Why I don’t want to become part of the lost generation

Youth unemployment is scarring a whole cohort of young people.

My name is Ava Patel, I’m 23 and I have a degree in Journalism from Nottingham Trent University. After I graduated I spent over a year looking for jobs and I finally got one manning the phones in a call centre. I’ve not just been rejected for journalism jobs but for manual work too, including shelf-stacking at a well-known supermarket, despite being qualified and making all the effort to get the job. The most common reply I’d get to an email or an application form I’d spent about 45 minutes completing was “Due to the high number of applications your application has not been successful on this occasion. We cannot provide any feedback.” I read the same message so many times that when I finally got the call centre job, I was over the moon. I’d often get advisors at the Job Centre whilst I was claiming Job Seekers Allowance asking me why I was even there, to which I’d simply reply, “can’t get a job.”

Countless rejections without feedback started to chip away at my confidence but when I found out other graduates were struggling to find employment too, I realised it was less to do with me and more to do with the fact that there simply aren’t enough jobs for young people. We are becoming the lost generation, there are over a million of us searching for work. We do have qualifications, work experience and drive, but we do not have the jobs to apply them to.

I finally got a position to work to raise awareness of youth unemployment as part of this year’s Channel 4’s Battlefront Campaign to tackle youth unemployment. I’ve had the opportunity to attend the Lib Dem Conference and the recent Channel 4 News Class of 2012 event hosted by Jon Snow, with contributions across the political spectrum, from MPs Damian Collins, Stella Creasy, David Milliband and Sainsbury’s CEO Justin King. While the debate was heated and passionate, not enough solutions were put forward. The Youth Contract only goes so far and all the goodwill behind work experience, training and apprenticeships schemes does not lead to job creation. We can have all the work experience in the world, but it won’t help us if there isn’t a paid, full time job at the end of it. We as young people need long term job creation, not more initiatives that provide short term solutions.

When I got the job to be a Battlefront campaigner it felt like my hard work and persistence had paid off. It almost felt surreal to think someone out there wanted to employ me, wanted to see all I had to offer. Part of Channel 4’s education output, this year Battlefront is focussing on the single most important issue facing young people today – the fact that over one million 18- to 24-year-olds in the UK today, according to the Office of National Statistics, are without a job. Youth unemployment is no longer a problem, but a disaster. And this is exactly what I said in the interview process. Along with three other campaigners we’re raising awareness of the issue on camera and online and my aim is to get young peoples’ voices heard. For too long employers and politicians have been calling young people job shy and lazy but for the vast majority of us this simply isn’t true. My ultimate aim is to speak to politicians about how they can provide solutions to make the labour market more accessible to young people. The current government’s answers to youth unemployment via the Work Programme and Youth Contract do not guarantee jobs and do not offer a sustainable long term solution. We lose £5bn per year in taxes and the economy loses £10bn per year in economic output because young people aren’t working [pdf], a crisis our country cannot afford, especially in the current economic climate.

In the past year alone youth unemployment has risen by 41 per cent (pdf) and it rose again this month. Young people like me, my friends and other Battlefront campaigners are suffering scarring effects of long-term unemployment and planning ahead for a life where we will never earn as much as previous generations. It’s no longer enough to give token gestures as we slowly lose our self-esteem, that’s not the tag line we want for the class of 2012.

Ava Patel is a Channel 4 Battlefront campaigner

A woman walks past a jobs board in Liverpool. Photograph: Getty Images
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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.