Good news on the jobs front, but why is the Youth Contract not working?

A year on from its launch, the Youth Contract looks feeble in comparison to the problem it is trying to solve. It's time for a jobs guarantee.

Today’s labour market statistics continued the good news of recent months. Employment rose at the fastest annual rate since 1989, and the inactivity rate, the proportion of the population neither in work or looking for a job, is at its lowest level since 1991. Whilst there are legitimate questions about how this 'jobs miracle' is possible given the poor state of the economy, we should be very encouraged that of all the issues the UK faces, job creation does not appear to be one of them at the moment.

But behind the positive headline numbers there are still some sections of the population facing a very difficult jobs market. Youth unemployment, which was falling at an encouraging pace until a few months ago, appears now to be stuck in reverse, with the number of young people unemployed rising 11,000 in the latest quarter. Even more worrying, the number of young people unemployed for over a year, and in danger of permanent wage scarring and disconnection from the labour market, is up by 10,000. There are some positive signs, with the numbers of economically inactive youth falling and employment amongst the group rising, but the high level of unemployment points towards a large proportion of the young being left behind as the labour market improves overall.

And what is being done about it? The coalition’s Youth Contract, launched over a year ago, aimed for a radical increase in support for young people’s entry into work, providing incentives for employers to take on young employees, increases in apprenticeship numbers, and greater provision of work experience placements. It was hoped to be, in the words of Nick Clegg, "a major moment for Britain’s unemployed young people".

And where are we now? Today’s data shows that youth unemployment remains stubbornly high. A week ago Cait Reilly succeeded in challenging the DWP over its mandatory work activity scheme. And last month the latest apprenticeships data showed that new places were disproportionately going to the over-25s, with the number of school-leavers moving into apprenticeships actually falling. A year on, the Youth Contract looks feeble in comparison to the problem it is trying to solve.

A better approach would be to tackle both the short and long-term causes of youth unemployment head on. Firstly, IPPR has suggested that a jobs guarantee be adopted, with anyone unemployed and claiming Jobseeker's Allowance (JSA) for over 12 months offered a paid job at the minimum wage. There were almost 80,000 young people in this group in December, a rise of 35,000 on a year ago. This would offer instant help to them, and is a fundamentally better policy than making people work for their JSA.

Over the longer-term, we need a revolution in how the system of transition from school to work operates. At the moment, most of the 50 per cent of young people who don’t go to university are faced with poorly-funded careers advice, low-quality or non-existent apprenticeship places, and a confusing plethora of vocational education options of variable worth. This group are being ill-served by the system, which doesn’t offer the skills or the experience needed for them to fully flourish in 21st century Britain.

Changing the deeply ingrained transition system will be difficult, but the evidence from other countries suggests it is not impossible, if the will from politicians, employers, unions and wider society is there. IPPR is currently carrying out a major research project in order to learn valuable international lessons on youth unemployment that can be applied to a UK context.

Today’s jobs data was great on most fronts. But if we fail to tackle the deeply-set issues around marginal groups in the labour force, including youth unemployment, we are in danger of a recovery for some, but one that misses out on those most in need.

Spencer Thompson is economic analyst at IPPR

Nick Clegg claimed the Youth Jobs Contract would be "a major moment for Britain’s unemployed young people". Photograph: Getty Images.

Spencer Thompson is economic analyst at IPPR

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Find the EU renegotiation demands dull? Me too – but they are important

It's an old trick: smother anything in enough jargon and you can avoid being held accountable for it.

I don’t know about you, but I found the details of Britain’s European Union renegotiation demands quite hard to read. Literally. My eye kept gliding past them, in an endless quest for something more interesting in the paragraph ahead. It was as if the word “subsidiarity” had been smeared in grease. I haven’t felt tedium quite like this since I read The Lord of the Rings and found I slid straight past anything written in italics, reasoning that it was probably another interminable Elvish poem. (“The wind was in his flowing hair/The foam about him shone;/Afar they saw him strong and fair/Go riding like a swan.”)

