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Unpublished estimates of the impact of the biggest squeeze on public spending since the Second World War show that the government is expecting between 500,000 and 600,000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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Theresa May knows she's talking nonsense - here's why she's doing it

The Prime Minister's argument increases the sense that this is a time to "lend" - in her words - the Tories your vote.

Good morning.  Angela Merkel and Theresa May are more similar politicians than people think, and that holds true for Brexit too. The German Chancellor gave a speech yesterday, and the message: Brexit means Brexit.

Of course, the emphasis is slightly different. When May says it, it's about reassuring the Brexit elite in SW1 that she isn't going to backslide, and anxious Remainers and soft Brexiteers in the country that it will work out okay in the end.

When Merkel says it, she's setting out what the EU wants and the reality of third country status outside the European Union.  She's also, as with May, tilting to her own party and public opinion in Germany, which thinks that the UK was an awkward partner in the EU and is being even more awkward in the manner of its leaving.

It's a measure of how poor the debate both during the referendum and its aftermath is that Merkel's bland statement of reality - "A third-party state - and that's what Britain will be - can't and won't be able to have the same rights, let alone a better position than a member of the European Union" - feels newsworthy.

In the short term, all this helps Theresa May. Her response - delivered to a carefully-selected audience of Leeds factory workers, the better to avoid awkward questions - that the EU is "ganging up" on Britain is ludicrous if you think about it. A bloc of nations acting in their own interest against their smaller partners - colour me surprised!

But in terms of what May wants out of this election - a massive majority that gives her carte blanche to implement her agenda and puts Labour out of contention for at least a decade - it's a great message. It increases the sense that this is a time to "lend" - in May's words - the Tories your vote. You may be unhappy about the referendum result, you may usually vote Labour - but on this occasion, what's needed is a one-off Tory vote to make Brexit a success.

May's message is silly if you pay any attention to how the EU works or indeed to the internal politics of the EU27. That doesn't mean it won't be effective.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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