Coffee House

Austerity hits home in the North East of England

28 December 2012

Have you personally suffered from George Osborne’s spending cuts? Your answer depends largely on where you live. I’ve witnessed both over the past few days. This Christmas, I’m enjoying my first prolonged stay away from London in some time and the impact of austerity in the North East has really struck me.

First to note is spending cuts in local government. In this part of the world, the public sector is a vast beast. The Guardian reported in 2010 34 per cent of the total employment in Newcastle upon Tyne is in the public sector, one of the top 15 councils in the country. The authorities of Sunderland, Northumberland, North Tyneside and Darlington all have above-national average employment in the public sector. Therefore the news in the Autumn Statement of another £445 million of spending cuts to local government in 2014-15 is another unwelcome development.


One friend who works in a council underlined to me how hard the Tories are going to have to work to win over public sector workers in time for 2015. Over a drink on Christmas Eve, I made the mistake of praising  Eric Pickles. My friend wasn’t quite so taken with the Communities Secretary: ‘That damn Eric Pickles, he’s a maniac! He’s destroying this country and there’ll be nothing left of my department when he’s through. I can’t wait for early retirement,’ he cursed angrily.

The second is the effect the squeeze is having on local businesses. Earlier this year, the North East had an 11.5 per cent unemployment rate, the worst in the country. Despite the slight upturn in the economy, it was still 9.5 per cent in August to October compared to 5.7 per cent in the South West. Wandering through the Metro Centre yesterday — Europe’s biggest shopping centre created from the Thatcher government’s enterprise zones — I saw that shop after shop was either closed or closing. The usual throng of Christmas bargain hunters was in evidence, but the patrons were mostly browsing or heading for the heavily discounted chain stores. It’s not just smaller business either – my local Natwest branch is closing and when I asked why, I was told it was a ‘streamlining of the business’.

In the London bourgeois bubble that I inhabit day-to-day, it is easy to forget the effects of austerity on the ground — mostly because the capital remains the economic powerhouse of the country. But a walk around my hometown is a stark reminder the private sector has struggled to take up the slack from the reeling back of the public sector, while the worst of the spending cuts are yet to come.

This also presents a political problem. The Tories, who still have a serious image problem in this neck of the woods, will be given another Northern thumping at the next election unless they can prove that good times still lie ahead for the region. For once, the Conservatives’ outlook is not entirely hopeless. Director of Policy Exchange Neil O’Brien, who wrote our cover feature on the North-South divide, will join the government with a focus on policy development in 2013. One can only hope he will inject some new ideas targeting those strivers beyond the Tories’ natural territory.

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  • Gabriella Coscia

    But austerity is also hitting London too. The poorer parts of London are not doing well, and certainly South East in particular Kent are being hit by the Austerity. It’s nationwide believe me.Not just the North

  • Paul Robson

    “I can’t wait for early retirement,’ he cursed angrily.”

    A better summary of what is wrong with the public sector is hard to find.

  • ButcombeMan

    Here is what a grown up journalist makes of the same subject:

  • Span Ows

    Lazy to blame current cuts. Most of what you write (apart from the numbers) could have been written in 2002, 1992, 1982 or 1972. Now, if you had written that most in the North will blame the Conservatives then we all know that.

  • E2toE4

    Sebastian Payne….. The Public sector ‘paid vote’ issue is both chicken and egg in this problem.

    Both Nissan and the Metrocentre WERE the results of meddling without which the Private sector growth would never have happened.

    As was the Cobalt business Park in North Tyneside and also the Quayside redevelopment in Newcastle and Gateshead, Gateshead taking the lead, subsequently home to the Baltic, Sage and Millennium bridge et al.

    The Sunderland riverside, regeneration around the National Glass Museum and the St Peter’s Campus of Sunderland University were also largely the result of this same ‘meddling’.

    Blame those old meddling Socialist dinosaurs Heseltine and Thatcher it was their activist policies and their incentive grants (to Nissan) and Enterprise Zone rates-free policies (and other incentives) that sparked off the Metrocentre (and Cobalt) as part of their ‘reclaim the inner cities’ effort/

    The Japanese Company and Sir John Hall were necessary but not sufficent.

