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How safe is your job?

This has been a year of financial panic, but 2009 will be dominated by unemployment. In a flexible l

The poster that won the 1979 general election was a fake. The "Labour isn't working" dole queue was ac tually composed of 20 fully employed Hendon Conservatives, photo graphed by Saatchi & Saatchi. But there was nothing synthetic about the impact that the poster had on the Labour government of James Callaghan. Never again, Labour resolved, could the party afford to go to the country when the country was out of work. Yet that is what Gordon Brown risks doing, if you believe the spin about him delaying the next general election until 2010.

This was a year of financial panic as oil prices spiked, banks collapsed and stock markets tumbled. But it is likely that 2009 will be the year of the dole. Unemployment, already higher than at any time since Labour came to office in 1997, is expected to climb to almost three million by 2010, according to the Confederation of British Industry. The turnaround in the UK employment market has been astonishing. The pace of job losses, led by the shake-out in the banking sector, has astounded analysts: the Centre for Economic and Business Research (CEBR) has forecast that 300,000 private-sector jobs will have been lost in the six months to the end of this year alone. The CBI's forecast, made only a few days ago, is almost certainly an underestimate, because it is based on Britain's GDP declining by 1.7 per cent in 2009. The Bank of England is now talking about the economy shrinking by 2 per cent next year, as Britain enters the worst recession since the 1980s. Capital Economics has forecast that unemployment will peak at 3.3 million in 2010.

The situation is already worse than the formal statistics suggest. Stephen King, of HSBC, argues that the official International Labour Organisation unemployment figures exclude two million people who are economically inactive but would like a job.

What is undeniable is that British firms are taking advantage of the "flexible" labour market to fire first and think later. Unusually, the region hardest hit is likely to be the one most able to cope: the south-east. The London area alone could lose 650,000 jobs, according to the Local Government Association. This is one of the wealthiest areas on the planet thanks to the financial services sector based in the City. Redundant middle-class professionals might find life a little different on £60-a-week Jobseeker's Allowance, but most can probably look after themselves. The people who will have their lives destroyed first are the legion of temporary and casual workers, many of whom do not figure in the unemployment statistics because of their age or country of origin.

Many of the new redundancies are unavoidable, but there are signs, too, that some firms are reducing their workforce as a message to shareholders, hoping to bolster their equity prices. When BT announced 10,000 redundancies on 13 November it made no attempt to play down the human cost and, according to some analysts, even exaggerated the job losses for effect.

After three decades of losing industries, the UK desperately needs to protect the skills it has left, not allow them to dissipate in the lengthening dole queues

Firms such as Virgin Media, Rolls-Royce, Yell, Wolseley and Citigroup have all announced thousand-plus job cuts in the past few weeks alone. The flexible labour market, inspired by the Tories and realised by new Labour, has allowed contraction to be a first, rather than a last, resort. It is the quickest way for a management in trouble to show that it is doing something.

The problem is that these job losses, rather like the banks' refusal to lend to small business, are enormously destructive to the broader economy. After nearly three decades of losing productive in dustries, the UK desperately needs to protect those skills it has, not allow them to dissipate in the dole queues. But with trade unions weak, employment law liberal and the government compliant, firms are being allowed to throw out the seedcorn of the future.

Only the state would be able to counter the effects of this attrition. In the pre-Budget report, the Chancellor's measures on benefits, pensions and VAT were intended to boost pre-Christmas demand in the high streets. However, the government is severely limited in its ability directly to fill the jobs gap. Yes, the public sector is still hiring, and will have put on 50,000 jobs in the six months to the end of the year, according to the CEBR. But, with public borrowing likely to reach at least £118bn next year, there will have to be a retrenchment in the labour-intensive public sector to get the public finances into some kind of order in the medium term. Make no mistake - the price of this year's fiscal stimulus is likely to be public-sector job losses, even with the Chancellor's heroic, and unrealistic, assumptions about an economic recovery in 2010.

In this instance, the weakness of the pound is unlikely to boost employment in export industries. This is a global recession, perhaps a global depression, and Britain cannot rely on international markets to replace lost domestic demand. There is also likely to be a wave of protectionism, starting in the US, as countries seek to save their own core industries with state subsidies and other anti-competitive tools. The world market may be a tougher place in which to sell in future. Anyway, Britain has lost most of its manufacturing base - down to 14 per cent of GDP.

In recent years, most of our "exports" have been in financial services - "invisibles", the demand for which will be slight for the duration of the credit crunch.

