Ministers have rowed back on claims that cutting the government headcount would likely lead to increased spending on unemployment benefit.

This had been the warning from the Council of Ministers in its response to a damning Tynwald scrutiny committee report on the size of the structural deficit.

But now this warning has been removed from its response document.

The economic policy review committee report, due to be debated at this month’s Tynwald sitting, concluded that government is living beyond its means.

It said the scale and cost has grown beyond what the taxpayer can sustain.

‘We have a bloated public sector while local businesses have been placed under ever-increasing strain,’ the report argues.

Among its recommendations is that the size of the public sector should not threaten or compete with the private sector, and the recruitment control framework should be updated.

In its initial response, the Council of Ministers said this didn’t account for the ‘financial or social consequences of reductions in public-sector employment, including the likelihood that government would need to fund increased unemployment benefits’.

It added: ‘Current public-sector recruitment challenges in specialist areas, such as audit and tax, indicate that the private sector may benefit from mobility out of government, rather than being constrained by it.’

But these lines have now been removed - with CoMin’s response now saying it accepts the committee’s recommendation.

CoMin agreed the public service workforce should be planned in a way that supports the economy and labour market.

It said a recruitment control framework introduced last year and quarterly reports on headcount were ‘steps in that direction’.

But turning to the report’s assertions about the public sector ‘crowding out’ private employers, CoMin said these were not supported by evidence.

Its new response adds: ‘The principle is accepted and the review of the recruitment control framework will take this recommendation into account.’