Why unemployment benefit is worth less than ever

The benefit has failed to keep pace with wages over the past 40 years.

In my column in this week's magazine, I look at how the value of unemployment benefit has fallen over the last 40 years. There wasn't space to include all of the data in the magazine, so I thought I'd share some more of it here.

As the table below shows, unemployment benefit rates (£5) represented 19.2 per cent of average weekly earnings (£26.10) in 1970. But the Tories chose to raise benefits in line solely with prices from 1980 onwards, with the result that the replacement rate (the percentage of an old wage that a new benefit replaces) fell to 16.6 per cent in 1985.

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First Major, and then Blair, stuck with the policy change and benefit rates fell to 13.8 per cent in 1995 and to 12.2 per cent in 2000. Today, Jobseeker's Allowance (currently £65.45 a week for a single person aged 25 or over) is worth just 10.9 per cent of average weekly earnings (£600.90). Had JSA risen in line with earnings, as the graph below shows, it would now be worth around £120.

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Ahead of the Budget on 23 March, I argue that the coalition should recognise that there is an economic as well as a moral case for raising benefits. Low earners spend a greater proportion of their disposable income than high earners and stimulate the economy as a result. Almost no one but the TUC has made this argument; it deserves a wider hearing. As unemployment continues to increase, pressure for a fair deal for the jobless will grow.

George Eaton is political editor of the New Statesman.

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Will Jeremy Corbyn stand down if Labour loses the general election?

Defeat at the polls might not be the end of Corbyn’s leadership.

The latest polls suggest that Labour is headed for heavy defeat in the June general election. Usually a general election loss would be the trigger for a leader to quit: Michael Foot, Gordon Brown and Ed Miliband all stood down after their first defeat, although Neil Kinnock saw out two losses before resigning in 1992.

It’s possible, if unlikely, that Corbyn could become prime minister. If that prospect doesn’t materialise, however, the question is: will Corbyn follow the majority of his predecessors and resign, or will he hang on in office?

Will Corbyn stand down? The rules

There is no formal process for the parliamentary Labour party to oust its leader, as it discovered in the 2016 leadership challenge. Even after a majority of his MPs had voted no confidence in him, Corbyn stayed on, ultimately winning his second leadership contest after it was decided that the current leader should be automatically included on the ballot.

This year’s conference will vote on to reform the leadership selection process that would make it easier for a left-wing candidate to get on the ballot (nicknamed the “McDonnell amendment” by centrists): Corbyn could be waiting for this motion to pass before he resigns.

Will Corbyn stand down? The membership

Corbyn’s support in the membership is still strong. Without an equally compelling candidate to put before the party, Corbyn’s opponents in the PLP are unlikely to initiate another leadership battle they’re likely to lose.

That said, a general election loss could change that. Polling from March suggests that half of Labour members wanted Corbyn to stand down either immediately or before the general election.

Will Corbyn stand down? The rumours

Sources close to Corbyn have said that he might not stand down, even if he leads Labour to a crushing defeat this June. They mention Kinnock’s survival after the 1987 general election as a precedent (although at the 1987 election, Labour did gain seats).

Will Corbyn stand down? The verdict

Given his struggles to manage his own MPs and the example of other leaders, it would be remarkable if Corbyn did not stand down should Labour lose the general election. However, staying on after a vote of no-confidence in 2016 was also remarkable, and the mooted changes to the leadership election process give him a reason to hold on until September in order to secure a left-wing succession.

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