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From ‘distribution of industry’ to ‘local Keynesianism’: The growth of public sector employment in Britain

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British Politics Aims and scope

Abstract

A striking feature of British economic and political development in the recent past has been the huge increase in employment reliant on state funding, especially in the less prosperous parts of the country. In many cities, direct public employment provides 30–40 per cent of all work, and private sector employment has hardly grown at all in the last 10 years. Despite widespread claims about the predominance of ‘neo-liberalism’ in recent British policy making, the state now provides more employment directly and indirectly than ever before in peacetime. This policy of ‘local Keynesianism’ has not been the outcome of an articulated political programme, but rather has arisen from the combination of a national policy of seeking to expand welfare provision from the proceeds of economic growth, with the striking incapacity of the private sector to create employment across much of Britain.

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Notes

  1. For example, in January 2007 Conservative Party News reported that ‘Welsh Conservatives have warned that an over-reliance on public sector jobs is making the Welsh economy uncompetitive’; Sunday Times 25 January 2009.

  2. Oxford Economics (2008); Buchanan et al (2009); Centre for Cities (2009, 2010); TUC (2009).

  3. The best account of regional policy up to the 1970s remains Parsons (1986). For the key moment during the Second World War, see Booth (1982).

  4. For an economic analysis of this approach, see Armstrong and Taylor (2000, Chapter 10). The emphasis on small-scale, local enterprise could be given non-Thatcherite ideological inflection, most notably in the notion of ‘progressive flexible specialisation’; see Hirst and Zeitlin (1986).

  5. Beatty et al (2007); on the underlying problems of the regions, see Erdem and Glyn (2001).

  6. Tomlinson (2007); Clift and Tomlinson (2007). For Keynesianism's revival as the centre of national economic management in the recession, see Wren-Lewis (2010), and more broadly, Straus-Kahn, Managing director of the IMF, who noted that ‘the financial crisis has created a sharp fall in demand, what economists call a Keynesian recession … To help confidence revive, there is no alternative but to use macroeconomic tools to boost demand and sustain output … Fiscal policy must, therefore, play a central role. Fiscal expansion is always risky, as it adds to debt and raises dangers later. But, given where we are, the benefits exceed the costs in countries with sustainable debt’ (Guardian, 3 November 2008).

  7. Numbers from Cooke and Lawton (2008, p. 48). The struggle against what was seen as the pernicious effects of wage subsidies was a key moment in the struggle by economists for ‘laissez-faire’ in Britain: Blaug (1997).

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  1. Department of History, University of Dundee, Dundee, DD1 4HN, UK

    Jim Tomlinson

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Tomlinson, J. From ‘distribution of industry’ to ‘local Keynesianism’: The growth of public sector employment in Britain. Br Polit 7, 204–223 (2012). https://doi.org/10.1057/bp.2012.10

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