    The thrust of the article isn’t wrong– but the detail is not as simple, and unless the analysis is correct then the current Cameronian trajectory may also (continue) to fail.

  • shaun

    Councils don’t help them selves when the profit making vaux brewery employing hundreds of men was allowed the be bought and asset stripped it left a big hole in the city centre. Tesco with their land bank policy got hold of the land frightened such a large brown field site would fall into the hands of a rival. Just around this time the RDA was formed one north east so began a decade long bun fight that saw Sunderland city centreall development stood still on other signifigant sites till VAUX was sorted the best course of action would be to work with tesco on their plans for the site and hammer out a compromise instead the bun fight lasted a decade ruined the city centre and a development that could have set the city up for the next decade after 25 million pounds in tax payer cash all we have is an assortment of ruined sites a small car park and a city centre looking tired and lost. All because instead of working to hammer a good compromise they decided to pick a fight with tesco that wasn’t needed.

  • Mr Gaga

    I run a business in Sunderland and find the local council a real obstacle. A small addition to our warehouse took over a year to get approval. Less “jobs worths” would be an improvement

    • an ex-tory voter

      More “state” means less wealth for all!!

  • Dogsnob

    “…a stark reminder the private sector has struggled to take up the slack from the reeling back of the public sector…”

    This expectation is recurrent and, to me, quite puzzling. What would motivate any private company to hire people just because they have been jettisoned from public service positions?

    It’s a given that there will be some kind of organic shift into the pay of private firms, but they are simply not hiring. The paramount name of the game in private industry, is to get rid of staff themselves. How would the scrapping of public services do anything to change the stance of private employers, regarding recruitment?

  • David Johnson

    Ok well I live there and I can tell you the social and economic problems faced by the NE pre-date the recession and spending cuts. If large council departments were the solution to the NE problems we’d have fixed them long ago.

    Also it’s worth remembering that while the cuts are biting employment within the region is actually rising modestly.

    There are obvious things the Government could do to help all sound free market principles: cut tax, cut regulation etc. On a more pragmatic level I’d also limit subsidies to industries which can’t easily move; get them to build significant assets here so they won’t be so inclined to relocate when the subsidy ends. Somebody commented earlier that Japanese companies love to subsidy shop; this is true and part of their way of doing business, we can’t allow out free market sensibilities make us lose out rather we just need to be cautious in how we operate subsidies.

  • John McEvoy

    The destruction of the economy in the North East was 100% designed, implemented and delivered by politicians. They did it by getting 75% of the economy to consist of the spending of other people’s taxes. Now that it has to be reduced, because other people have run out of money, the inflated, fake, zombie economy is simply vanishing without trace. Politicians can take full credit for the disaster they created.

  • Mombasa69

    2015 UK (Government Debt) £1.5 TRILLION

    Household Debt £1,456 trillion (end of January 2012).

    God knows how much our private companies and business owe on top of that.


  • Mombasa69

    2012 the interest on the national debt will cost £44.8 billion a year. That’s more than we spend on defence, and not much less than the entire education budget….

    So let’s all stop moaning about this pathetic so called austerity, the Government is hardly cutting back enough ffs.

  • andagain

    I wonder how many Tories there are who think that people in the North ought to move to find work, but that no more houses ought to be built in the South for them to move in to.

    To judge from the comment threads on ConservativeHome, the Spectator and the Telegraph, the answer is most of them.

    • an ex-tory voter

      Not so, Tories would much prefer to remove the state’s boot from the necks of these people and encourage them to invest and grow businesses in the north.

      • andagain

        Fine. Liberalise the planning system. That is almost the only central planning restriction left in the country.

        And yet, almost all the opposition to liberalising it comes from within the Tory Party. Anyone would think it helps prop up the house prices of wealthy homeowners in the South East.

        • an ex-tory voter

          The reluctance to liberalise the planning system has nothing to do with wealthy home owners in in the South East and has everything to do with “pseudo tories” continuing to implement socialist policies of central control. The present government is led(?) by a man without principle or backbone, that is why the centralised planning system is not being dismantled.