We can be thankful at least that the right man is in the White House at the right time. Alistair Darling has moved some way towards matching Barack Obama’s plan to create 2.5 million jobs over the next two years through public work projects and alternative energy investment. Yet this will not happen quickly and will do little to alter job losses already in train. And, in America, which is 12 to 18 months further advanced into the recession than Britain, life is already desperate for people on the margin.

The US department of agriculture reported on 17 November that the number of children who went hungry in 2007 - the first year of the credit crunch - jumped by 50 per cent to almost 700,000. It said that, overall, 12.2 per cent of Americans, 36.2 million people, "do not have the money or assistance to get enough food to maintain active, healthy lives". It could happen here.

At the very least Britain faces a return to a period of sustained joblessness, and to the destructive psychology that accompanied it. There will be dole queues, of course, but the social composition of the new jobless - led by financial services, property, retail - will be very different from what we saw in the early 1980s. As a recent report from the Chartered Institute of Personnel and Development argued, those at most risk in the coming "redundancy torrent" will be managers, professionals and skilled non-manual workers.

Tens of thousands of jobs are about to eva porate from British banks. Multiply that by all the professional jobs which depended on those middle-class incomes, such as estate agents and lawyers. Certainly, the first to be hit will be those at the bottom. But they are likely to be joined by large numbers of articulate, middle-class individuals shaken out of the financial, media and peripheral service occupations - from aroma therapy to management consultancy - which have grown up during the long boom.

Middle-class workers are not ready for this and it will be a shock to their self-confidence and self-esteem – a social and cultural transformation that could have profound political implications.

In the 1980s, the middle classes were still relatively secure in their career structures in management and the professions. They had homes, occupational pensions, clear employment paths. Certainly, they were a world away from the trade unionists fighting for their jobs in the old industrial heartlands of Britain. Margaret Thatcher relied on the middle classes to support her war on the militants with their braziers - and to blame them for the recession of the 1980s. The braziers are gone and the industrial working class has largely been dismantled. So, too, have the secure middle-class career structures.

Those who will suffer are the children of the baby boomers, who graduate with high debts and higher expectations

In the 1980s, professional and other white- collar jobs were, by and large, jobs for life, with annual pay increments, annual promotion, pension rights and a predictable future. Not any longer. The modern media, for example, are a shifting sea of freelance and contract workers for subcontractors to the large institutions. Even at the BBC, where I started out, there may be a crust of well-paid performers and anonymous executives who earn more than the Prime Minister, but below that is a huge army of irregulars, often on low salaries, coming in and out of the corporation's revolving doors. The commercial sector has been relying on large numbers of underpaid or unpaid "interns" desperate for work. This is the flexible labour market at its most pernicious. Such practices are widespread throughout the British economy.

Deregulation and leveraged buyouts by private equity over the past two decades have left many firms with flattened management structures, often relying on outside consultants to get them through busy periods. Occupational pensions have become a rarity. Promotion has become intensely meritocratic. Companies increasingly "offshore" white-collar functions to countries such as India, where an educated middle class is willing to work for much lower wages. Most of the job losses at BT are among self-employed contract workers in the UK; the firm has not cut any of the jobs it has outsourced to India.

The group hit hardest is the under-35s, sons and daughters of the postwar baby boomers, who have emerged from university with high debts and even higher expectations. These are the young people who have little experience of recession and none of mass unemployment. Neither have many of their parents, who lived through the 1970s and 1980s largely untouched by unemployment or debt. If there is to be a political response to the new depression, it is likely to emerge from this group of déclassé graduates, many of whom face a future without the security they have been brought up to expect. They will not be able to afford houses or establish careers. Indeed, the under-35s have so much personal debt that their net wealth is actually negative. Three-quarters of the under-35s are in the red, according to the Skipton Building Society, owing more than £9,000 on average. They will look to the state for security, but the state will not be able to deliver.

This time there is no trade union menace to blame for economic distress

A Ministry of Defence think tank has made a remarkable forecast about political militancy. The Development, Concepts and Doctrine Centre published a report in April 2007 in which it speculated that in coming years “the world’s middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest”. “The middle classes could become a revolutionary class taking the role envisaged for the proletariat by Marx . . . the growing gap between themselves and a small number of highly visible super-rich might fuel disillusion,” the report said.