Anyone who writes about politics encounters this; I call it Subclause Syndrome. Smother anything in enough jargon, whirr enough footnotes into the air, and you have a very effective shield for protecting yourself from accountability – better even than gutting the Freedom of Information laws, although the government seems quite keen on that, too. No wonder so much of our political conversation ends up being about personality: if we can’t hope to master all the technicalities, the next best thing is to trust the person to whom we have delegated that job.

Anyway, after 15 cups of coffee, three ice-bucket challenges and a bottle of poppers I borrowed from a Tory MP, I finally made it through. I didn’t feel much more enlightened, though, because there were notable omissions – no mention, thankfully, of rolling back employment protections – and elsewhere there was a touching faith in the power of adding “language” to official documents.

One thing did stand out, however. For months, we have been told that it is a terrible problem that migrants from Europe are sending child benefit to their families back home. In future, the amount that can be claimed will start at zero and it will reach full whack only after four years of working in Britain. Even better, to reduce the alleged “pull factor” of our generous in-work benefits regime, the child benefit rate will be paid on a ratio calculated according to average wages in the home country.

What a waste of time. At the moment, only £30m in child benefit is sent out of the country each year: quite a large sum if you’re doing a whip round for a retirement gift for a colleague, but basically a rounding error in the Department for Work and Pensions budget.

Only 20,000 workers, and 34,000 children, are involved. And yet, apparently, this makes it worth introducing 28 different rates of child benefit to be administered by the DWP. We are given to understand that Iain Duncan Smith thinks this is barmy – and this is a man optimistic enough about his department’s computer systems to predict in 2013 that 4.46 million people would be claiming Universal Credit by now*.

David Cameron’s renegotiation package was comprised exclusively of what Doctor Who fans call handwavium – a magic substance with no obvious physical attributes, which nonetheless helpfully advances the plot. In this case, the renegotiation covers up the fact that the Prime Minister always wanted to argue to stay in Europe, but needed a handy fig leaf to do so.

Brace yourself for a sentence you might not read again in the New Statesman, but this makes me feel sorry for Chris Grayling. He and other Outers in the cabinet have to wait at least two weeks for Cameron to get the demands signed off; all the while, Cameron can subtly make the case for staying in Europe, while they are bound to keep quiet because of collective responsibility.

When that stricture lifts, the high-ranking Eurosceptics will at last be free to make the case they have been sitting on for years. I have three strong beliefs about what will happen next. First, that everyone confidently predicting a paralysing civil war in the Tory ranks is doing so more in hope than expectation. Some on the left feel that if Labour is going to be divided over Trident, it is only fair that the Tories be split down the middle, too. They forget that power, and patronage, are strong solvents: there has already been much muttering about low-level blackmail from the high command, with MPs warned about the dire influence of disloyalty on their career prospects.

Second, the Europe campaign will feature large doses of both sides solemnly advising the other that they need to make “a positive case”. This will be roundly ignored. The Remain team will run a fear campaign based on job losses, access to the single market and “losing our seat at the table”; Leave will run a fear campaign based on the steady advance of whatever collective noun for migrants sounds just the right side of racist. (Current favourite: “hordes”.)

Third, the number of Britons making a decision based on a complete understanding of the renegotiation, and the future terms of our membership, will be vanishingly small. It is simply impossible to read about subsidiarity for more than an hour without lapsing into a coma.

Yet, funnily enough, this isn’t necessarily a bad thing. Just as the absurd complexity of policy frees us to talk instead about character, so the onset of Subclause Syndrome in the EU debate will allow us to ask ourselves a more profound, defining question: what kind of country do we want Britain to be? Polling suggests that very few of us see ourselves as “European” rather than Scottish, or British, but are we a country that feels open and looks outwards, or one that thinks this is the best it’s going to get, and we need to protect what we have? That’s more vital than any subclause. l

* For those of you keeping score at home, Universal Credit is now allegedly going to be implemented by 2021. Incidentally, George Osborne has recently discovered that it’s a great source of handwavium; tax credit cuts have been postponed because UC will render such huge savings that they aren’t needed.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle