For a government that claims to believe in “workers not shirkers”, Britain’s Conservative-led Coalition is doing remarkably little to encourage the creation of new jobs.
Instead, the “Autumn Statement” delivered by Chancellor George Osborne in early December announced a grim four-to-five years of continuing austerity, particularly targeting those on benefits. Singled out for belt-tightening were those receiving “working age” benefits, ie the unemployed and those earning so little that they require additional state support. Both groups will see already inadequate state support become worth even less.
It may or may not be true (the number-crunching and arguments continue) that the government will recoup as much tax from richer citizens by removing some relief on pensions. But it is hard to see the Chancellor’s imposition of a small tax rearrangement on top earners’ pension investments as in any way equivalent to the steady erosion over several years of already inadequate breadline benefits.
At the same time, planned public sector cuts of around £10 billion will mean a worsening of public services and thousands more civil servants losing their jobs within the next four years. One certain result of this will be to make yet more families dependent on state support.
The 1 per cent a year limit on the increase in “working-age” benefits for the coming three years (rather than raising them in line with inflation) will make the lives of millions of households more miserable and more precarious, even in households where some work. Julia Unwin, chief executive of Joseph Rowntree Foundation, the leading anti-poverty research organisation, commented: “We are at risk of consigning the poorest to a decade of destitution.”
This is not just “more of the same” from the Coalition Government. Those on benefits are being demonised in increasingly condemnatory language. An exceptionally socially privileged and expensively educated group is publicly attacking Britain’s new poor as “shirkers” and of “living a life on benefits”. Working families “doing the right thing” are being crudely pitched against those out of work.
Don’t blame us, blame your neighbours the Chancellor appeared to be saying: "How can we justify the incomes of those out of work rising faster than the incomes of those in work? Where is the fairness, we ask, for the shift worker leaving home in the dark hours of early morning who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits?"
It would be easy to dismiss this as bad-mannered sneering by posh boys (and perhaps even politically inept). It is comically ignorant, too, since a shift worker would be well used to his or her neighbours living their lives to a different rhythm.
But there may be more to the sneering than that.
Kiran Stacey, Financial Times political correspondent, writing of the Autumn Statement, observes that Osborne’s 1 per cent cap on benefit increases did not arouse the outrage it once would have done among Labour MPs because it taps into a new anti-benefits mood in the British public. The Opposition is loath to be on the vote-losing side of that debate, Stacey suggests.
“The shift in public attitudes against benefits claimants is one of the most unexpected aspects of this recession,” he writes. “Whereas in previous downturns, people have become more sympathetic to those claiming state help, this time the reverse has happened…”
He notes that in the 1991 downturn, nearly 60 per cent of those polled by the British Social Attitudes Survey wanted to see more spending on welfare benefits but that that figure is now 30 per cent. A survey by YouGov, published in Prospect magazine in February this year, confirms this. It finds unease among affiliates of all political parties over the cost of benefits and a growing appetite for welfare reform. Such surveys could merely reflect (and reinforce) a press obsession with benefit fraud. But they also suggest a growing unease among the wider public at the failure of all parties to develop a job creation strategy for dealing with the growing welfare bill in a low-wage/no wage economy.
Today’s 18-24 year olds face difficulties and uncertainties that their parents would not have imagined. In 1981, unemployment hit 10 per cent and a British Reggae group, UB40 (named after the unemployment benefit form of the day) sang “I am the one in 10”, referring to the 10 per cent unemployment in Margaret Thatcher's Britain. That level of unemployment was considered shocking. Some feared it might spark a revolution. It didn’t and the cyclical recession was followed by an upturn (and a change of government and a new cycle). But last year, three years after the biggest financial crisis for decades, Britain’s one in ten became an unprecedented one in five among the 18-24 year old age group. Economists argued that the labour market had entered a new phase of structural unemployment in which former semi-skilled work might be lost forever. Creative thinking was required on where the new work would come from and how those without work should be provided for. This is not uncharted territory and various bodies have advised that more government attention on the things Britain does well such as design, music, computer games, film animation and graphics, small creative companies etc, rather than finance, retail and banking would produce speedier economic results. The Government, however, took a different tack.
The pensions secretary Maria Miller argued simply that there was no shortage of jobs. Ministers put their faith in the Work Programme, whose single strategy is to make the unemployed employable. The Prime Minister spoke of “hard-working families” paying for the benefits of others. Young people desperate for work were labeled lazy and work-shy and characterised as not trying sufficiently hard to make themselves attractive to employers. This has not been a culture conducive to creating life opportunities for the young creative people on whom the future of the economy depends. Instead, they have been diverted to shelf-stacking to “earn” their benefits when payment of the same benefit along with advice on how to freelance or set up a small car-cleaning or craft business might have achieved much more.
Of the various responses to the continuing economic crisis announced by Osborne (cuts, cuts and cuts) none has been geared to creating jobs. This is a government that simply does not believe in job creation even for tiny entrepreneurial interventions, even though it is the essence of free enterprise. It believes only in big contractors on payments by results schemes such as the Work Programme..
Chancellor Osborne’s Autumn Statement came hard on the heels of an official report on the desultory performance of this Programme, designed to get those on benefits back into work. Government ambitions for the programme were grandiose as is clear from the Department of Work and Pensions website:
“The Work Programme is the biggest, single, payment by results employment programme Great Britain has ever seen, providing personalised support to an expected 2.4 million claimants over the next seven years.”
The failures of the Programme and of some of the companies such as A4e who have had contracts for getting people back to work have been well documented. There have been scandals and sackings. Government points out that since payment is by results, the taxpayer will not lose out. But it has lost out in terms of progress towards a better employment climate.
Martin Bright is chief executive of a small charity, New Deal of the Mind, which aims to get young unemployed people into creative jobs and apprenticeships. He has been working within the confines of the Work Programme (and before that the Future Jobs Fund) since 2009.
“There are serious problems with the Work Programme which have been rigorously analysed by the Centre for Economic and Social Inclusion,” he said. “With a success rate of 3 per cent, people are right to ask whether this scheme is fit for purpose. If the government wants to show it means business it should remove failing contractors from the Work Programme right now.”
Bright, who is currently working on schemes with a major arts funder and with a local authority, argues that there now needs to be a radical overhaul of the Work Programme itself, of apprenticeships and of job-centres (“where welfare-to-work reform should have begun in the first place”).
He does not believe the options for getting young people into work need be determined by politics. “The government seems frightened of the idea of ‘job creation’ and sees it perhaps as Labour’s policy. But the best job creation programme in Britain was probably Margaret Thatcher’s Enterprise Allowance Scheme in the 1980s which diverted money directly to young people to get them starting something. A similar scheme could get some small businesses moving today.”
The alternative looks grim. The idea that the poor are to blame for their misfortunes is as old as history. The economic twist on that idea – that giving benefits to the poor saps them of the will to work (and thus does them a disservice) - was commonplace throughout the nineteenth and much of the twentieth century. A compassionate post-Second World War era laid such ideas temporarily to rest. Now, in the face of a severe and continuing recession, blaming the poor for their misfortune is back with a vengeance.