The idea of a revolution sweeping suburbia is faintly risible, though it was a subject of a recent J G Ballard novel, Kingdom Come. But the MoD may have grasped an important truth about the nature of politics in the new global economy. It is beginning to erode class differentiation and has left many middle-income earners exposed to the kind of insecurities that formerly afflicted only lower-class workers. Clearly, the economic circumstances of management consultants cannot be compared directly with those of retail workers. But when they lose their jobs, they face very similar challenges: mortgage and credit-card debt, catastrophic loss of earnings and the need for retraining.

Part of the difficulty experienced by the Conservative leader, David Cameron, in developing a coherent political response to Gordon Brown's neo-Keynesianism, is that the party of capital has lost its "class enemy": the industrial working class. There is no trade union menace to blame for economic distress and the Conservatives have had to fall back on "fiscal conservatism" - or reduced public spending. This is simply not a priority for an electorate that is looking to the state to protect it from the predations of the market. Equally, new Labour under Brown has been forced almost against its will to become more critical of the plutocracy running the banks, to accept nationalisation and greatly increased government spending. Brown's government has even had to abandon one of the founding principles of new Labour by proposing higher taxes on the rich.

The Conservatives, who have not entirely lost their Thatcherite reflexes, are looking to the middle classes to react against the new profligacy - but they will find it difficult to do so. As un employment mounts among the middle classes, especially among the under-35s, there is going to be a much stronger demand for policies which promote jobs and growth even at the cost of public borrowing. The Tories cannot afford to be on the wrong side in this battle.

As Martin Hutchinson, author of Great Conservatives, has expressed it: "A world in which few if any have security in their livelihood is not conservative, it is anarchist. It is also deeply repugnant to the average voter."

If Labour isn't working, neither are the Conservatives.

This article first appeared in the 01 December 2008 issue of the New Statesman, How safe is your job?

Picture: MILES COLE
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Ruth Davidson: “Brexit could deliver a hit we can’t recover from”

The Scottish Tory leader has revitalised the party north of the border. Is she now destined to occupy the hottest seat of all?

Ruth Davidson has had a good summer. At the age of 38, she has finally bought her first house. It’s a two-bedroom mid-terrace in an Edinburgh suburb that she will share with her Irish fiancée, Jen, and their cocker spaniel, a failed gun dog called Wilson (“It’s just as well he’s handsome because, by God, he’s stupid,” she tells me). The hyperactive leader of the Scottish Conservatives is eager to put down roots. “I’ve always moved for work,” she says. “I worked out that since I left home to go to uni at 17, I’d had more than 20 flats. This is the first time I’ve had a home. It’s nice.”

On 29 August, her opposite number in the Labour Party, the well-liked Kezia Dugdale, resigned. Her replacement is likely to drag the Scottish party in a more Corbynite direction on issues such as nationalisation, taxation and public spending. This will put pressure on the SNP – now the party of choice for many disaffected Labour lefties – to do the same. That would leave space in the centre ground that Davidson’s Tories will be more than happy to fill.

“If I’m perfectly honest, I am by nature a centrist,” she says. “I’m fairly hard-core on some justice and fiscal policies. I’m a proper Tory there. But in terms of social policy and things like that, I’m absolutely a centrist. But it’s because I think it’s right. It brings people with you and, if you’re looking towards [forming a] government in a way that as a party in Scotland, five to ten years ago, we could never have conceived, it’s about bringing people with you and making the arguments for being bold and radical.”

This sounds familiar. Is the great young hope of British Conservatism a much more youthful, female version of Tony Blair? That won’t go down well in the Shires or the leader columns of the Daily Mail. “No! I didn’t go to Fettes, I don’t own… rental properties around the world, I don’t holiday with pop stars, so I don’t consider myself to be a Tory Tony Blair. There’s some things I think he did very well. I think in terms of foreign policy, his idea of humanitarian interventionism that he used in Sierra Leone and in Kosovo was bang on. It was the right thing to do and it saved lives. However, I’m probably the only Tory leader who has been on one protest march in their life and that was against the Iraq War in 2003, so there are things I don’t agree with him on. Actually, I joined the Territorial Army about a month later because I wanted to serve in some way – though not in Iraq.”

Ruth Elizabeth Davidson grew up in a Presbyterian family in Selkirk, where her father worked in a wool mill and she attended a comprehensive school. After a career in broadcast journalism, she entered politics and became leader of the Scottish Tories in 2011; she has since revitalised the party in one of the great contemporary political feats. With Davidson at the helm, a party that was wiped out in the 1997 election (it won none of Scotland’s 72 Westminster seats) and that had shown only a flicker of life since then has supplanted Labour as the official opposition at Holyrood. In June’s general election, the Tories won 13 seats (out of 59) in Scotland, an increase of 12. Between the 2015 and 2017 general elections, the Scottish Tories put on more than 320,000 votes; in the May local elections, they more than doubled their share of Scottish council seats to 276.

