by John Stephenson
Prior to 2010, Tory commentators often protested in harmony with tabloid headlines denouncing New Labour’s welfare policies as weak. In retrospect it is often acknowledged that the party’s work capability assessment was poorly designed and allowed people to take advantage of state hand-outs. Individuals in genuine need of incapacity benefits were often shunned on to job seekers allowance, leading to a toilsome cycle of temporary work while the support they needed was overlooked.
However, on the back of the coalition’s failures over unemployment and in the midst of pressure to reveal further policy proposals, Labour’s compulsory jobs guarantee offers a real alternative to the Tory-led government’s strategy to get people back to work.
Under the scheme, Labour would guarantee every adult who has been unemployed for a period of 24 months or more a work placement, with an aim to eventually reduce this time period over the long-run. Such an approach is regarded by many economists as being superior to a standard liberal economy, so long as political considerations – such as the wider ramifications for the disabled and the ratios between public and private sector employment – are carefully controlled.
While the policy would undoubtedly be costly – coming at a fee of around £1 billion for the taxpayer – there is plenty of room for manoeuvre within the current chancellor’s budget. For instance, the party are keen to stress that such funds could be acquired by reversing the coalition’s decision to stop tax relief on top earners’ pension contributions being limited to 20%, a move which is said would save the government around £2 billion.
Senior figures within Labour, such as Ed Balls and Liam Byrne appreciate that work should pay more than benefits as a matter of principal. However, the proposals indicate that benefits would be capped according to geographical location, taking into account the higher living costs associated with areas such as London and Manchester.
In doing this it could potentially prevent the sharp-rise in homelessness predicted by charities and academic bodies alike, as a result of government plans to increase rents and limit social housing tenancies. In a 2012 report produced by the charity Crisis, Heriot-Watt university and the university of York, evidence suggested that “almost all aspects of the coalition government’s welfare reforms are considered to be problematic with respect to their implications for homelessness”.
However, while the plans would step away from the coalition’s one-size-fits-all cap, this is not to say they would be soft. As part of a more hard-line approach from the Labour Party, Balls has called for tougher scrutiny of claimants so as to better assess their particular circumstances. What’s more, individuals turning down offers of employment would potentially be denied further hand-outs.
Not only would this aid people in getting back into a working routine, it would also put more money into the pockets of those facing economic adversity, meaning a likely stimulation of the economy and an eventual reduction in the social costs of unemployment.
Additionally, it would address some of the more delicate problems detailed in Iain Duncan-Smith’s own social justice strategy, such as his concern over the rise in mental illness within the UK. Research conducted by the British Psychological Society shows that individuals undergoing a lengthy spell of unemployment are likely to experience “higher mean levels of strain and negative feelings” in comparison to their employed counterparts.
Such findings are concerning, especially considering the number of adults over the age of 25 out of work for 24 months or more has increased by around 146% in the last 2 years. Likewise, our younger generations are at considerable risk. As recently as May 2013, the ONS released figures stating the number of unemployed 16-24 year olds was as high as 973,000; having increased by 15000 since the previous quarter.
Young people can find themselves in a catch-22 situation, looking for first-time work while employers demand relevant skills and an array of references. A jobs guarantee would provide such experience and give them the communication skills and know-how to strike up contacts and further opportunities.
In the meantime, employment remains around the 2.5 million mark under a government with a work programme that has failed to meet any of its initial targets and still only gets 13% of its participants into paid employment. This alongside a new-fangled “Youth Contract” which failed to assist even 5000 young men and women in finding a job in the last year. Terrible really, when you consider their target was 53,000.
John Stephenson is a politics student at Lancaster university
Tags: compulsory jobs guarantee, Ed Balls, John Stephenson, Liam Byrne, long term unemployment
Bearing in mind Labour has opposed every welfare reform and work programme and seen a doubling of the welfare budget under their leadership, what confidence do you think the public has in any proposal from Labour ?
They will make the right noises of course, but as your piece shows any charity or NGO will push for some kind of change to accomodate their self interest. This is one reason why definitions of “incapacity” for benefit purposes were stretched beyond credibility.
You also say that Labours ideas will cost money and trot out the standard ‘tax the high earners’ solution, this time via tax relief. About time you thought about dipping into different pockets don’t you think ?
How many times have we seen these new schemes, Labour or Conservative and none “NONE” of them work and every new one is presented as the best yet, yet they all fall by the wayside.
At best they camouflage the situation for political reasons, at worst they do absolutely nothing for the kids in our country.
Blair said Education, Education, Education he failed, yes I will agree he improved the infrastructure of our schools but not for preparing those kids for a life in the workplace, 2.5 million young people unemployed and yet companies would rather pay a pensioner than take on a young person, that is not because these companies wouldn’t want to employ the young, they have tried and been let down so often they no longer bother.
I left school when I was15, I wouldn’t dare be late, I wouldn’t dare answer back or refuse to do something I thought was beneath me, that is the norm for too many of our kids.
