A vital read on supply-side policy and unemployment - you must have a real understanding of this in order to write coherently about it; a challenge, I know, but you are studying a very difficult subject:
Benefits Britain is back – and it's condemning millions to dependency
Don't blame Brexit for worker shortages. The UK has a hidden crisis of mass joblessness
My wife took the kids on holiday for half-term and I have never felt more grateful to be left at home. EasyJet cancelled their flight with a day’s notice. She found another, on Wizz Air, and they’d all boarded before the pilot told them it had been cancelled, due to lack of cabin crew. The same story can be heard nationwide: mayhem due to a lack of baggage handlers, check-in staff, cleaners. It’s 1970s-style bedlam, but there are no strikes. The aviation industry has vacancies galore. Salaries are surging – but they still can’t hire.
They’re not alone. Anyone who can find a flight to Britain would discover hotels closed for lack of cleaners, restricted restaurant menus due to lack of chefs, and “help wanted” signs on every high street. Every country that locked down has had problems readjusting, especially losing people to early retirement. But studies show that, for some reason, Britain has done worse than almost anywhere else in getting people back to work.
It’s traditional, at this point, to blame Brexit – and say it’s time for more immigration. The boss of Collinson, which runs airport lounges, did so yesterday: unemployment is at the lowest in 40 years, he said. So with no Brits available, what option is there but to look abroad? For almost two decades, employers have done just that: solve staffing issues by importing low-cost workers from overseas. That reflex is very much still there, twitching away. But dig deeper, and this argument collapses.
Immigration has bounced back. There is no Brexit-sized hole in our workforce; not anymore. Immigrants now account for one in five workers in Britain, the highest ratio ever. Brexit certainly has made immigration less controversial: polls show far greater democratic consent under the new points-based system. But as things stand, Brexit hasn’t made any measurable difference to the numbers. So we can’t blame absent Poles or Italians for the shortages: migrants are playing a bigger part than ever in keeping Britain moving.
The problem lies with the Brits. The low unemployment claim is a mirage. Britain has, in fact, been suffering a period of mass joblessness as big as any in our recent history. The proportion of people who are neither in work or looking for it is higher now than it was in the mid-1970s. More than five million people were claiming out-of-work benefits at the last count – a figure as big as the population of Scotland. But many of them don’t count as unemployed, because they’re not looking for jobs. So – presto! – they vanish from the national debate.
This overall figure masks horrific local blackspots. In Blackpool, official figures show 26 per cent on out-of-work benefits. In Middlesbrough it was 23 per cent, in Hartlepool 22 per cent, in Manchester, it’s 18 per cent. All of these places have thousands of jobs going, which makes the joblessness all the less defensible. These official out-of-work figures will, of course, include the long-term sick and they are always six months out-of-date. Things will have improved by now, a bit. But the general problem (and scandal) remains.
Why? How did we get here? How did Universal Credit, the flagship reform of the Cameron era, start to produce the problems that it was designed to solve? It was created with strings of conditionality on welfare payments, with sanctions imposed if people turned down jobs or missed face-to-face meetings. During lockdown, the conditions were abandoned – and never properly restored. So the new system has started to trap people in welfare as surely as the old one did. It has started to become an issue in Cabinet.
Thérèse Coffey, the Work & Pensions Secretary, is pushing for reform. For example, it’s currently possible to get out of regular appointments with a work adviser if you do just nine hours of work a week. Coffey wants to make this 12 hours – and in this, she deserves support from the rest of the Cabinet. If anything, they should be going further. In a country crying out for workers, this could easily be raised to 24 hours. This is the time for ambition – and for the return of a tough-love policy that Iain Duncan Smith delivered to such striking effect.
His reforms meant that, during the Cameron years, the incomes of those at the bottom increased far faster than those at the top. Work paid. More jobs were created than economists thought possible. It was a progressive triumph – and an experiment that’s ripe to be repeated. The logic is just as compelling now. Moving from welfare to even minimum-wage work makes someone about £6,000 a year better off: the best remedy to the cost-of-living crisis. Not to mention the great worker shortage crisis.
And given the rising cost of government – via ever-increasing taxes – we can take a step back and ask a broader question. The welfare state is obviously a safety net – but how big should it be? Britain now has one of the highest minimum wages in Europe and more job vacancies than at any time since records began. But still, a third of all households are claiming means-tested benefits. Was this intentional? Or have we just slid into this situation, because no one quite worked out what is going on?
Nothing is more likely to help people move from welfare into work than actual face-to-face consultation, as studies show. So asking healthy people to see a work consultant if they’re doing less than 24 hours a week is hardly onerous. Or, with so much help needed, unreasonable. The last decade dealt with the “idle Brit” myth: people were not inherently lazy or work-shy. When a bad system was replaced with a good one, things got better. They could get better again.
Universal Credit was created by a principle: that welfare dependency is cruel. It is not compassionate to write cheques and abandon people in edge-of-town housing estates while growing the economy with imported labour. The main aim is to save lives, not money – and, this time, rebuild the economy after the devastation of lockdowns. The jobs are there. The workers are there. We just need a government with the courage and resolve to put the two together. If Boris Johnson is still interested in a post-Covid reform agenda, he really should look no further.
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