There is a good chance that in 2021, when the next Holyrood elections are held, Davidson will find herself leading Scotland’s largest party and becoming first minister. Already she regularly attends Theresa May’s political cabinet in London and is spoken of at Westminster as a future prime minister – some would parachute her into No 10 tomorrow if they could. Members of her small back-room team say that they are besieged by media interview requests and invitations from around the world. Everyone wants a piece of Ruth Davidson’s magic.

***

When we meet in her small office on the Conservative floor of the Scottish Parliament, I sense the low hum of military-style planning, even though Holyrood is still in recess. After ten days in Ireland, Davidson is rested and recharged. “I think along with almost every other person involved in politics [or] journalism about politics, and the voters, I went into the summer absolutely knackered. But I’m ready to go again. We’ve had a really good 18 months. We’ve had three elections where we’ve come from third to second each time, we’ve more than doubled our number of MSPs, more than doubled our number of councillors. We’ve gone 13 times our number of MPs, though that maybe talks more about the base level than anything else…”

It’s certainly true that the old joke about there being more giant pandas in Scotland (there are two) than Tory MPs (there was one) has run its course. “The pandas are going to have to do a lot of listening to Barry White music to catch up with us now.”

Yet Davidson is far from satisfied. “I don’t want this to have been a peak. This is a platform for us to build on. In the five-and-a-half years I’ve been leader, between referendums and elections, I’ve fought eight national campaigns. Scotland is tired of politicians shouting at each other with no end product, and we need to use this period – which is the first we’ve had in years with no imminent election – to reduce the temperature in Scotland and in the political discourse. We need to use it to do some of the heavy intellectual lifting that’s not been done in this place [Holyrood]. We need to start asking questions about long-term solutions in important policy areas.”

The 20th anniversary of the referendum that licensed Tony Blair’s creation of the Scottish Parliament falls on 11 September and is inevitably inspiring some reflection and soul-searching north of the border. Not many would claim that the institution’s first two decades have been a shining example of policy innovation and political daring. “Are we as a country more dynamic, braver, more advanced, better educated, with better health than 20 years ago? I’m not so sure,” says Davidson. “Honestly, I think it’s been timid. I think devolution was designed to be more ambitious than what previously existed, and I’m not sure that ambition has been realised within this building at Holyrood.”

If given the opportunity, she wants to make good on the parliament’s potential. She accuses her SNP rivals of big talk but little action: “They’ve been very good at saying whatever issue of the week they’re getting hammered on is their top priority and that they’re going to have a commission, or there’s going to be a review. At some point, you actually have to start making tough decisions.”

The day after our interview, Davidson unveiled proposals for a series of new towns in Scotland and for 25,000 homes to be built annually. On education, she wants to encourage innovation by giving head teachers autonomy over budgets. She aspires to boost the status of the teaching profession, allow high- and low-performing schools in the same localities to “buddy up”, and encourage different types of school to open, including technical and state-funded schools that opt out of local authority control.

Davidson wants to introduce Teach First, which fast-tracks high-performing graduates into the teaching profession, to Scotland. “We used to pride ourselves at being the best in the world at education. Well, let’s have a bit of humility and let’s look at what’s happening in the world that’s better than what we’re doing.

“I understand that the SNP were trying to keep a broad collective together because they were working towards the goal of independence, but it’s not good enough that an entire generation’s life chances have been thwarted because you’ve been afraid to take on the teaching unions, or you’ve been afraid to make the changes that perhaps parents wouldn’t understand and you’d have to explain to them.”

Measures to tie the NHS and social care together will receive proper attention in the next few years, she says, as will the economy. “Part of centrism is about understanding the need for private industry, private enterprise, free trade, the idea that you can lift all boats. Inequality in the UK is at its lowest level for 36 years, but it doesn’t feel like that to people out there. They see these millionaire footballers or Russian oligarchs in London with their gold-plated Bentleys while they’re struggling and that disconnect is really tough.”

The ambition is clear, although the dissimulation and cant of the conventional political interview are replaced by a refreshing frankness. “We’re getting ready to change from a strong opposition to looking like an alternative government of Scotland,” she says. “We don’t look like that now. We know that. We’ve got a lot of work to do, but we’re up for it. I have to make sure I’ve got the team, the vision, the policies, the ideas, and that we’ve got the tone right – the civility that we can bring back into politics in Scotland, because it’s been at fever pitch for a really long time.”

