Tory Liberal failure on the economy – Double-Dip recession

With the news that we are officially in a double-dip recession period LINK it is becoming clearer that the Tory Liberal economic policies are fundamentally flawed. Yes, they inherited a large deficit, but they also inherited a growing economy.

Cutting too far too fast has recklessly damaged the UK’s good prospects of getting our economy moving again. So far, the Tory Liberals have increased unemployment by

  1. Slashing jobs in the public sector on the unsubstantiated claim and risk that jobs will miraculously appear in the private sector to make up for the rise in unemployment in the public sector
  2. Increasing VAT which has an impact on a business’ take home profits, meaning that they have less profit available to employ people and expand
  3. The VAT rise also impacts on consumer spending and disincentivises businesses
  4. Scrapping the Future Jobs Fund which equips young people to be work ready. Indeed the long term impact of this has also been ignored by the Tory Liberals. Even if there is a lack of employment opportunities in the country, it is important that these schemes are invested in so that people are equipped with the skills they need and are work ready for when the economy does recover and there are jobs for people to go into.

Unemployment should never be a price worth paying. The immediate and long-term impact of worklessness is far worse than pursuing an aim to get rid of the deficit in four years. The Tory Liberal Government have made this their priority and ignored the impact that this damaging course has on ordinary people.

The VAT rise also had a detrimental impact on inflation. Naturally, it costs more to buy products because there is more tax paid on spending money. This leaves less disposable income to the individual and what’s more, wages are not going up with inflation. People are being squeezed with higher costs and lower income.

This brings me to my final point on the deficit, which has increased under this Tory Liberal administration – LINK

Growth is a key component to tackle the deficit. Without economic growth, it becomes difficult to address the deficit. This has been the Tory Liberal Coalition’s main failure. There is the issue of the Eurozone crisis that the right wing Government will point to. However, slashing public sector jobs with a front loaded approach and the VAT rise are policies of the Government’s own making.

The Tories are out of touch with ordinary people and their stance on the 50% tax rate at this very moment in time is testament to that. The Liberals aren’t bothered about issues such as employment, jobs, the economy, crime and the NHS – this is proven with how easily they flipped their position on these what I consider core issues. They are far more concerned with the House of Lords and the electoral system and appear more principled on these issues than ones that have a more profound impact on people.

Guest Blogpost from Richard Lynch: Paying the price for recession and stagnation

It is now four years since the worst global recession for over 70 years began to impact on UK jobs – and working people are still paying a high price for it and for the stagnation which has followed it. During those four years:

  • Unemployment increased by over a million, from 1.61 million to 2.67 million, and is still increasing.
  • 2.68 million people, 10% of those employed at the start of the recession, were made redundant.
  • Underemployment doubled, with the number of people in part-time jobs because they couldn’t find full-time employment rising from 670,000 to a record 1.34 million.
  • Unemployed people made 14 million claims and repeat claims for Jobseeker’s Allowance and received JSA payments which were worth a mere 10% of average full-time earnings.

But it was not just the unemployed and underemployed who lost out, as a recent report from the Chartered Institute of Personnel and Development showed:

  • Two thirds of those who returned to employment after being made redundant found that their pay, on average, was 28% lower than before, and lower still for those who couldn’t find work on the same hours as before.
  • Those who managed to keep their jobs suffered as well because the recession and unemployment resulted in lower pay increases or none at all, and left the average worker £3,000 a year worse off than if pay had increased at pre-recession levels.
  • The cost to employers of making 2.68 million people redundant varied from sector to sector but is estimated to have cost a total of £28.6 billion.
  • And the cost to the economy, in terms of lost output, is estimated to have been at least £87 billion (6% of GDP) and possibly as high as £135 billion (10% of GDP).

All of this shows that it is not just the unemployed who have been paying a high price for the recession in jobs but people in work, many employers and the economy as well. And unless action is taken to get the economy growing again, something which did not feature in the recent budget, we will continue to pay a high price for probably years to come.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

Guest Blogpost from Richard Lynch: Another bad year for jobs?

Unemployment
Unemployment (Photo credit: born1945)

2011 was a bad year for unemployment and underemployment and, if the latest Labour Market Statistics are any guide, 2012 looks like being at least as bad. These statistics, which mainly cover the three months to end January 2012, show that:

Unemployment was 2.67 million, up 28,000 over the quarter and 148,000 over the past year. The unemployment rate was 8.4% of the economically active population, up 0.1% on the quarter and at a level which was last exceeded in October 1995 (when John Major was Prime Minister).

Unemployment amongst JSA claimants was 1.61 million in February, up 7,200 on the previous month and 162,000 on the previous year. This left the claimant rate at 5%, unchanged from January but up 0.5% on the previous year.

Youth unemployment was 1.04 million, up 16,000 over the three months to end January and equivalent to 22.5% of economically active 16-24 year olds. However, separate figures showed that the unemployment rate for black youth has been rising at almost twice that for white youth and that unemployment amongst young black men has risen from 28.8% to 55.9% in the past three years.

