The bloated public sector is stifling any chance of a strong recovery

In November, despite the furlough scheme ending and despite older workers opting for early retirement in worryingly high numbers, there were 257,000 more people in work than there were a month earlier.

Perhaps even more remarkably, there were 424,000 more people in employment than there were before the pandemic started. Whatever else has been going on, at least more people are in work than ever before.

In total, the UK has 29.4m employees, close to a record high.

Here’s the catch, however. More of them than ever are working for the state in one way or another. The latest public sector employment figures released last week showed that in the latest quarter alone, the Government payroll rose by 22,000 to hit 5.7m.

It is up by 137,000 people in the past year. It is almost certain to have accelerated even more since then. If you add in what are now in effect parastatal organisations, such the rail companies, for example, and arguably much of the energy industry, as well as dozens of out-sourced services, the real total is far higher.

Sure, some of those people were needed in the NHS. But in fact the health service accounted for only 2,000 of the total increase for the quarter, and 73,000 for the year as whole (although it now employs a staggering 1.85m people – and we wonder why it is increasingly unmanageable).

The vast majority of the extra people were employed in generic civil service roles, no doubt mainly working from home. Very few appear to be on the front line delivering public services.

We had been bringing the total number of people working for the state under far tighter control over the past decade. The percentage of employees on the government payroll peaked at 22pc at the end of the New Labour era in 2010, but under the coalition, and then Conservative governments, fell steadily to 16.4pc by 2018 (although in fairness, a big chunk of that was due to reclassifications). 

We were close to the point where there were more self-employed than government workers. And yet now it is going steadily back up again. The percentage of the labour force working for the state is close to 18pc, and will soon be above 20pc.

In truth, that rapid rise in the number of people in government is crowding out the private sector. There are two big problems with that.

First, it is contributing massively to critical labour shortages elsewhere in the economy. We already know that with fewer immigrants following our departure from the European Union, and with older workers leaving the labour market in alarming numbers, companies are scrambling to find the staff they need.

That might be most acute in sectors such as trucking and logistics, but it is happening everywhere. If those 127,000 people who had joined the public sector over the past year were available then it would be a lot easier for companies to fill the hundreds of thousands of vacancies they have open.

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