Bolder policies would help to limit job losses

Anthony Browne
Follow Anthony
EVEN the government’s supporters admitted that yesterday’s unemployment figures were grim. The number of people out of work is now 2.57m, the highest for 17 years, with more than one in five young people now jobless. Labour was quick to make political capital out of it by blaming it on the government’s cuts, citing the drop in public sector jobs. But the reality is, as the government pointed out, the UK’s recovery from recession is being shackled by the worsening global economic crisis. Economic growth is just too slow to create jobs fast enough to keep unemployment falling. With fewer private sector jobs being created than public sector jobs being lost, unemployment is rising again. One small positive note, as some economists pointed out, is that most of the decrease in employment was because of a fall in the number of part-time jobs, while the number of full-time jobs remains pretty steady.

The figures – particularly the continuing slow growth in average earnings – make it even less likely that interest rates will rise in the near future. But they are also likely to have political consequences. Chris Grayling, the employment minister, did a valiant tour of the TV and radio studios, announcing a new initiative to help the young into jobs. Labour will do its best to turn this into a narrative about a return to the uncaring 80s, when Conservatives were seriously weakened by appearing to shrug their shoulders at the human tragedy of lengthening dole queues. Unemployment became a dominant political issue, finally helping Tony Blair to sweep into power in 1997. To make sure that doesn’t happen again, the government must have a strong story to tell about what it is doing to help those that need help most. In particular, the Conservative part of the government can’t afford to subcontract concern about unemployment to the Liberal Democrats – Tories have to show they care too.

It is vital that the chancellor, in next month’s growth review, highlights policies targeted at helping the unemployed, and in particular the young unemployed. In London, in partnership with national government, we have been doing our bit to get companies to take on apprenticeships – 28,000 in just the last nine months – meaning that the number of apprenticeships is rising more rapidly in London than anywhere else in the UK. But the national government is able to target tax breaks and mould welfare reforms to ensure that more is done to create jobs, and help the jobless into them.

The government has already provided a national insurance holiday for start-up companies taking on employees, and the Federation of Small Businesses is urging the government to extend that national insurance holiday to all small companies when they take on new employees. Another proposal is to give national insurance holidays to companies that take on workers who are currently jobless and on benefits. If sufficiently well targeted, such measures shouldn’t cost the Treasury money, but actually save it money by reducing the benefits bill.

The most important thing is not to let bouts of short-term unemployment turn into entrenched long-term unemployment, which is far more difficult to tackle – and causes far more human misery. Only with imaginative and powerful policies, and a strong story to tell about helping the unemployed, can the government stop unemployment again dominating the political agenda.

Anthony Browne is the former director of the leading think tank Policy Exchange.