sector, according to figures yesterday highlighting the growing influence of the state in Britain's flagging economy.

Huge recruitment drives by the NHS, civil service, police and state schools boosted public sector employment by 86,000 to an eight-year high of 5.3 million, the Office for National Statistics (ONS) said.

It said the increase was "unusually large" given that public sector employment is just a fifth of the private sector. There was a 1.7 per cent increase for the year to June 2002 on the previous 12 months in public sector jobs and follows a 2.3 per cent increase in the previous year. This compared with a 0.4 per cent rise in private sector job creation last year and a fall of 0.1 per cent in the previous year.

In all public sector employment has risen 2 per cent during the last two years, compared to an anaemic 0.16 per cent increase in the private sector.

The ONS said the growth in public sector employment could be even higher as some private sector workers, such as agency nurses, are classed as private even though they are paid by the NHS.

The Conservatives said there was little evidence of an improvement in services despite the creation of 354,000 public-sector jobs since 1998. Michael Howard, the shadow Chancellor, said: "Labour is taxing and spending and failing. Hospital waiting lists are still over a million, violent crime is rising and school truancy rates are up."

He highlighted research by the European Central Bank that found wide variations in the value for money taxpayers get from public services in different countries. The bank said the UK's public sector was as much as 20 per cent more inefficient than those in the US, Japan and Australia - although better than the European average.

"Gordon Brown [the Chancellor] is misspending billions of pounds of taxpayers' money," Mr Howard said. Economists in the City said the reports added to fears the Government was too reliant on its spending plans to keep the economy afloat.

Michael Saunders, an economist at Citigroup, said unemployment would be almost 200,000 higher without the increase in public sector jobs. "The real question is how sustainable it is given the fiscal position," he said.

Several organisations have warned the Chancellor will be forced to find billions of extra pounds because of a shortfall in tax revenue. Mr Saunders said the growth in job creation would come to a halt if the public finance deficit started to run out of control. "We cannot view the public sector as being a sustainable source of jobs growth," he said.

However, the Government has pointed out that Britain's unemployment rate at 5.0 per cent is the lowest of the Group of Seven rich nations. It also says a huge growth in part-time employment, which hit an all-time high in June, shows that Britain's economy is more flexible than it was in the past.