Utility job cuts 'cost taxpayers pounds 805m'

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The Labour Party said yesterday in a study justifying its proposed windfall profits tax that privatised utilities had cut 89,473 jobs since the last election at a cost to the taxpayer of pounds 805m.

David Blunkett MP, shadow education and employment secretary, said that figures compiled with the help of the House of Commons Library and the AEEU, the engineering workers union, showed that there had been a substantial payback to shareholders and a growing payout by taxpayers, who were picking up the cost of job losses.

Mr Blunkett said that the total cost to taxpayers since 1992, in both unemployment benefits and lost revenue, amounted to pounds 805m, against profits made by the utilities of more than pounds 33bn.

Mr Blunkett added: "It is clear from these figures that, despite their protests, on past profits alone the privatised industries are in a position to contribute towards Labour's plans to boost the skills of Britain's young people.

"The windfall tax on the privatised utilities, proposed by Gordon Brown and I, will be used to fund schemes for young people in the public, private and voluntary sectors."

He made concessions to business opinion, however, saying: "Labour has no argument with increased efficiency leading to improved customer service.

"However, some of the privatised utilities have lined the pockets of fat cats at the expense of the taxpayer, the consumer and their employees. The nation as a whole has been expected to pick up the bill for the excesses of the fat cats."

Mr Blunkett pointed to British Gas, which has axed more than 33,000 jobs, while directors' pay has risen dramatically and profits have increased by more than pounds 2bn.

On top of that, more than 20,000 jobs have gone in the English electricity companies since the last election, while those companies have made combined profits of more than pounds 12bn. British Telecom has shed 40,000 jobs since 1992, says Labour, while making profits of pounds 10bn. In the water industry, total employment has risen but the number of employees dealing directly with water has fallen by 21.5 per cent (10,290 jobs) since 1989.

Mr Blunkett said: "Taxpayers have lost twice in the sale of the former public utilities and in the cost that all of us have had to pick up.

"By their actions we have not only lost the payback to the Exchequer from former public services - the Post Office last year paid pounds 367m to the Chancellor - we have also had to pay for the benefits and lost tax revenues resulting from the redundancies in the industries concerned."