Labour unveils jobs guarantee for the long-term unemployed

Ed Balls announces new policy to be funded by reducing pension tax relief for those earning over £150,000.

Ever since the coalition began its programme of welfare cuts, Labour has argued that the best way to reduce the benefits bill is to get more people into work. Now, ahead of next Tuesday's debate on the Welfare Uprating Bill (which will enshrine in law George Osborne's pledge to cap benefit increases at 1 per cent for the next three years), the party is seeking to show how it would achieve that goal.

In one of the most significant Labour policy announcements since 2010, Ed Balls has said that the party would introduce a compulsory jobs guarantee for long-term unemployed adults to be funded by reducing tax relief on pension contributions for those earning over £150,000 from 50p to 20p. The guarantee would initially apply to those who have been out of work for 24 months, but over time Labour would seek to reduce this limit to 18 or 12 months. The party has already proposed a compulsory youth jobs guarantee (one component of Balls's "five point plan") to be funded through a £2bn tax on bank bonuses. The new policy would apply to the 129,400 adults over the age of 25 who have been unemployed for 24 months or more, an increase of 88 per cent since the same month last year and a rise of 146 per cent in the last two years. All would be paid at least the minimum wage.

In an article for PoliticsHome on a "one nation" approach to welfare reform (note Balls's adoption of his leader's favoured motif), the shadow chancellor writes:

Ed Miliband, Liam Byrne and I are today calling for a compulsory Jobs Guarantee for the long-term unemployed.

This is the One Nation jobs contract Labour would introduce right now: the government will ensure there is a job for every adult who is long-term unemployed, and people out of work will be obliged to take up those jobs or face losing benefits.

Our Jobs Guarantee for adults will build on the model of the Future Jobs Fund with government working with the private and voluntary sectors to ensure there is a job paying the minimum wage for every long-term unemployed person.

Labour's aim is to appear both compassionate - the long-term unemployed will not be left to languish on the dole - and tough - those who are out of work must take accept any job they are offered or lose their benefits ("no ifs or buts," says Balls).

As I said above, the policy would be funded by limiting pension tax relief for the highest earners, a change announced by the last government but reversed by the coalition before its scheduled introduction in April 2011. At present, additional rate taxpayers enjoy relief of 50 per cent (45 per cent from April) on their pension contributions. Balls's proposal would see their tax relief limited to the 20 per cent received by basic rate taxpayers, meeting the £1bn-a-year cost of the policy. He writes:

When times are tough it cannot be right that we subsidise the pension contributions of the top 2 per cent of earners at more than double the rate of people on average incomes paying the basic rate of tax. £1 billion a year would fund a compulsory jobs guarantee initially for all those out of work for 24 months or more – which we would seek to reduce to 18 or 12 months over time.

It's worth recalling that before the 2012 Budget, Danny Alexander called for the government to adopt a similar policy, noting that "If you look at the amount of money that we spend on pensions tax relief, which is very significant, the majority of that money goes to paying tax relief at the higher rate". However, rather than scrapping higher rate relief, George Osborne used his Autumn Statement to reduce the annual tax-free pension allowance from £50,000 to £40,000 (having already reduced it from £255,000) and the lifetime allowance from £1.5m to £1.25m (having already reduced it from £1.8m). As a result, basic rate taxpayers are still subsidising the pension contributions of the highest earners in the country. Balls's proposal is a neat way of reopening this particular coalition divide.

Labour can no longer be accused of lacking positive proposals but the coalition will continue to challenge the party to say how it would meet the cost of uprating benefits in line with inflation, rather than the 1 per cent increase proposed by Osborne. In an article for the Times (£) earlier this week, Nick Clegg wrote: "Labour must show how they’d pay for it. Would they cut hospital budgets? Schools? Defence?"

Balls and Miliband are fond of pointing out that the coalition is simultaneously reducing the top rate of income tax from 50p to 45p (worth an average of £107,500 to the country's 8,000 income millionaires) but they are reluctant to commit the revenue from a reintroduced top rate so early on in the parliament.

Ed Balls speaks at the Labour conference in Manchester last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Ansbach puts Europe's bravest politician under pressure

Angela Merkel must respond to a series of tragedies and criticisms of her refugee policy. 

Angela Merkel, the Chancellor of Germany, is supposed to be on holiday. Two separate attacks have put an end to that. The first, a mass shooting in Munich, was at first widely believed to be a terrorist attack, but later turned out to be the actions of a loner obsessed with US high school shootings. The second, where a man blew himself up in the town of Ansbach, caused less physical damage - three were seriously injured, but none killed. Nevertheless, this event may prove to affect even more people's lives. Because that man had come to Germany claiming to be a Syrian refugee. 

The attack came hours after a Syrian refugee murdered a pregnant Polish woman, a co-woker in a snack bar, in Reutlingen. All eyes will now be on Merkel who, more than any other European politician, is held responsible for Syrian refugees in Europe.

In 2015, when other European states were erecting barriers to keep out the million migrants and refugees marching north, Merkel kept Germany's borders open. The country has resettled 41,899 Syrians since 2013, according to the UNHCR, of which 20,067 came on humanitarian grounds and 21,832 through private sponsorship. That is twice as much as the UK has pledged to resettle by 2020. The actual number of Syrians in Germany is far higher - 90 per cent of the 102,400 Syrians applying for EU asylum in the first quarter of 2016 were registered there. 

Merkel is the bravest of Europe's politicians. Contrary to some assertions on the right, she did not invent the refugee crisis. Five years of brutal war in Syria did that. Merkel was simply the first of the continent's most prominent leaders to stop ignoring it. If Germany had not absorbed so many refugees, they would still be in central Europe and the Balkans, and we would be seeing even more pictures of starved children in informal camps than we do today. 

Equally, the problems facing Merkel now are not hers alone. These are the problems facing all of Europe's major states, whether or not they recognise them. 

Take the failed Syrian asylum seeker of Ansbach (his application was rejected but he could not be deported back to a warzone). In Germany, his application could at least be considered, and rejected. Europe as a whole has not invested in the processing centres required to determine who is a Syrian civilian, who might be a Syrian combatant and who is simply taking advantage of the black market in Syrian passports to masquerade as a refugee. 

Secondly, there is the subject of trauma. The Munich shooter appears to have had no links to Islamic State or Syria, but his act underlines the fact you do not need a grand political narrative to inflict hurt on others. Syrians who have experienced unspeakable violence either in their homeland or en route to Europe are left psychologically damaged. That is not to suggest they will turn to violence. But it is still safer to offer such people therapy than leave them to drift around Europe, unmonitored and unsupported, as other countries seem willing to do. 

Third, there is the question of lawlessness. Syrians have been blamed for everything from the Cologne attacks in January to creeping Islamist radicalisation. But apart from the fact that these reports can turn out to be overblown (two of the 58 men arrested over Cologne were Syrians), it is unclear what the alternative would be. Policies that force Syrians underground have already greatly empowered Europe's network of human traffickers and thugs.

So far, Merkel seems to be standing her ground. Her home affairs spokesman, Stephan Mayer, told the BBC that Germany had room to improve on its asylum policy, but stressed each attack was different. 

He said: "Horrible things take place in Syria. And it is the biggest humanitarian catastrophe, so it is completely wrong to blame Angela Merkel, or her refugee policies, for these incidents." Many will do, all the same.