          • andagain

            It seems that the Telegraph and a lot of commentors on ConservativeHome are “pseudo tories” then, because they continue to demand that the socialist central planning continue. And demand deregulation.

  • andagain

    One can only hope he will inject some new ideas targeting those strivers beyond the Tories’ natural territory.

    That would require decisions that cost their existing base. And membership. That would require a civil war within the party which would make it impossible to persuade people that the average tory cares about people outside their existing territory.

  • Jebediah

    Realistically regions dependent on Labour’s client state will not vote Tory for a long time. It’s a logical reaction if you live in a high state employment area. The best of all is having a diverse economy and state jobs should be spread jam thin across the whole nation. Lumping them in one place to short term boost employemtn, makes that place vulnerable, as in essence they have a single employer.

  • an ex-tory voter

    The North will remain poor until they realise the standard of living “they” enjoy is directly proportional to the wealth “they” create. The Labour government did The North no favours by pouring in state funding. It was a short term fix which ignored long term imperatives and actually made matters worse by creating a socialist client state and pricing the wealth creators out of the labour market. State spending camouflages the lack of wealth creation and the bigger the state gets the more depressed the real economy becomes.

    The North of England is a truly beautiful place to live and work. Given the right incentives there is no reason why it should not be a centre for wealth creation. It has the entrepeneurs, the skills and the logistical connections necessary to do so. All that is necessary is to get the state off their backs and reward those who wish to succeed. Success and an improved standard of living will follow.

    • toni

      @ex-tory voter

      My recollection is that for years and years the NE was crying out for business to set up there, so where were all these wealth creators and entrepreneurs pre. your alleged “Labour government did The North no favours by pouring in state funding”?

      And when, and who, was responsible for putting in the “logistical connections”?

  • John Smith

    Its more the sense of entitlement that is stifling in the NE
    Any youngster who has anything about them have long left for London & the SE
    The economy has changed from one of enterprise to one of lives on benefits and activity in the black & grey economy.
    No one is looking anymore. . .

  • William Blakes Ghost

    there’ll be nothing left of my department when he’s through. I can’t wait for early retirement,’

    Isn’t that the point ? How else will be reduce the public sector to a sustainable size. At least Eric Pickles is doing his job…….

    • Daniel Maris

      Porky Pickles is a disaster. Wherever he goes he wraps up everything in red tape. His planning “reforms” were a complete disaster. Don’t believe the hype.

      I don’t particularly agree with Gove, but if you want an example of a minister actually doing well, then look to Gove, not Pickles. Gove thinks things through. Pickles finds it difficult to connect up any thoughts in a logical sequence.

      • 2trueblue

        It is not in councils interests to work with Pickles or this government. Their agenda is to keep going as they were.

  • notme3

    I took four million out of a twenty million local government budget, and it made zero impact to the service we provided.

    • John McEvoy

      Take out another four million. Repeat until you stop wasting other people’s money.

      • notme3

        I stop wasting money? The budget provides a series of services that are required by an act of parliament. I reduced that budget by 20%, it had no impact. Yet, all I get is a flippant response. What an arrogant individual you are.

  • ButcombeMan

    This is trivial journalism, linking Osborne’s hardly existing “cuts” with a picture of a (probably) 60s, hideous car park being demolished. There is no relationship, why pretend there is?

    It is true some parts of the North East are hideously poor but it was all gradually reviving towards the end of the 90s.

    Sucking at the teat of low quality Civil Service DWP and before that DHSS jobs, was never going to revive the North East.

    AND shops are closing everywhere but the affluent South East

    This is the result of the Big Brown Mess and 13 years of bankrupt smoke & mirrors, Brown/Balls economics.

    If you got out more you would know that some parts of the country never recovered from the last recession or even the one before that.

    • Daedalus

      The car park and associated shopping centre were demolished in 2010. Not sure whats there now!

      • ButcombeMan

        I am obliged, if you are right (and I assume you are), my point about the triviality and falsity of the linking, is even better made.

