David Vance SubstackRead More
I was studying yesterday’s UK workforce data and boy oh boy does it reveal a stark divergence between the private and state-funded sectors. It exposes two-tier economy where job losses in wealth-generating industries are offset by expansion in government-funded employment. This is socialism in action and we all should dread where it leads us.
Between December 2024 and December 2025, the private sector shed 377,000 jobs while state-funded sectors added 114,000. This is creating an imbalance in the economic foundation of the nation.
Examining the data illustrates two fundamentally different economic realities. Private sector employment declined across high-value industries including finance and insurance (-78k), information and communications (-77k), wholesale and retail (-68k), manufacturing (-52k), and professional/scientific sectors (-45k). Meanwhile, state-funded sectors grew in education (+44k), public administration and defence (+41k), and health and social work (+29k). This creates an economy increasingly reliant on public spending rather than private enterprise. And that is not sustainable.
The pay growth figures further expose this divide. Private sector workers experienced 3.0% regular pay growth year-on-year, while public sector employees enjoyed 4.8% increases. This disparity not only reflects government prioritisation of public sector reward but also highlights the financial pressures constraining private businesses from matching such increases.
The shrinking private sector is the thing that poses serious medium to long-term economic risk. Remember that private businesses generate the tax revenues that fund the public sector, creating a fundamental dependency relationship. When 377,000 private sector jobs disappear, the tax base contracts significantly—reducing income tax, National Insurance contributions, corporation tax, and VAT revenues. This creates a fiscal paradox where government employment expands precisely when the revenue source to fund it diminishes.
High-value private sector losses are particularly damaging. Finance, insurance, information, communications, and professional/scientific industries typically pay above-average salaries. Each lost role in these sectors reduces not only direct tax contributions but also associated spending in local economies, affecting retail, hospitality, and service industries.
Manufacturing job losses makes things worse. Reducing domestic production capacity and potentially increasing import dependency, worsening our national trade balances. The 52,000 manufacturing jobs lost represent diminished industrial capability that’s difficult to rebuild once supply chains and expertise dissipate.
Let’s cut to he chase. An economy with expanding public employment funded by a contracting private sector is inherently unsustainable. Without private sector growth generating increasing revenues, government spending faces inevitable constraints. Labour’s hard left back benchers seek to deny this but is remains true. The way things are going means we will need future tax increases on remaining private businesses and workers—potentially accelerating further job losses—or eventual public sector cuts.
Two Tier Keir and Rachel from Accounts are creating a cosseted public sector insulated from market pressures while private sector workers face mounting pressure and job losses. Eventually, the iron rule of supply and demand will FORCE CUTS in the Public Sector.