During the eighties I was involved in training the young, stay with me here, at that time private companies took over training and the whole thing fell apart, I taught engineering, specialising in welding, at that point we were giving a good standard of training, we were strict but very fair, then one day my manager came to me and said we will need to allocate less welding rods for each trainee, Ok, but you cannot teach anyone to weld without welding rods, training became paper based, then they decided they would have apprentices and we would ship them out to companies with little training, some were very successful but none had the training I had as an apprentice.
We need to go back to when we trained our kids for the workplace, we need to train them so we are not so reliant on workers from elsewhere, we need to make them employable, reliable
and a group employers want to employ. this will be attacked I know but those that do ask yourself why it isn’t working, ask yourself what will change, our kids who don’t work get older and become the adults that are long term unemployed, still without the work ethic, set even more in their ways, not understanding why they are still unemployable. don’t misunderstand me, it isn’t their fault it is the fault of the Politicians who will yet again give us another useless scheme that will cost billions covering cracks rather than doing something worthwhile, Spend the money wisely on proper schemes and please get the private sector out of it, they are ripping the government off, have done for years, we have created a system where many make a very good living from training and job creation sadly our kids aren’t included in that number. what the companies now do best is manipulate numbers and deliver nothing, create nothing and in the meantime our young unemployed numbers continue to grow.
“Compulsory jobs guarantee offers hope for the long term unemployed”
No it doesn’t, it just creates more stress on the government which needs to tax more creating a disincentive for entrepreneurs to start businesses.
WHEN WILL THE LEFTACCEPT THAT THE current welfare state is a career?
Creating conditions where people start businesses is the right policy.
“Hand-out” interesting term that, what do you mean by it?
It worries me when politicians start talking about making work compulsory. It is an idea based on a number of fundamental misconceptions both about the nature of the labour market, people, and economics.
Firstly, all those that do work do so not out of compulsion but out of choice. No-one has to work because the security of the welfare state (while it still exists) offers them all an alternative. Those that do work do so because working offers them a far better quality of life than not working. Most also work because they enjoy it – it is part of their social life.
In free-market economics people are only expected to work if the value of that work exceeds the utility of the leisure that it replaces. If you include welfare then the value of work exceeds both the sum total of the utility of leisure and the benefits received. Currently for every worker in this country that is the case. So why should the unemployed be treated differently?
This injustice is doubly so when you realize that the unemployment of the last 30 years is not an accident but the result of a deliberate policy by successive governments aimed at controlling inflation. In this battle the unemployed are the sacrificial lambs of the Phillips curve.
The history of economics from the times of Adam Smith and David Ricardo shows that the private sector rarely provides full employment. The labour market never clears. In large part this is down to excessive inequality. If the rich have more income than is needed to safisfy their wants then their consumption function decreases. So too does that of society as a whole. The result is a fall in aggregate demand and thus employment.
Keynes and Hyman Minsky recognized this. That is why Minsky advocated the government acting as employer of last resort, providing jobs for those that the free market rejects. The proviso was that all such employment should be voluntary and at the rate of the living wage (i.e. much higher than the benefits level). When Balls and Byrne start quoting Hyman Minsky then they will be worth listening to.
Cantab83
The Job Guarantee will be based on the Future Jobs Fund, and has little to do with Balls and Byrne, whom have added the unwanted compulsory aspect. I was involved in the creation of the FJF.
Here is an assessment by the civil servant who ran it.
http://www.cesi.org.uk/blog/2012/nov/future-jobs-fund-worked-we-shouldnt-bring-it-back-–-we-can-do-even-better
“only to say that the impacts described are huge by the standards of employment programmes.”
Good to see a post not on Syria and dealing with issues that really matter in the list of priorities ie jobs and homes and dissaffected youth and unemployed, and the unforseen collateral consequences of the Welfare State.
Having said that this scheme has just as much chance of turning a the damp squib as the Tory Scheme. The problem is to persuade SME employers that they have a responsibility to help provide job placements; we have to create these extra jobs, and the taxpayer has to subsidise employment and the unemployed until they get into steady work, whatever that is these days.
That is why Labour has to be a listening Party of ‘Business’ and get Business leaders on our side, and convince them that we are for ‘Business’ and not against them.
@Fred
“WHEN WILL THE LEFTACCEPT THAT THE current welfare state is a career?”
The Left should never accept overblown Rightwing fictions.
@Ex Labour
Welfare as % of GDP fell (as it usually does) under Labour. It always rises under Tory governments.
Labour had it own job creation last time it was in power the public sector was used by Blair and Brown to take the unemployed people, I was sent down to the NHS working for the min wage doing nothing all day, I have done some really miserable jobs in my life, but doing nothing all day knowing the job you do is meaningless was to me the same as picking up unemployment.
We need a labour government to put money into real jobs sadly all we get are these part time badly paid offers of long term death.
Nothing that is compulsory can possibly offer hope. Slavery is illegal.
The UN’s International Labour Organisation (ILO) defines Slavery as;
“work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily”.
So it seems Labour support Slavery, in which case I’ll be voting Green. Up yours Miliband you Class Traitor.