Cuts ‘could mean 1.3m job losses’

Leaked figures suggest the Treasury expects austerity measures in last week’s Budget to drive up unemployment by as much as 1.3 million, it has been reported.

The Guardian obtained what it said was a slide from a Treasury presentation on the Budget which suggested that as many as 120,000 jobs could be lost from the public sector and 140,000 from the private sector in each of the next five years.

The Treasury, which appears not to have been given advance notice of the story, could not immediately confirm or deny whether the slide was genuine.

But a spokesman cited a report by the independent Office for Budget Responsibility, set up by Chancellor George Osborne ahead of his first Budget to make forecasts free from political influence, which predicted that unemployment would fall over the coming years.

“The OBR forecasts unemployment to fall in every year, and employment to rise – as the Guardian article acknowledges,” said the Treasury spokesman.

The newspaper said that Mr Osborne would have seen the presentation before announcing cuts averaging 25% in most public sector budgets last Tuesday. It quoted the leaked slide as saying: “100-120,000 public sector jobs and 120-140,000 private sector jobs assumed to be lost per annum for five years through cuts.”

It was not clear on what basis the assumption was made, or whether the job losses amounted to a prediction or a worst-case scenario.

The figures stand in stark contrast to the OBR prediction that unemployment will peak this year at 8.1% and then fall for each of the next four years to reach 6.1% in 2015.

And they contradict the Treasury’s Red Book, which said: “The decline in employment appears to be coming to an end and we expect a modest recovery in employment in the second half of 2010.”

Alistair Darling, the shadow chancellor, said: “Far from being open and honest, as George Osborne put it, he failed to tell the country there would be very substantial job losses as a result of his Budget. The Tories did not have to take these measures. They chose to take them. They are not only a real risk to the recovery but hundreds of thousands of people will pay the price for the poor judgment of the Conservatives, fully supported by the Liberal Democrats.”

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