She continues: “We have people who are serious, thoughtful, who probably ten years ago wouldn’t have changed career to do politics. But this big, cataclysmic referendum [in 2014] happened where people said, ‘The Scotland I want is worth fighting for.’ Whether you were for Yes or No, it dominated so much that a lot of people who would have just sat on the sofa and shouted at Question Time decided to get off their backsides and do something about it.”

In Scotland’s predominantly leftist political culture, there are those for whom a Tory – centrist or otherwise – can never be anything more than a stone-hearted friend of the moneyed elites. Davidson’s electoral success and personal popularity are all the more luminous when contrasted with the miscalculations and missteps that have gored the reputations of several senior London colleagues, including the Prime Minister and the Foreign Secretary.

Davidson says she isn’t worried about cross-contamination, but an indication of how Westminster decisions can trip her up came earlier this year when the UK government announced plans to restrict child tax credits to the first two children. An exemption was announced for women whose third child was a result of rape, but campaigners were furious that victims would be expected to prove their circumstances to the DWP.

Davidson defended the so-called “rape clause” and found herself in a difficult spot. “It was said I looked uncomfortable talking about it – well, yes. But do I want to make sure people who have had children in the very worst circumstances have the financial support that they need? Yes, I do. Nobody was putting forward a better way of doing this.”

Were her opponents in Scotland using the issue to tarnish her reputation? “Look, I’m not going to say that. But it’s interesting that even Jeremy Corbyn didn’t think it was an issue on the campaign trail.”

***

Davidson was a staunch Remainer. She aggressively debated Tory Leaver colleagues during the referendum campaign – most notably roughing up Boris Johnson, for whom she has little time, at a debate at Wembley Arena in London. She accepts that Brexit “is going to happen. You’ve got no major political party likely to be in government advocating that it doesn’t happen and no electoral event that would give them the mandate to stop it before it happens.”

Yet she is far from uncritical of the government’s performance. Of the fraught beginning to the Brexit negotiations, she says, “I think one of the things the UK government didn’t do that they should have done was pitch-roll this: remind the British public that when it comes to European negotiations – and we’ve had several decades of them – we are told no until five past midnight and then suddenly a deal gets done in the wee small hours of the morning. I don’t think the country was prepared for this period that we’re currently in. People in a room talking and then walking out and up to a bank of microphones and saying entirely different things while standing next to each other is part of what negotiation is. I think the UK government has not just an obligation but a duty to negotiate as hard as they can on behalf of the country.”

What is her biggest concern about the impact of Brexit? She pauses. “Interesting question… My real fear is that if there’s a short-term economic hit, we don’t bounce back from it.”

Would she like a prolonged transition period during which Britain maintains access to the single market? “I’m for free trade and want to make sure that people from Scotland and the UK have access to – and the greatest ability to operate within – the single market, which I believe are the exact words the Prime Minister used in her Lancaster House speech back in January. The mechanism for how we get to that I’m less aerated about, as long as that’s where we get to.”

We have reached, at last, a mention of the invisible Prime Minister, in office but not in power, counting down the days until her colleagues decide to free her from the burden of empty leadership. I say that it’s brave of Theresa May to get on with the job each day. It can’t be fun. “She’s absolutely straight down the line,” Davidson says. “She’s not a game player. And the kind of clichés that you hear about her, about her believing in service and public duty, are absolutely true. Everything that she said about being there for the long haul, as long as the party and the country want her – she will get up and she will put in a shift.”

Could Davidson end up occupying that hottest of seats? David Cameron once told me that he “never put a limit on her abilities and ambitions. She has got what it takes in politics. She’s got oomph, she’s got spirit, she’s got brains.”

One friend who has watched her astonishing progress concedes that even Davidson has been surprised by her success. “She has had to get her head around how good she is and how much potential she has – that she can play on the biggest of stages. Each time we think she’s reached a plateau, she climbs the next one. I genuinely think she could do just about anything she wants to, and maybe she’s starting to believe that.”

For Ruth Davidson, the next plateau is in sight. “When 2021 comes around, people will be looking for a first minister, and the option they’re going to have is Nicola Sturgeon again or me,” she says. It’s a remarkable statement, given recent history, to come from the lips of a Scottish Tory leader – but she means it, and we should take her seriously.

Chris Deerin is the New Statesman's contributing editor (Scotland). 

This article first appeared in the 01 December 2008 issue of the New Statesman, How safe is your job?