Tweet
With the government blundering over soaring unemployment, the principle that everyone should be better off in work is at risk
It was a dramatic moment. A backbench Labour MP – by the name of Tony Blair – demanded an answer of the prime minister, Margaret Thatcher, on the question of full employment. In response, Thatcher pulled out from her handbag the 1944 white paper on full employment and started reading. Of course her government failed to act and unemployment soared.
At least she pretended she was trying. George Osborne can't even muster a pretence. Today's news has brought misery on the jobs front; the clearest and starkest evidence yet that the government's plan for growth is hurting not helping Britain.
Our unemployment is now climbing faster than the eurozone, Japan and America. We are now losing jobs almost three times faster than we are creating them. The rise in those without jobs is the highest for two years. The number of young people out of work has surged by 77,000 and it is women who are now being punished most. Women are now bearing the brunt of redundancies and women's unemployment is at its highest level for 23 years.
Now, more than ever the government needs to renew a commitment to full employment – as a new report from the IPPR spells out. Unless action is taken, it says, 100,000 people over 50 may never work again and will be forced to retire on lower pensions.
The government says it is trying. The first part of their "fightback" saw the Department for Work and Pensions take the strategic decision that youth unemployment was so serious that it would be better to spend more each year on phones and stamps than on a plan to get young people back to work. Bigger, and potentially more significant, was the Work Programme; "the biggest back-to-work" scheme in our country's history, boasted David Cameron.
Except it is not. As long-term unemployment has doubled over the last year, it has turned out that the Work Programme is not so big after all. Indeed, the independent House of Commons DWP select committee took a close look and concluded the Work Programme was actually a third smaller than the plans Labour had in place to get our country back to work. The Social Market Foundation discovered that 25% less is being spent per jobseeker than under Labour's flexible new deal – and that nearly three quarters of people will simply flow straight through the other side back on to the dole. It is less a welfare-to-work scheme than a revolving door – all programme, and little work.
This is now incredibly serious. Over a year and a half after the end of the recession, unemployment is soaring. The private sector is not recovering fast enough to absorb public-sector redundancies; the number of vacancies in our economy is down again, and the government is making it harder for families to go to work if they have children.
Cuts to childcare are forcing women to give up work because families can no longer afford to pay someone to look after the kids. Incredibly, 32,000 women have already given up work because of childcare "reforms" that mean that they're no longer better off in work anymore. Millions of Britain's parents feeling the squeeze desperately want to work – but can't afford to without help with childcare. House of Commons research commissioned by my team reveals that this has cost the exchequer nearly £50m in lost tax and national insurance, £50m that could have been used this year to run hundreds of Sure Start centres.
Worse, however, is to come. Childcare tax credits are about to be abolished and as the welfare reform bill enters the House of Lords, the government has still not said what will be put in their place. It's a leap in the dark for families up and down the country.
At risk is the basic principle that everyone should be better off in work. Once upon a time, Iain Duncan Smith told us that's what he believed in. But the principle has now been thrown out the window. The Resolution Foundation says that the government's funding of childcare under universal credit "could shatter its commitment to make work pay". They say parents face losing over 94p in the pound as they increase their working hours beyond 24 hours a week. If you are on the minimum wage, 24 hours a week earns you under £7,000 a year. The government's changes are trapping people on poverty pay.
Put all this together and you've a recipe for driving welfare waste through the roof. With fewer people paying tax it's harder to get the deficit down – and unemployment is helping push the benefits bill up by £12bn, that's £500 per household.
The tragedy is that there is another way. Radical welfare reform, say the IPPR, would mean a minimum-wage job to anyone who has been unemployed for more than a year, which must be taken or benefits docked. These are exactly the kinds of ideas the government should be exploring.
We must act now to make sure there are enough jobs to go round. We are fast slipping down the world league table of employment. Ed Balls and I have called for a tax on bankers' bonuses to fund youth jobs and boost industry. Sadly the government has a tin ear for any plans that will get our country working again. They must change course. The weight of evidence is piling up against them. They must act before they scar our country with the long-term effects of unemployment.
- Unemployment
- Unemployment and employment statistics
- Welfare
- Liberal-Conservative coalition
- Childcare
- Child benefit
- State benefits
Liam Byrne
guardian.co.uk © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds
More...
