James Purnell is the welfare and pensions secretary – the title ‘work and pensions’ is a bit of a euphemism. Britain isn’t a planned economy, the government doesn’t set employment levels, so the ‘jobs summit’ today is based on a false premise. We ain’t Cuba. Yet Brown wants to play up to the narrative that he is ‘taking action’. So poor old Purnell needs to speak about jobs, and did so in interview with Evan Davis on the Today programme earlier. It brought up some interesting points…
1. How bad can this get, asked Davis. “Governments don’t forecast unemployment, that has been the case for some time,” said Purnell. Actually, unemployment forecasts are in the Budget and PBR based on independent consensus published monthly by the Treasury and its December sheet answers the question ‘how bad can it get’. From 1.04m unemployment in the final quarter of last year, the worst case scenario is from ING Barings which projects 1.9m claimants in the final quarter of this year – an 83% increase. So this is the worst case scenario. So far.
2. Purnell says he’s putting more money into JobCentre Plus with £50 billion “from the fiscal savings and VAT stimulus”. There is no money from the VAT ‘stimulus’ – it cost the exchequer £12bn. Purnell’s point is to draw a Brown-style dividing line: the Tories oppose this action so it wouldn’t happen under them. This is one of his key messages.
3. Why does Britain have such a global crisis, asked Davis? Purnell chaffed. “Clearly we have a global financial crisis, and the UK is not immune to that”. This is where Davis comes into his own. He had evidenty been reading the News of the World which yesterday pointed out that by the OECD’s projections (table 14), Britain will have the sharpest rise in unemployment in the developed world between this year and next. This exchange gave a tiny glimpse of Purnell’s eye for detail – he responded that “we end up below the EU level”. Indeed. The OECD forecasts Eurozone unemployment of 9% next year v Britain’s 8.2%.
4. “In the last few years we have created 3m new jobs,” says Purnell. Imported them, more like – two-thirds went to (or were created by) immigrants and the rest are public sector workers or pensioners. There are fewer British-born private sector workers now than in 1997.
5. Purnell said his aim is to make sure people “don’t fall out of touch with the labour market” and would not “shuffle them on to incapacity benefit” like the Tories had done. He’s right: this was perhaps the worst failing of the last Conservative government. Thatcher thought it was a one-off move, putting manufacturing workers onto IB. Instead, this created self-perpetuating welfare ghettoes. Purnell is precisely right to believe that in this downturn the most important thing his department can do is make sure another generation is not written off, cast into a welfare dependency subworld, and then has to sit out the next expansion while the new jobs are imported.
6. Purnell claims he calculated that had the Brown squirt (I refuse to call his paltry measure a stimulus) been carried out in the 1990s there would have been 300,000 fewer on the dole. This is fascinating statistic, and you can bet all sorts of dodgy assumptions were involved in its conception. It will have taken much work to prepare and we can expect to hear it again.
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