Thursday, 7 February 2013

The Tory long-term unemployment catastrophe

At first glance, the official unemployment figures released by the Office for National Statistics (ONS) in January 2013 make comforting reading to Tory sympathisers. If one just focuses on the headline figure of 7.7% unemployment and an economic inactivity rate of just over 9 million people, you could imagine that although the rates are barely moving downwards, things are not getting any worse.

However if one digs a little deeper into the long -term unemployment and youth unemployment figures we find some truly shocking statistics. I've used the last batch of ONS employment statistics released under the Labour government for comparison, published in April 2010.

What we have to bear in mind is that this last batch of economic figures released under the Labour administration were terrible. The Conservatives and the Liberal Democrats used the skyrocketing rates of unemployment in the wake of the global financial sector crisis of 2007-08 as a pre-election club to bludgeon Labour with. The fact that the global financial crisis had resulted in labour market chaos and the very worst unemployment figures since the early days of the Labour administration, just before a General Election was a disaster for the party. Any opposition with the slightest air of competence about them should have romped to a landslide victory on the back of dismal labour market figures like this.

As we know the Tories didn't romp to victory, they crawled into power with the backing of the Liberal Democrats. In the early days of the Tory led administration they were bullish; George Osborne set about inflicting his "cut now, think later" ideological austerity experiment with the zeal of a man on an ideological crusade, His wonks at brainchild taxpayer funded right-wing economic think tank, the OBR, predicted 2.6% growth for the UK economy by 2012 and the welfare minister Iain Duncan Smith talked optimistically about "getting Britain working" as he set about extending private sector outsourcing contracts at the DWP left over by Labour and bringing in his own flagship outsourcing project known as the Work Programme.

As we know how it turned out, Osborne's ideological austerity experiment drove the UK into a double-dip recession, economic growth in 2012 was a shocking minus  0.1%, in the year that the UK hosted the most prestigious sporting event on the planet. The private sector outsourcing projects at the DWP turned out catastrophically with the Atos WCA assessments picking up the moniker "the disability denial factory", the Workfare scheme provoking widespread protests and comparisons with slavery and Iain's flagship Work Programme costing an estimated £450 million in it's first year, just to place 31,240 clients out of 877,880 into work, a success rate of just 3.5%, with not a single one of the 18 Work Programme contractors meeting the minimum target of getting just 5.5% of clients into work.

Throughout this debacle one thing remained a mystery, the overall rate of unemployment remained more or less static, despite George Osborne's austerity experiment causing economic stagnation (a fact admitted by his brainchild think tank's own research) and Iain Duncan Smith's hopeless tenure as Employment minister.

Comparing the January 2013 employment data with the April 2010 report we find a number of startling things, the number of people unemployed and claiming benefits for over one year has risen by 168,000 to 894,000, a rise of 23.1%. Youth unemployment has risen by 36.2% to 963,000 and worst of all, the number of people out of work and claiming benefits for more than two years has risen from 268,000 (a post economic crisis all time high under the 1997-2010 Labour administration) to 443,000, a rise of 65.3%.

Despite all of the Tory rhetoric about tackling long-term unemployment, the facts speak for themselves: The Conservatives have overseen a massive rise in long-term unemployment. What is worse, is that this massive increase has come on top of the worst figures the Labour administration ever produced. Labour had the excuse that the global economic crisis had caused havoc in the Labour market. What is the Tory excuse? Their rhetoric in 2010 was that they were going to bring long term unemployment down, instead it has skyrocketed.

One is left with the distinct impression that Iain Duncan Smith and the Tories never had any real plan to deal with the unemployment situation, no cross-governmental strategy to support British businesses with innovative new ideas, no attempts to improve co-operation between the DWP and the education sector, no plans at all really. All they could come up with was the ever-predictable Tory strategy of "lets abnegate our own responsibilities, get the private sector in on some lucrative taxpayer funded contracts and watch as our privatisation experiment goes wonderfully". It seems that Iain Duncan Smith has spent far more time pushing the DWP to draw up desperately one sided contracts with the private sector (where the private sector take enormous profits,with the taxpayer left to carry all of the risk and all of the unforeseen financial costs too).

We can only imagine how much better the situation would have been had Iain Duncan Smith not spent his energies pushing through one bonkers, taxpayer funded private sector outsourcing scheme after another, and instead focused his energies on devising some real practical initiatives to tackle unemployment. The numerous failures of these private sector outsourcing schemes (The Atos WCA scheme, Workfare and the Work Programme) illustrate one thing very clearly indeed. The private sector is not well suited to the successful implementation of social reform. When it comes to the crunch, the private sector has a shareholder obligation to ensure a profit whatever the circumstances. If it is a choice between turning a profit and the success of the social reform, there is only one possible outcome. Profit comes first and concern for the actual well being of the unemployed comes as a very low priority consideration.

One thing is for sure though, despite this desperate worsening of the long-term unemployment situation, there will be no change of policy from Iain Duncan Smith now. The private sector contracts are all drawn up now, to walk away from these catastrophic schemes would cost hundreds of £millions in compensation payouts. And anyhow, with Tory popularity slumping lower and lower, they are going to need all the scapegoats they can get in the run-up to the next election. They won't care one jot that they made the long-term unemployment situation so much worse, as long as they turn the "scrounger narratives" up to full volume, they'll be hopeful that there are sufficient ignorant reactionaries to be won over with a good old fashioned display of Tory hate.




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