Letter: Labour's proposals to create more jobs

Sir: Your leading article and economic commentary on Labour's new proposals to tackle unemployment (20 January) discuss at length the problems of a windfall tax on the utilities. The commentary even claims that in no circumstances whatsoever - irrespective of the use to which the revenue is to be put - should a retrospective tax be considered. Yet this surely misses the key point about these proposals.

Unemployment, as you recognise, should be at the top of the economic policy agenda at the moment. Yet the most that we hear from government are leaked reports of heated cabinet debates on what degree of 'Workfare' to introduce, a policy that is hardly likely to bring unemployment down in a hurry, whatever one thinks of its intrinsic merits.

Bolder ideas for bringing down unemployment are so often knocked down by economic 'experts' because the expenditure they imply either adds to the PSBR or requires higher taxes, neither of which is deemed appropriate, given the fragility of the recovery and public finances. We are thus talked into a situation of feeling helpless before the upward march of unemployment.

What Gordon Brown's proposals illustrate is that even for those accepting the straitjacket of not increasing borrowing to get the economy out of recession, there are things that can be done to release resources to tackle unemployment. People may disagree over the precise mechanisms suggested, but surely not with the basic proposition - and not with Mr Brown's ideas for raising revenue by retaining stamp duty on shares and closing tax loopholes.

The reason for the failure of government to act on unemployment is thus brought more sharply into focus as concerning a lack of will rather than a lack of options.

Yours faithfully,

DAN CORRY

Senior Economist

Institute for Public

Policy Research

London, WC2

21 January