        Payne is yet another scribbler here, of very little brain. Where does Fraser find these people? More importantly, why?

  • D B

    My heart bleeds for Andy Capp.

  • Ostrich (occasionally)

    You illustrate your article with a photograph of the ‘Get Carter’ car park in Gateshead, during its demolition. Not one mention can I find of the massive regeneration that is in progress on the site, high rise housing (yes, for some people it’s quite suitable), student flats, a shopping mall, supermarkets and a whole lot else. Try driving south along the Tyne bridge and the whole thing can’t help but catch your eye. Yes, there are shops closing in the Metrocentre (which hasn’t been the largest shopping complex in Europe for a long while) but there will always be ups and downs, whether business is good or bad…they’re called market forces. If the shops that are selling tat and nick-nacks are closing then perhaps its a good thing they are going. Meanwhile, before you disgrace yourself again by submitting such an unbalanced article open your eyes and look around you (especially when driving south along the Tyne bridge, the traffic is very busy with people going places doing things not what you’d expect from an industrial wasteland.)

    • Sebastian Payne

      The regeneration in Gateshead town centre is indeed fantastic as you point out…but it’s at least 13 years late, thanks to disagreements backwards and forwards between Tesco and Gateshead Council. Also, it’s not a major source of employment as Nissan and Metro Centre. The new 1,000 jobs will be most welcome though. Do remember also that the recently demolished Trinity Square was built in the 1960s for the same reasons the new Trinity Square has just been redeveloped .

  • Koakona

    Lazy article, the picture and caption alone paint the wrong picture. The buildings replacing that entire part of Gateshead are pretty much finished, giant structures considering the surrounds, when seen from the Newcastle side of the river they are quite prominent in marking Gateshead’s town centre. Who will pay for it? I would assume Tesco is paying for a bit of it since they will occupy the majority of the ground floor with a new hypermarket however why not do a bit of investigative journalism and go find out. Crikey if it wasn’t raining out I would pop along the road and have a look at the boards around the site to tell you who is paying for it. Guaranteed there is tax money in it somewhere, especially considering how much of it is going to be student accommodation and such.

    As for anger in the North East at the Conservative government, yes there will be from those who are suckling at the taxpayers teet. The Tories problem is they fail to tap into the immense stream of anger working people (public and private sector alike) have for their families, friends and neighbors who laugh giro in hand all the way to the bank.

    Moreover did you ever stop and wonder why the public sector is so large in the North East, could it perhaps be as the state grew its administrative function it cleverly shoved it all up here where there is a jobs shortage (although the situation is improving) and the cost of the human resources and land is leagues cheaper than anywhere south of Scotch Corner?

    Ultimately however what all right minded people in the North East want is for government to get out the way and allow industry to return, real jobs. Nissan is a great example and we want more, so lets see more posts about what red tape and regulations can be cut to allow the private manufacturing sector grow in this low wage, low cost part of the country.

    • Sebastian Payne

      As I said below, the redevelopment is fantastic but it’s long delayed and does not address the area’s structural issues. Agreed on both the working people concerns and the encouragement of industry – I’m hopeful the Tories might be seize at the next election

  • Reconstruct

    Sebastian Payne. Learn this truth: the plural of anecdote is not ‘data.’ The data available from the Office of National Statistics shows that the Northeast has the fastest rate of employment growth (up 5% in the year to 3m Sept) of any region in Britain. By contrast London is up only 1.4% and the Southeast is down 0.5%.

    Why didn’t you check the facts? Even if clicking on to the ONS site is beyond you, surely you can’t have missed the expansion of investment and employment in the auto-industry?

    Obviously, it must be strange for you to stray outside the M25 – but a few moments doing some hard ‘reporting’ could and should have led you to a very very different story.

    Lazy lazy lazy. But more confirmation that those inside the M25 have little knowledge of, or interest in, the country that lies outside it.

    • trapezium

      Still, it’s true that the centre of Newcastle is looking devastated.

      • I.B.Wright

        True of most towns, North or South. Plenty of charity shops. Bugger all else.

      • Dogsnob

        Get yourself a ticket to Bradford and take a walk around. Now that’s devestation.

      • Yorkieeye


  • TomTom The basic problem is that REAL businesses in the North East were destroyed by City merger-mania and then the 1980s recessions….Engineering is big in Germany, USA, Japan, Italy, India, China but not in the North East yet Armstrong built a powerhouse there until it was merged away and the orders ceased to flow. Just why was Hanson allowed to destroy ICI a company built by the British Government in 1926 to protect against the power of IG Farben ? Why did ICI get dismembered and sold to Akzo ? These were the major industries of the North East not Council jobs or Ernest Hall being a property developer building shopping malls – or even Sykes building Meadowhall on the site of a steel works, or Trafford Centre being built on the site of a 1930s Industrial Park with firms like Turner & Newall. don’t blame the workers that their factories were turned into retail centres

    • Dimoto

      What did Hanson have to do with it ?
      The ICI dismemberment was down to smart-arsed “investment bankers”, and an utterly incompetent and craven board of the same old pals club.
      It’s only a question of time before the same interests engineer the break-up or sale of Astra-Zeneca.

      • TomTom

        Try John Mayo of UBS later Destroyer of GEC who worked on the “Defence” against Hanson staging a break-up bid because FINANCE made cheap money available for a Conglomerate to asset strip a Manufacturer rather than Shareholders control the Manufacturer. Rothschild and Lazards and UBS-Warburg spend their time staging BIDS instead of MANAGING Shareholdings in Corporates

    • John Smith

      ICI’s demise was also aided by useless senior managers and craven trade unions.

      • TomTom

        Yes and now the Councils provide employment so it worked out well……if only we canb get rid of Banks where useless senior managers seem to have let “rogue” employees rip off shareholders……step forward Sir Hector Sants !!!

        • Wessex Man

          UTOPIA zzzzzzzzzzzzzzzzzzzzzzzzz

    • Daniel Maris

      The ICI story is certainly an instructive lesson in what happens when your government gives up on co-ordinated action to nurture industry and employement. Could that have happened in France or Germany? No, no way.

  • Daniel Maris

    Nelly O’Brien is fully signed up to expanding London, not to creating a vibrant economy in the North East. He is also fully signed up to the mass immigration economy which is going to completely destroy this country if it carries on much longer.

    The people of the North East have shown what they can do in terms of car manufacture – a real success story. We need to disengage from the financial sector which is the motor of mass immigration and our economic imbalance. If the City of London “loses out” to Frankfurt, New York or Hong Kong, more fool them I say.

    I think our focus should be on the real economy:

    1. Ensuring we have energy independence and are maximising recycling/utilisation of domestic resources.

    2. Making sure we are in the van of the robotics revolution so we can position ourselves as a leading manufacturer again.

    3 Putting ourselves at the front of the coming transport revolution in terms of electric vehicles and automatic vehicles.

    4. Creating micro-economies on our worst estates by pooling existing state resources and forming co-operatives to deliver goods and services. This will make a big difference on those estates, creating huges numbers of jobs where they are needed most.

    5. Ensuring there is a legal right to work so people in our country get the first option on jobs, not incomers.

    6. Supporting innovation and strengthening links between universities and business.

    7. Reduce the working week.

    To take that forward, we need better planning – a national economic council and regional economic councils; an estates taskforce; regional and national investment banks; a “conveyor belt” from schools to work, amongst other things.

    Put a special levy on the financial sector in the City to fund some of this transition.

    • Rhoda Klapp

      Central planning is the answer? After all its successes in the past, you think any kind of central planning is the answer? Freedom is the answer. Efforts by misguided people to push this sector or that area invariably come to nothing and set up dependence for decades.

      Oh, and there is no north/south divide per se. There are good places in very region, and there are deprived places. A recession doesn’t affect YOU unless it is you who loses their job and can’t get another. If you keep your income and the self-respect and confidence that comes with it, you are not in recession. The very concept of a north/south divide or any similare meme is part of an attempt to establish both guilt and victimhood amongst people who are just doing their best to get by. Politicians are expert in using that sort of tactic. Don’t fall for it.

      • Rahul Kamath

        ‘Freedom’ would include freedom for a firm incorporated in the UK to hire a foreigner to work in the UK, freedom for a property owner in the UK to rent/sell to a foreigner and freedom for a British national to marry a foreign spouse or adopt a foreign child.

        • Rhoda Klapp

          I think we have all of those now. If you don’t get the distinction between controlled immigration run in the interest of the population and open borders, having discussed it so many times, please pay more attention to what commenters write rather than what you think is behind what they write.

          • Rahul Kamath

            I think you need to check your facts. None of these freedoms exist in the UK today in anything like a complete form. As you have admonished me to “pay more attention”, I’ll do the same and suggest you “do some research”. The UKBA website is a good starting point.

      • TomTom

        “Central Planning” is what MITI did in Japan and the USA did when it told GE to build jet engines once Churchill gave the plans and told Pratt & Whitney to stick with turboprops….it is not uncommon….just the British are lousy at it which is why the MoD Contract to Birmingham University which developed LCD displays seems to have benefitted everywhere but HERE….and but for Heath nationalising Rolls-Royce after the Lockheed-RB211 disaster we would not have the No2 Jet Engine Manufacturer in the world based in the UK

        • Daniel Maris

          It’s also the reason why we, with the greatest wind resources in Europe, have no wind turbine industry to speak of but Denmark and Germany have big firms with a big slice of the world market.

          • Rhoda Klapp

            We have centrally-planned wind. It stinks, requiring subsidy whether the wind blows or not. Germany is planning (centrally!) over twenty lignite power stations. Not because that wind is so brilliant, but because it is built on a foundation of lies.

            • Daniel Maris

              Whether you think it’s rubbish or not, there’s a lot of money to be made from designing and manufacturing wind turbines.

              • Stuart Eels

                Well this true for quite a few of Cameron’s buddies but not the country.

              • an ex-tory voter

                For good reason it is known correctly “as subsidy farming”

          • 2trueblue

            And in Denmark they have not been able to close one coal fired power station, that is how successful wind is. Germany are importing power from France and have also not closed any coal fired power stations. I think they may even be looking at opening more. Wind is not efficient.

    • Rahul Kamath

      Basically re-invest Gosplan then! As per my earlier comment, you really are a socialist.

      Also, this legal right to work for Britons is already established (i.e. you can’t give a foreigner a work permit without first advertising locally for the position). It’s also easily subverted by employers.

      • TomTom

        you can’t give a foreigner a work permit without first advertising
        locally for the position…………… in the USA where the Bureau of Labour has the same rules

        • Rahul Kamath

          Yes exactly.

      • Daniel Maris

        That’s not a right. I am talking about putting in place a right to work, beginning with 16-25 year olds not in education. There should be a concomitant duty to support oneself. In other words, no welfare for people in this age bracket. It would be a major step towards reducing welfare dependency.

        • Rahul Kamath

          Why don’t you expand on how you see this working?

          • Daniel Maris

            Let’s call it Routes to Work.

            I think that at age 11 children on joining secondary school should be told about the scheme in lessons at school. It should be an upbeat approach, making it clear there will be work for everyone. This approach would be reinforced each year in school.

            Firms and other employers over a certain size – perhaps 100 – would be required to make available a certain percentage of jobs for school and college leavers aged 16-25 with a guarantee of at least three year’s employment (subject to a probationary period).

            At age 15 young people would be asked to choose (provisionally) whether they wished to join the scheme (at age 16 or later) or to enter education at age 16 and select an employment sector e.g. electrician, plumbing, tourism, local government etc Entry to some sectors would be qualification based. There would be a Miscellaneous Sector for anyone not meeting the basic requirements of other sectors.

            School/college leavers would then undergo interviews and aptitude tests and be ranked. Employers could then choose in various localities to offer people on the sector lists employment to meet their quotas.

            I think there should be a bonus available for all young people successfully completing 3 months and then one year and then 3 years under the scheme.

