This is an AAA disaster created by George Osborne

The Chancellor's incompetence is clear from the employment figures. Despite all the Coalition's claims to the contrary, young people in particular are suffering needlessly

Share
Related Topics

In February 2010, just before the general election, the then shadow Chancellor, George Osborne, gave a speech promising to implement a new economic model that would bring Britain “a bright future”.

He set out benchmarks for economic policy, the first of which was maintaining Britain’s credit rating. He said: “In order to bring some accountability to economic policy, I have set out eight benchmarks for the next Parliament against which you will be able to judge whether a Conservative government is delivering on this new economic model. So we will maintain Britain’s AAA credit rating.”

I bet he wishes he could have those words back! I intend to keep him to his word because on Friday, for the first time in our history, Moody’s downgraded that cherished top credit rating. They couldn’t even wait to hear what was in next month’s Budget.

Blame game

Now is not the time to blame Labour or the weather or the Jubilee. This is a disaster created by George Osborne at No 11 Downing Street. The scary thing is that the Chancellor looks like a deer in the headlights and has no idea what to do. My suspicion is that there may well be a further UK credit downgrade later in the year if growth disappoints and we enter a triple dip.

Before the AAA loss, the Coalition had been making great play of the strong employment figures. But let’s look at the nitty gritty. Though the UK has had twice as large a drop in output as the US, the fall in total employment and in the employment rate in the UK has been much smaller. Nobody really understands why.

The performance of countries in terms of changes in the employment rate is reported in the table below for 15 countries ranked by the change in the rate since the start of the recession in 2008Q1 as well as from 2010Q2 when the Coalition was formed. Germany, Switzerland and Japan are the only countries that have seen increases since 2008. Portugal, Ireland, Spain and Greece have seen a collapse in employment rates that shows no sign of stopping. The UK is in the middle of the pack and has seen some rise under the Coalition.

Yet despite all the claims from the Coalition about the numbers of jobs created, the proportion of adults aged 16-64 that are employed is 1.5 percentage points below the level at the start of the recession in 2008 as well as in every month for the previous decade. In fact the number of employed in December was down 21,000 compared with November (29,777,000 and 29,756,000 respectively). Since the start of 2008 the size of the population age 16 and over is up 3.6 per cent.

There is a big difference in the numbers employed based on national origin; there has been an increase in employment of nearly 600,000 since the spring of 2008 of people born outside the UK. Of special note is an increase of 200,000 workers from A8 countries – the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia. Since 2005 the number of workers from these countries is up by around 600,000. They came to the UK because they could; they were not allowed to go to the other EU countries and couldn’t claim benefits and so they came to work.

The number of employed born in the UK is down by nearly 350,000 over the same time period. Note that the employment rate of people from the A8 is 79.4, compared to 72.5 for the UK-born.

Part of the discussion at the Institute for Labor conference in Bonn that I attended last week was where the Bulgarians and Romanians are likely to go once restrictions are lifted on where they can locate in April. The analysis suggests that they will go to places where the opportunities are the greatest, so expect them to go to Germany, Austria and the Netherlands; not the UK. We found little or no evidence in any country of welfare benefit shopping; the Eastern Europeans want work.

There was some worrying evidence on the young in the latest ONS labour market release. The number of young unemployed increased again, and of particular concern was that the number of unemployed aged 16-17 increased by 8,000. In addition there was an increase of 15,000 in the 18-24 age group who had been unemployed for at least a year.

Idiots in charge

These are precisely the people the Work Programme (WP) was supposed to help. It was introduced in June 2011 to help long-term unemployed people move off benefits and into sustained employment. Its cost is estimated at £3bn to £5bn over five years. For its first 14 months of operation (to July 2012) it fell well short of expectations.

The Public Accounts Committee last week reported that only 3.6 per cent of claimants on WP moved off benefit and into sustained employment, less than a third of the 11.9 per cent the Department expected, and well below the Department’s own estimate of what would have happened if there had been no WP running at all.

Individual WP providers’ performance in helping claimants into employment varies widely, but not one of the 18 providers has met their contractual targets. The MPs warned that, given the poor performance, there was a high risk that one or more providers would fail and go out of business or have their contracts cancelled. Of 9,500 people moved off disability benefits and on to the flagship WP, just 20 have found a job lasting more than three months.

Margaret Hodge, chairwoman of the Public Accounts Committee, argued that the performance of the WP “has been extremely poor … The programme is particularly failing young people and the hardest-to-help”. Unlike the previous government’s Future Jobs Fund and the Educational Maintenance Allowance, which did work, the WP is not. Indeed, the WP may actually harm people.

The employer didn’t know the job applicants were long-term unemployed until the DWP told them. With idiots like the Coalition in charge, it’s no wonder young people are still getting a raw deal.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Read Next
New SNP MP Mhairi Black distinguished herself in Westminster straight away when she made herself a chip butty in the canteen  

The SNP adventure arrives in Westminister - but how long before these new MPs go native?

Katy Guest
The Public Accounts Committee found widespread concern among civil servants that they would be victimised if they spoke out about wrongdoing  

Nikileaks explained: The sad thing about the Nicola Sturgeon saga is that it makes leaks less likely

Jane Merrick
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?