Region to ‘bear the brunt of 50,000 jobs cuts pain’

10:29am Tuesday 25th May 2010

By Rob Merrick

UP to 50,000 jobs will be culled because of the Government’s £6.2bn of immediate spending cuts, it was claimed last night – with the region certain to bear the brunt of the pain.

The Chartered Institute of Personnel and Development also warned it was wrong to slash spending while the jobless count is still rising, adding: “Higher unemployment may be once again considered a price worth paying.”

Many of the job losses – from a recruitment freeze, big cuts to quangos and shelving projects – are likely to be in the North-East, which has a high proportion of public sector workers.

The axe will fall most heavily on local authorities, which will be told to save £1.165m within months. Schemes to cut youth crime, extend childcare, offer one-to-one tuition and tackle homelessness are in the firing line.

The Child Trust Fund will be axed from January, halting £250 or £500 payments to give children a nest egg when they turn 18. Top-up payments, at the age of seven, will be scrapped from August – together saving £320m.

And the Con-Lib Government came under fire for axing the £1bn Future Jobs Fund, which aimed to put 100,000 jobless 18 to 24-yearolds back to work through the downturn, to prevent a “lost generation”.

A second scheme – offering a “golden hello” of up to £2,500 to firms recruiting the long-term jobless – was also scrapped.

Helen Goodman, the Bishop Auckland MP and former DWP minister, said: “The new Government is making exactly the same mistakes that the Tories made in the 1980s when they let unemployment go sky high – with all dire the consequences that followed.”

Labour said at least 44,000 young people would be left languishing on benefits by axing the £290m Future Jobs Fund, given that the average subsidy per job was £6,500.

As expected, yesterday’s package included deep cuts to the regional development agencies (RDAs), which will be ordered to cull £270m of “lower value” projects.

The department for business was unable to say what sort of schemes would be scrapped, adding: “We will be working closely with the RDAs, over the next few weeks, to agree criteria for the projects affected.”

Alan Clarke, the chief executive of One North East, agreed it was too early to say where the axe would fall. He said: “Clearly this is a challenge, but it is one we will meet.”

Last night, Business Secretary Vince Cable hinted that the biggest cuts would be at RDAs in the South, East and East Midlands, telling the BBC: “We are questioning their usefulness. Suitable economies will be made there.”

At a Treasury press conference, Chancellor George Osborne ducked a challenge to say how many jobs would be lost, saying: “My objective is to create jobs, with a private sector recovery.”

The Chancellor said the cuts were essential to “bring confidence back to the economy”, which would free up businesses at home and abroad to invest.

Instead, Mr Osborne, and his Lib Dem deputy David Laws, trumpeted their decision to protect spending in the crucial areas of schools, 16-to- 19 education and Sure Start – as well as the NHS, defence and overseas aid.

Last night, Kenny Bell, Unison’s deputy regional convenor, said his members feared cuts “worse than we experienced under Thatcher” – suggesting 20,000 local government posts could disappear in the North-East.

He added: “We also know that NHS trusts are having to lose a third of administration workers. There are real fears that a double-dip recession is going to be reality for the region very soon.”

The New Local Government Network think-tank estimated that town halls would suffer a 15 per cent cut in grants this year, saying: “The scale of cuts before March next year is a colossal challenge.”

Councillor Paul Watson, chairman of the Association of North-East Councils, said: “It is still too early to say what the implications of today’s announcement will be for councils in the North-East.”