The ‘Dear Leader’s Children’

A major political headache is how to ensure the recession doesn’t claim another lost generation. Official figures suggest that nearly 1 million people under the age of 25 are already on the dole, with a further 1.5 million being economically inactive. These figures will only get worse. Polly Toynbee thinks that Germany is pulling out of recession because they have the answer:

‘Labour’s efforts are directed towards getting people into work. But Germany focuses on stopping people falling out of work, by contributing to wages. A study this week says a ¤6bn scheme prevented a major rise in unemployment, and helps explain why Germany is already pulling out of recession.

Closer to home, Wales has a similar, though smaller scheme: ProAct has paid 88 employers to keep on 5,577 workers so far, in viable firms on short-time working. At a cost of £13m, job for job that is cheaper than Whitehall schemes. Wales is the only place in the UK where unemployment has fallen in the last two months. ProAct may not be the only reason, but officials think it created a culture that encouraged employers to keep staff on. As the young are usually first out in layoffs, it should be tried elsewhere.

How could all this be paid for, since tax receipts are falling? Borrowing a few more billion to prevent vastly more future spending makes sense: paying the extra debt back will be far cheaper than the cost of extra benefits, mental illness, crime and social disruption for decades. Youth bonds, like the old war bonds, could help avert this social disaster.’

Certainly, paying private companies to keep people in work or to fund apprenticeships is preferable to forcing people onto the dole long-term; especially as there is no guarantee that they will find work. A recent Prince’s Trust report suggests that one in five of this year’s 16-year-olds will have found a job at 21.

Like David Blanchflower, Toynbee is surely correct that investment now will save money in the long run. And it makes sense to extend initiatives like ProAct in the future. There are existing schemes in place to assist the young: the £1,000 voucher after being unemployed for 6 months, and the £1bn Future Jobs Fund, which will pay employers to train young people. But alone, they are not enough to avert mass permanent unemployment. Investment in apprenticeships and covering private sector wages is needed. The tragedy, and it will be expensive in every sense, is that, after July’s horrendous budget deficit figures, it seems likely that the strain on the public finances will lead to the private sector being squeezed, and that borrowing will not be as easy as it was last autumn. Grievously, the advent of ‘The Dear Leader’s Children’ is inevitable.