Speech on Jobs and Growth in Queen’s Speech debateHouse of CommonsMay 17th, 2012
CHECK AGAINST DELIVERY
Madame Deputy Speaker I want to make two points in this debate.
The first is about youth unemployment. I will present figures showing that the country is paying a rising price for the Government’s economic failure.
The second is that neglect over youth unemployment is matched by hubris over the Euro.
We don’t need to debate whether youth unemployment is a big problem. It’s a massive problem. The key figure is about long term unemployment. Today, over 260 000 young people have been unemployed for over a year, and a further 200 000 for over 6 months.
And the problem is getting worse and more expensive.
As recently as 2008 there were 6000 18-24 year olds claiming JSA for over a year. Now it is 55 000. It has tripled in the last year. In South Shields it has gone from 15 people in April 2011 to 250 a year later. A 1500 per cent increase.
As for cost, in February the Acevo Commission on Youth Unemployment which I chaired calculated on the basis of figures from the first quarter of 2011 the ten year cost of youth unemployment – from higher benefits, lost taxes, lost economic activity – to be £28 billion.
The University of Bristol have re-run the figures using the last quarter of 2011. The calculation now stands at £30 billion [figures can be found here: http://davidmiliband.net/2012/05/youth-unemployment-figures/ ]. £2bn of reasons to inject urgency and effectiveness into Government policy.
It is no good the Employment Minister trumpeting stability. Stability in this case means the problem is festering and getting worse.
How dare the Deputy Leader of the Lib Dems celebrate last Wednesday the “huge success” of government policy.
- The new wage subsidy is at best unproven at the proposed level. My PQ from last week has not been answered in time for this debate.
- The apprenticeship drive is rebadging more jobs for over 25s than creating new jobs for under 25s.
- The expertise of voluntary sector providers is being squeezed out by the contracting process. The Single Homeless Project, the London Voluntary Service Council, St Mungo’s, have all pulled out.
- There is a gaping hole in government policy around transport costs
I make no apology for repeating a basic fact to Ministers. The Work Programme helps only one in ten of the young unemployed. And the sharp rise in long term unemployment has coincided exactly with the introduction of the Work Programme in June 2011. It’s success rate is 20 per cent. So only one in fifty of the young unemployed are getting a job thanks to the programme.
The Chancellor’s bet that cutting public spending would of itself spur private sector growth has hit the buffers. So here are three steps that the government could take:
- Require all public contracts over £1 million to offer apprenticeships to young people.
- Bring forward spending from 2014 to raise either the size of the wage subsidy or the number of young people helped.
- Bite the bullet and recognise that only a part time job guarantee can offer hope for those unemployed for over a year.
One in thirty people in work lost their jobs in the first quarter of this year. No wonder there is a crisis of confidence.
Government Ministers blame Europe for the collapse at home.
But on key measures we are actually doing worse than the big countries in Europe. Worse than Germany – maybe people expect that. But worse than France too. We are actually on a par for performance with Italy. And with a 20 per cent rise in the value of the pound in the last 4 years the Chancellor’s claim that he would rotate the economy from domestic to external demand looks like a pipedream.
The lesson is not to stay the course; it is to change course.
All the OBR charts and predictions are based on a model that presumes all economies trend back to 2% growth. But we are in a balance sheet recession, and no model predicted that.
The troubles in Europe are not a reason for us to stick to Plan A; they are the reason to shift to Plan B.
Debts are rising in Spain, Portugal, Italy and Ireland because fiscal policy is exacerbating the economic cycle.
So our absolute requirement is to pitch all our policy – fiscal policy, monetary policy, industrial policy, banking policy - against the cycle in the light of the risks we face.
And we need to argue for that abroad as well as at home. We should be embracing President Hollande not snubbing him.
There are no islands in the modern economy.
It is not ideology. It is maths. And judging by the Gracious Address, it is time for the government to go back to the classroom.