Peter Jackson column

Apr 28 2005 By Peter Jackson, The Journal

Thousands of manufacturing jobs will be lost over the next few months following a sharp fall in orders.

The gloomy forecast comes in CBI's latest industrial trends survey, which predicts 22,000 job losses in the period of April to June.

In the survey, companies reported the weakest three months performance since the summer of 2003, with output falling for the first time in six quarters. And, according to the CBI, manufacturing has shed 21,000 jobs this year.

Even though we are more reliant on manufacturing in the North-East than other regions, maybe we shouldn't worry too much, as another report, published earlier this week, revealed that almost two thirds of the region's economic activity comes from Government spending.

So, with luck, any jobs lost in manufacturing will be replaced by the Government payroll.

I hope that doesn't sound unduly cynical. After all, that is what has been happening. As I remarked last week, a report by Ove Arup and Oxford Economic Forecasting shows the North-East to have a dreadful record in job creation, with only 10,000 net jobs being created between 1971 and 2004 - and that includes public sector positions. Which means, if it wasn't for the Government's largesse, we would be in dire economic straits indeed. Or would we?

I have some sympathy with the views of Steve Rankin, director of CBI North, who believes the public sector should be cut back. The problem being that such a large public sector acts as a powerful brake on the development of a healthy private sector.

There is an argument that it can mean artificially inflated pay rates, a lack of entrepreneurial spirit, a lack of incentive to people starting their own businesses and a creaming off of talented people who would otherwise be in the private sector.

Having said that, I still believe we should be lobbying hard for a large share of the 20,000 civil service jobs which Mr Brown has promised to move out of London to the regions.

If we could attract a sufficient number of educated, articulate, middle-class, well-paid professionals to the region I believe it could work wonders for aspirations. Such people would pretty swiftly demand and get higher standards of housing, transport and - most important - schools. And that would represent a major step forward for all of us.