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date: 7 September 2010

embargo: For immediate release

Cuts will hit the £4,000 per head that the government spends in private sector

A new TUC analysis of official statistics published today (Tuesday) shows that government spends half as much again on buying goods and services from the private sector as it does on its own pay bill.

As a result departmental cuts of between 25 per cent and 40 per cent to be announced in the Comprehensive Spending Review will inevitably hit the private sector, the TUC says.

Analysis of public accounts shows that in 2008/9 the public sector wage bill took 25p of every pound raised in tax, while spending on the private sector (at £236 billion a year) took 38p - more than £4,000 for every adult in the UK.

TUC General Secretary Brendan Barber said: 'Commentators talk as if public sector staff will be the only losers from government austerity, but the private sector will inevitably be hit just as hard by the savage cuts promised in the Comprehensive Spending Review.

'Such cuts are bound to lead to substantial job losses in companies that have public sector customers. But this will only be the most obvious effect on private sector jobs and profits.

'Staff made redundant from either sector, or who fear they might be, will cut back their spending. Companies that lose public sector contracts will stop buying goods and services from other firms. The net result is a big loss in business and consumer confidence.

'This is why we are so worried about the prospects of a double dip recession. At best the most we can see is a shallow recovery where the economy bumps along the bottom and fails to generate the jobs we need.'

NOTES TO EDITORS:

Health (£71 billion), defence (£26 billion) and economic affairs (BiS and transport) (£23 billion) are the biggest customers of the private sector.

- The analysis is based on data provided by HMT in its Public Expenditure Statistical Analyses 2010, (Table 5, public sector expenditure by function, sub-function and economic category) which is available to download from: http://www.hm-treasury.gov.uk/pespub_pesa10.htm

- It is impossible to determine exactly how much public sector spending is spent on UK

companies. Imports account for around 30 per cent of GDP, so this is a good basis for

estimating the amount that the public sector would spend on imports - meaning that it is

likely that around 70 per cent of public sector spending in the private sector is spent on

UK companies.

- Congress 2010 will be held at the Manchester Central Convention Complex from Monday
13 September to Thursday 16 September. Free media passes are no longer being issued. Media credentials now cost £50 and can be collected in Manchester. If you would like a media pass, please visit www.tuc.org.uk/congress/tuc-18063-f0.cfm and return the form.

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Gibson T: 020 7467 1337 M: 07900 910624 E: egibson@tuc.org.uk

Press release (700 words) issued 7 Sep 2010