Article for the Huffington Post, published on 15 September 2011 (http://www.huffingtonpost.com/stephen-timms)

The new unemployment figures are grim. Long term unemployment has doubled over the past year. The biggest rise in unemployment for two years - since before the end of the recession. A very worrying surge in youth unemployment, by 78,000. And the largest number of women out of work for 23 years.

The real problem is the absence of growth in the economy. The economy has virtually flat-lined and private sector confidence is poor. The Government told us that its reductions in public sector employment would enable it to cut the deficit, and that private sector firms would step forward to create new jobs to make up the loss. It simply isn't happening.

Almost three times as many jobs are being lost as being created. President Obama announced last week a plan for jobs. Our Government needs to recognise the seriousness of what is happening in Britain too.

We have suggested that Alistair Darling's successful tax on bankers' bonuses should be repeated for a second year, and that the proceeds should be applied to creating new jobs for young people.

Long term youth unemployment creates heavy long term costs for the economy, and can seriously constrain the potential of the young people who endure it. The Government mustn't let the problems carry on escalating as they are doing. One idea I want to look at is whether it would be feasible to introduce a job guarantee for jobseekers. That approach was very effective in limiting the rise in youth unemployment before the election, but the current Government scrapped it.

The Government's Work Programme was launched in June. It's taking time to get going. This seems to be one of the current problems - the predecessor programmes were all scrapped earlier this year.

Thousands who would have been helped by them may well have lost out on the chance of work as a result. The Social Market Foundation published an analysis last month which concluded that the Government's numbers for the Work Programme don't add up. If they are right, the Programme will need to be bailed out with additional funding - which some providers have maintained all along would be necessary.

The cost of childcare is a growing problem. It was highlighted in a presentation yesterday in the House of Commons by the Daycare Trust and Save the Children, entitled "Making Work Pay - the childcare trap". Government has reduced the level of support available, but - as unemployment among women rises sharply - it may well be a false economy.

The current system of childcare tax credits is being abolished by the Government, in the Welfare Reform Bill which has been through the House of Commons and received its second reading in the House of Lords yesterday. But the Government still hasn't decided what the replacement for childcare tax credits will be.

The purpose of the Welfare Reform Bill is supposed to be to ensure that people will always be better off in work than out of work.

However, given what we know already of the Government's thinking, it looks as if many needing childcare support in order to work may well find themselves worse off in work, once the costs of childcare are taken into account.

The case for a change of course in Government economic policy gets stronger by the week.

Posted
AuthorStephen Timms