The mass unemployment Budget

The Guardian’s Treasury scoop demands a better response from the right.

Regular readers of the New Statesman will know that this magazine and its writers have long opposed the right's neo-Hooverite "austerity" measures and have worried about the prospect of a return to mass unemployment. In one of his first columns for the NS, back in September 2009, Professor David Blanchflower, a former member of the Bank of England's Monetary Policy Committee and one of this country's most respected labour-market economists, wrote:

If large numbers of public-sector workers, perhaps as many as a million, are made redundant and there are substantial cuts in public spending in 2010, as proposed by some in the Conservative Party, five million unemployed or more is not inconceivable.

As I've said before, I hope he's wrong. He hopes he's wrong. But this Conservative-led coalition seems intent on proving him right. Today's Guardian front-page scoop is based on leaked Treasury data obtained by the paper's economics editor, Larry Elliott, which suggests that George Osborne's austerity Budget will result in the loss of up to 1.3 million jobs across the economy over the next five years.

From the Guardian report:

Unpublished estimates of the impact of the biggest squeeze on public spending since the Second World War show that the government is expecting between 500,000 and 600,000 jobs to go in the public sector and between 600,000 and 700,000 to disappear in the private sector by 2015.

Commentators on the right, like Iain Martin and Iain Dale, have been quick to seize on the fact that, as the Guardian reports, "the Treasury is assuming that growth in the private sector will create 2.5 million jobs in the next five years to compensate for the spending squeeze". Says Dale:

Either you believe Treasury figures or you don't. If you believe the ones which say 1.3 million jobs will be lost, surely you then believe also the ones which say 2.5 million jobs will be created.

Not true, Iain! It is perfectly possible to accept that 25 per cent cuts in departmental spending across the board -- bar Health and International Development -- will inevitably lead to huge job losses (or else what do those cuts consist of? "Waste"??) without believing the speculative (and highly optimistic) figures for growth and future private-sector employment which accompany the announced cuts.

Here's how John Philpott, chief economist at the Chartered Institute of Personnel and Development -- and not a dyed-in-the-wool lefty, as far as I know! -- describes Osborne's employment forecast:

There is not a hope in hell's chance of this happening [the creation of 2.5 million new jobs]. There would have to be extraordinarily strong private-sector employment growth in a . . . much less conducive economic environment than it was during the boom.

Oh, and on a side note, don't forget that the Tories' immigration cap won't help spark a private-sector-led economic recovery, either, as business leaders, among others, have argued.

I think it is important for the left to recognise and shout about the private-sector angle to the looming crisis of unemployment. The Daily Mail and other organs of the right-wing echo chamber see all public-sector jobs as "non-jobs", as a drag on the economy, as an unwelcome consequence of the "bloated" New Labour state, and so have little interest in the fate of soon-to-be-redundant civil servants et al.

But I can assure you that they will be screaming from the rooftops if Osborne's masochistic cuts hit the private sector as hard as the public sector, as predicted by his own department. Losing up to 2,800 jobs a week from the private sector ain't going to be pretty, and right-wing voices that try to distract us with mere speculation about "future" growth need to understand this.

UPDATE: Anthony Painter has more on the delusions inside Osborne's Treasury regarding private-sector growth:

Let's take 1999-2007 -- pre-credit crunch/recession and boom time. In that time the UK private-sector economy only created 1,520,000 private-sector jobs. So what hope is there that it will create 2.5 million by 2015 in a period of slow growth, fiscal consolidation, potentially rising interest rates, and while the European economy is stagnant? Not very high would be my guess. This is a Budget that will not create jobs at the very best.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.