Prescott steers clear of specifics on employment: Jobs shift designed to avoid conflict with Labour rival. Nicholas Timmins reports

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JOHN PRESCOTT yesterday rowed back from an absolute commitment that unemployment should be cut to 2.5 per cent, saying instead that the task of defining full employment should be given to a commission on the subject which he would establish on becoming party leader.

The task of the Commission on Full Employment, he said, would be 'to define full employment and achievable employment targets'. That would allow Labour to go into the next election with 'a hard-headed commitment to end mass employment'.

On announcing his candidacy last month for the two Labour leadership posts, Mr Prescott said he would campaign for policies to reduce unemployment to 2.5 per cent. Yesterday, however, while saying on BBC radio that 'I certainly want to see a reduction of unemployment in this country by 1 million', his election statement, Policies into Action, avoided such specifics. Keeping a commitment to full employment its centrepiece, it used the same definition as Tony Blair of seeking a 'high and stable' level of employment.

The labour market had changed so much since Beveridge's definition of 2.5 per cent jobless that 'we probably have to redefine what we mean by full employment,' Mr Prescott said. That would be one of the first tasks of the commission, which would also be charged with establishing the policies needed.

The move by Labour's employment spokesman, who appears convinced he stands an increasingly good chance of becoming deputy leader, reduces the risk of any serious rift during the remainder of the contest between him and Mr Blair on how full employment should be achieved. None the less Mr Prescott remained firm that 'Labour should set out targets for creating jobs and reducing unemployment at the time of the next general election.

Unemployment had put a 'crippling burden of more than pounds 30bn a year on British taxpayers'. That money could be invested in wealth- creating industry and public services so that Britain would be 'investing in success, not taxing for failure'.

Practical action to create jobs 'will assist Labour to release billions of the nation's resources that are currently being spent keeping people idle and destroying their potential. Just think what that money could be used for. Investing in health, caring services in the community, nursery education, higher educat ion, vocational education, and backing Britain's wealth- creating enterprises'. Putting full employment back at the top of the agenda had thrown the Tories into disarray, Mr Prescott said. After 15 years of mass unemployment, they too were talking of a return to full employment, although 'no one in Britain is fooled by this deathbed conversion. It is their jobs they are worrying about.'

Mr Prescott said he was particularly worried about those out of work for more than a year who should have some priority. 'They are being forced on to a welfare dependency and there's one million of them.'

Targets for creating jobs could be set, he said. President Bill Clinton had achieved within two years his target of creating 2 million, while the European Commission wanted to create 15 million, of which Britain's share would be about 1 million.

While arguing that there was 'no simple checklist of policies which will automatically create full employment', Policies into Action argues jobs can be created by changing Treasury rules to allow more joint public-private infrastructure projects.

Phased release of the pounds 5bn recipts from council house sales could create 200,000 building jobs among the 500,000 unemployed construction workers. That would build 120,000 homes while saving the Treasury almost pounds 2bn a year in benefit payments and lost taxes.

An energy conservation programme would allow low income families to spend less on fuel and more in the local economy. Restoring regulation of the bus industry would encourage investment in new buses, 'a sensible use of limited investment incentives' could also boost manufacturing. 'I believe we have a great deal to learn from the successful economies of Germany and Japan, where the public and private sectors work in co-operation and partnership.'

Mr Prescott, however, also called for the 'social productivity' of jobs to be taken into account as well as their economic productivity. 'It may appear efficient to increase class sizes in schools, or reduce the number of nursing staff in hospitals, but if that is at the expense of quality education or quality care, then it is neither cost-effective nor socially productive.' Provision of local services, 'should be judged against their social productivity as well as their economic productivity'.

In addition a 'fundamental debate' about the distribution of work, education and leisure was needed. 'There has been a tremendous growth in part-time work at one end of the spectrum and in over-work at the other,' and a 'fairer balance' had to be sought.

Mr Prescott's statement also seeks a more progressive tax system, now that the top 10 per cent of earners pay only one-third of their incomes in tax while the bottom 10 per cent pay nearly half. 'It is a scandal that the top 1 per cent have had pounds 9bn in tax cuts while the bottom half have had only pounds 4.8bn.'

The switch from full-time to more part-time working also meant that a declining number of full-timers were paying national insurance contributions.

Supporting a minimum wage, Mr Prescott also expressed alarm at the use of family credit to support 'poverty wages'. Employers were offering pounds 1.50 an hour and suggesting that family men contact the DSS to get family credit. As a result the bill was doubling every four years and had risen from pounds 400m to pounds 1.6bn. Once tax and national insurance losses were added that was a pounds 2bn subsidy 'to maintain poverty wages'.

(Photograph omitted)