How bad can things get? That’s the question on everyone’s lips as unemployment tops the 2 million mark, public borrowing shoots through the roof – and the International Monetary Fund predicts that Britain’s recession will be one of the worst worldwide. Even the Bank of England’s governor is raising the spectre of mass unemployment.
Economists are seriously debating the possibility of recession tipping over into depression, with all the dystopian social consequences this implies. Others take a less apocalyptic view, but admit to huge uncertainty. This summer’s Spending Review could be postponed because of the difficulty in estimating annually managed expenditure.
For newly unemployed people, these are no mere academic debates. Thousands of DWP staff have been diverted from other duties, and jobcentre services expanded, to deal with the surge in fresh claimants.
On average, ten jobseekers are chasing every vacancy. As jobless levels hurtle towards 3 million, there could be a decade-long impact in some areas. Into this wasteland steps the government’s welfare reform Bill, which MPs debated this week. With its measures to compel the long-term unemployed (including lone parents of pre-school children) into work, and use the private sector to run Flexible New Deal, it was always going to be controversial.
For the Treasury, as it counts the cost of its fiscal stimulus, there are obvious attractions to curbing the benefits bill. But how much sense does a Workfare-style policy make in this climate?
Not much, judging from the reaction of private contractors, who want to double their upfront fees. Meanwhile, the scheme’s architect has jumped ship to the Conservatives, and welfare campaigners are up in arms over the reforms. Increasingly, it looks like Work and Pensions Secretary James Purnell has been sold a pup.
Ministers say they are preparing claimants for economic recovery, instead of leaving them to ‘wallow’ on the dole. But such assurances ring hollow without subsidies for short-time working, serious support for childcare and training – and the 100,000 new jobs promised by Gordon Brown a while back.
Instead of hanging on to a beached whale of a policy, the government needs to recast its whole jobless strategy. Or, as someone once called it, think the unthinkable.
