Is Labour serious about welfare reform? It hasn’t given that impression over the past year, given the flagship welfare reform bill ended up being gutted, largely because the Treasury had decided to use it as a vehicle for a load of blunt cuts, rather than the real – and very costly – business of wholesale benefits and back-to-work reforms. But the huge benefits bill and high levels of economic inactivity means the problem can’t be ignored, and so Rachel Reeves had another go at the back-to-work bit this week at Labour conference.
The problem with the Chancellor’s plans, as we discussed at a Spectator/IPPR fringe meeting today, is that they sound rather familiar. Reeves wants to give paid work to young people who have been unemployed for 18 months, with the government offering ‘some form of subsidy’ to private sector employers who offer the work placements. There were similar attempts under the last Labour government in the form of the New Deal and the Future Jobs Fund, both of which did some good, but they also contained flaws which meant they failed to make a difference to the harder-to-reach cases. One flaw in the New Deal was that the ambition to abolish youth unemployment meant young people were shifted from one category to another: if they were in ‘training’, even if that really meant sitting at the back of a classroom paying no attention at all to the talk on ‘interview skills’, then they didn’t count as unemployed.
Matthew Taylor, who worked for that last Labour government and carried out a review for Theresa May on modern employment, argued that many of the training courses that were being offered just weren’t relevant to the young people being put on them, or worse led them into a line of work that they were still not qualified to carry out at the end of the ‘training’, meaning they’d wasted their time and had their hopes unfairly raised. Young women were put on hairdressing courses, he said, which they then discovered did not even equip them for going into a salon because they didn’t have GCSE maths.
In his speech this afternoon, Starmer rightly talked about the need to move away from thinking that a university education was an automatic sign of success. He joked about people knowing his father was a toolmaker, before asking whether people really knew how much skill was involved in that job. It was an entertaining and personal moment in the speech, but it also touched on a really important problem in Westminster, which is that academic achievement is always valued more highly than craftsmanship. Politicians have mostly been to university and believed all their lives that manual jobs are for people who didn’t do well at school. They talk very worthily about ‘skills’ while not really knowing what they are, and while shuffling responsibility for them from one department to another.
This lack of care and attention means that we end up with situations like the hairdressing training fiasco, without anyone really twigging or necessarily caring. It also means that we have serious skills shortages in a number of really key sectors and little plan to address them. Horticulture and landscaping, for instance, have severe shortages. Despite both lines of work being highly skilled when done properly, they are often regarded as the sort of jobs that school dropouts end up doing. Many of the people I know working in both worlds spent most of their school years being told they were stupid, and yet now have highly fulfilling careers. Politicians need to realise that employment and training problems start far earlier than the point at which someone is out of work: they begin when they’re in the classroom, being told that they will only amount to anything if they are academic.
Shortages aside, there’s another issue with this expectation that private companies will want to take on more young people. They’re not currently in a mood to hire anyone at the moment, and the ‘some sort of subsidy’ might briefly compensate for the rise in National Insurance contributions that is causing this reluctance, but it won’t make them any more likely to take these young people on for the long term. As with the disability benefit reforms which were actually cuts, Reeves seems to be undecided about what she wants from business: is it revenue from taxes, or more job creation? If the former is too high, she won’t get the latter. And if you try to do welfare reform on the cheap, you won’t get what you want, either.
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