            Any young people not found employment under the scheme would then be guaranteed employment under a Productive Employment scheme – a workfare scheme. There’s plenty of productive work that can be done which is currently not covered by the commercial sector, public sector and charities.

            There would be costs in the scheme, but also savings for firms in terms of advertising. More generally I believe there would be a huge productivity increase for the country as a whole as welfare dependency, teenage pregnancies and criminal activity were all reduced.

    • Wessex Man

      are you sane?

  • Ross Smither

    Your Public Sector friend who “couldn’t wait for early retirement” – doesn’t that say it all.
    How many in the private sector who have had their pension savings decimated would love to have the chance for early retirement!!

    • Andy

      Quite right. You couldn’t buy his Local Government pension, nor a normal Civil Service pension. It is the private sector which has felt the pain from Gordon Brown’s incompetence and it is the public sector which has had a grand time. Young Payne needs to get out more. Come to the North. I can show him the effects to years of government incompetence and meddling. We need to foster and grow the private sector at any and every opportunity. We can start by having a different attitude to wealth and wealth creation.

      • Daniel Maris

        Most public sector pensions go to people who are not high income earners. If they didn’t have their pension (and the self-respect that goes with that) they would be dependent on the state for income support (unless that is you actually want to see pensioners dying of hypothermia or starvation). In a country with per capita GDP of something like £29,000, there is nothing extravagant in public sector pensioners getting something like £5,000 per annum on average under current pension arrangements.

        Many public sector pension funds are self-supporting e.g. the local government fund. The employer’s contribution is simply part of the remuneration package. It varies, others do get a direct payment from the state.,

        • Rahul Kamath

          Daniel you are almost sounding like Owen Jones here. I think the issue most people have is that the private sector has largely done away with defined benefit pensions (or made them quite risky) while the public sector retains them with no risk at all. Is this because the public sector manages better or is it because they are not exposed to the efficiency requirements of the marketplace?

          • TomTom

            It is because they are UNFUNDED

            • TomTom

              and do not have to meet IFRS or GAAP accounting rules

            • notme3

              No, local government pensions are funded, fully funded in fact.

              • TomTom

                No they are not. The Pension is guaranteed so the taxpayer makes up any shortfall

                • notme3

                  Of course they are underwritten. Underwritten by the employer who is the taxpayer. But they are fully 100% funded by employer and employee contributions. The split of course is no where near fair, but that’s another argument.

                  A pot of money exists, a contribution is put in by employer and employee, the fund is managed, and every few years actuarial assessments are made to make sure the fund will be able to meet its obligations.


              • John McEvoy

                Funded by whom?

          • Daniel Maris

            The private sector has walked away from its responsibilities. In other countries the law makes them responsible for proper pension provision. We are now moving towards that.

            • Cynical Observer

              “The private sector has walked away from its responsibilities. In other
              countries the law makes them responsible for proper pension provision.”

              What other country are you talking about? No law forces US employers to offer corporate pensions.

          • Paul Robson

            Oh FFS. It’s because they are propped up with huge subsidies.

        • notme3

          “on average”

          You only come by that ‘average’ by including people who dont have their full service.

          • Daniel Maris

            Yes, and huge numbers of those are mothers who’ve put a lot of effort into raising their families. Others will have worked in the private sector which provides no pensions. The point is that the huge pension pots are not that common and really, that’s something for government to address if it’s got out of hand, which it probably has due to the vast inflation in CEO and below salaries across both public and private sector. That’s where the real problem lies.

            • notme3

              So WTF cares? You dont put into a pension, you dont get much out. You put in your years, you get a very good pension.

        • jazz6o6

          “………Many public sector pension funds are self-supporting e.g. the local government fund. The employer’s contribution is simply part of the remuneration package. It varies, others do get a direct payment from the state……..

          In your dreams. Local authority pensions cost about 25% of council tax. If the fund gets a bit low they just bump up the tax.

          • Stuart Eels

            My local Council who lost millions via Iceland, actually contribute 44% of all revenue to employee pensions. I did a F of I request for details.

            • Daniel Maris

              Lets us know which council that is. I very much doubt it. Do you mean revenue from council tax? Perhaps your comment is just sloppily phrased.

          • Daniel Maris

            Council tax is only a small proportion of council revenues. It can easily be as small as 10% depending on where you live. If it is 10% in your area then that means the pensions are only a 2.5% charge on council revenues, which is not at all unreasonable. Councils should contribute to the cost of pensions and obviously, as people live longer, the proportion will increase over time. That’s just the way it is and should also be for the private sector which shamefully walked away from its responsbilities under Labour. Only now is the government (rightly) putting the onus back on the private sector to make pension provision rather than expecting the state to pick up the tab.


            “Although it is the only tax which is set by local government, the Council Tax contributes only a small proportion (25%, on average) of local government revenue. The majority comes from central government grants and from business rates which are collected centrally and redistributed to local authorities.”

            • jazz6o6

              You can mess with the figures all you like but council pensions absorbe the equivalent of 25% of council tax.

          • Yorkieeye

            They are also in massive deficit

        • Andy

          Why don’t you read what I actually wrote ? I said ‘You couldn’t buy his Local Government nor a normal Civil Service pension’.

          And you will find that a lot of ‘self-supporting e.g. the local government fund’ falls disproportionately on the long suffering taxpayer. When, for example, the teachers pension fund was originally set up the contributions were 50/50. Tell us what the proportion is now. Hint, it isn’t 50/50.

          As to your assertion that the ‘private sector walked away from its responsibilities’ do you mean like Dawson International ?? Why do you think that private sector employers no longer offer pension schemes ?

      • belbylafarge

        You may think that it is clever to say such things but mean spirited and spiteful people like you are responsbile for the Tories poor showing in the north. I am sure that this will cause the loss of Stockton South at the next election so the Labour party willsend you aletter of thanks. As for Neil O brian he is just another t*rd in love with his own excretory ideas and the author is a cretin if he thinks that it is good news for the north that he is onto the case.

        • Dimoto

          The North-East was Labour’s pet project to create a dependent client region, and be damned with regeneration. Blair and Mandelson NE MPs ?
          Perhaps you could suggest a painless way the willing victims in the NE, could be brought back to reality ?
          Join Salmond’s dodgy project maybe ?

          • belbylafarge

            Perhaps there is no painless way of doing it but it will cost the Tories at lest one or possibly 2 seats (ie Hexham too) so it cannot be done without expedniture of electoral captial. They will not thank you up there for saying “yes it hurt, yes it worked.”

      • Sebastian Payne

        I’ve been in the North myself Andy, hence the inspiration for this piece. Two of the great regeneration projects in the region – the Nissan car plant and Metro Centre – were both (as you said) private sector growth without meddling. Shame there aren’t more of them

        • Daniel Maris

          There appears to have been a good deal of government involvement in the Nissan development. From Wikipedia:

          “In February 1984, Nissan and the Government signed an agreement to build a car plant in the UK.”

          It must have been an agreement about something.

          I think Nissan is exactly the sort of development this country needs: good jobs, export earnings and no magnets for mass immigration.

          • TomTom

            As I recall there was £250 million of public funding somewhere and also public funding for Toyota in Derbyshire….Japanese firms love subsidy-shopping

          • mikewaller

            It is also just possible that being in the EU helped!

            Regarding the core of Sebastian’s piece, the obvious answer is for dynamic young thrusters like him to return to the North East to do some personal re-invigorating. Economic centripetalism is a well recognised phenomenon, but talented people from wherever are not actually forced to bring their skills to the metropolis.

        • Yorkieeye

          One reason for the lack of new shops in the Metro is that it is now very out of fashion, the action has moved back to central Newcastle, which is buzzing.

  • David Lindsay

    All that we bloody need is Neil O’Brien and Policy Exchange. The Eighties on steroids.

    London is only still as you describe because it was bailed out by the rest of us. “The capital remains the economic powerhouse of the country”? It has little or no economic, social, cultural or political connection to the United Kingdom, and, to be fair, it never has had. Except when it has needed to be bailed out, of course.

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