Underemployment also increased with the number of people working part-time because they couldn’t find full-time jobs up 110,000 to 1.3 million, the highest figure since comparable records began in 1992.

On the slightly less negative side, there was a fall in long-term unemployment – by 12,000 in the number of those unemployed for over a year and by 25,000 in those unemployed for over two years. However this still left 855,000 in the former category and 405,000 in the latter. There was also a fall in the economically inactive rate for 16-64 year olds not working but not included in the unemployment figures. Numbers in this group fell by 27,000 to 9.3 million, giving an inactivity rate of 23.1%. However, the fall was largely due to the effects of a government campaign which contributed to cutting the number of people in the long-term sick category by 67,000 to 2.09 million. In addition to this, the number of job vacancies increased by 15,000 to 473,000 but this still left an average of 5.6 unemployed people chasing every vacancy.

Unfortunately these crumbs of good news appear unlikely to presage a downturn in unemployment, as the economy is still flat-lining, consumer spending and business investment are at historically low levels, companies are still going bust and the recent budget did little to change the situation. The public sector, which cut 270,000 jobs last year, is also continuing to make cutbacks and recent Office for Budget Responsibility projections indicate that a total of 700,000 jobs will have gone by 2015 and 880,000 by 2017. There is also likely to be a post-Olympics jobs cull in certain sectors, including in Balfour Beatty where an estimated 1,500 jobs are believed to be at risk.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

Guest Blogpost from Richard Lynch: Unemployment figures are still dreadful

The latest Labour Market Statistics, which mainly cover the three month period to end December 2011, provide more bad news on jobs and suggest that there is worse to come.

Overall unemployment increased by 48,000 to 2.67 million over the quarter, giving an unemployment rate of 8.4%. The figure for the number unemployed was 179,000 higher than a year earlier and included 860,000 who have been out of work for over 12 months. The number unemployed for two years or more was 423,000 over the same period.

Male unemployment increased by 16,000 to 1.55 million and female unemployment increased by 32,000 to 1.23 million. Youth unemployment increased by 22,000 to 1.04 million, giving an unemployment rate for 16-24 year olds of 22.2%.

unemployment
unemployment (Photo credit: Sean MacEntee)

The number of people working part-time because they could not find a full-time job increased by 83,000 to 1.35 million over the quarter, the highest figure since comparable records began 20 years ago.

The number of ‘economically inactive’ people fell by 78,000 to 9.29 million, giving an economic inactivity rate of 23.1%. (Economically inactive people are 16-64 year olds who are not working but who are not included in the unemployment figures because they had not been looking for work over the previous four weeks and were not available to start work within the following two weeks. They include the long-term sick, home makers, early retirees and those who have simply given up trying to find work.)

The number of Jobseeker’s Allowance claimants increased by 6,900 in January 2012 to 1.6 million, giving a claimant count of 5%.

The number of job vacancies increased by 11,000 to 476,000 in the three months to October 2011, but this still left an average of over 5.6 unemployment people chasing every vacancy.

According to the Financial Times, most economists expect unemployment to rise further over the coming months, with many predicting a peak of 2.8 or 2.9 million.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

Guest Blogpost from Richard Lynch: Job destruction shows no sign of easing

Unemployment is now higher than it was at the worst point of the recession and odds are shortening that it will match Thatcher’s three million in the next year. The latest figures, from the January Labour Market Statistics, are for the three months to the end of November 2011 and show the following:

 

Overall unemployment increased by 118,000 (1,300 a day) to 2.68 million, giving an unemployment rate of 8.4% – the highest since John Major was Prime Minister 17 years ago.

The number unemployed for over a year was 857,000 and the number unemployed for over two years was 424,000.

 

Youth unemployment continued to rise, with an increase of 52,000 to 1.04 million, making the unemployed rate for 16-24 year olds 22.3%.

 

The number of unemployed people claiming Jobseeker’s Allowance rose, although by a more modest 1,200, to 1.6 million, giving a claimant count of 5%.

 

The inactivity rate (16-64 year olds who are not working but are not included in the unemployment figures) fell slightly to 23.1% but that still leaves 9.29 million people, including home makers, long term sick, early retirees and those who have simply given up trying to find work, in this category.

 

The number of people in part time employment rose to 7.86 million, and the number working part–time because they couldn’t find a full-time job rose to 1.31 million, the highest figure for 17 years.

The number of self-employed people also rose, to a record 4.14 million, as more people are forced to go self-employed after failing to find a job or because employers are increasingly changing employees’ contracts to self-employed, so they can get out of paying the minimum wage, statutory holidays, sick pay and NI contributions.

The word “rose” features a lot in this article but there’s nothing rosy about the picture it paints on unemployment and under-employment in Britain today. And all the signs are that things are going to get a lot worse.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

Guest Blog Post: Richard Lynch on the worst unemployment for 17 years

The announcement, earlier in the winter, that 80,000 people had applied for the 18,000 temporary Christmas jobs advertised by Royal Mail, showed how bad unemployment has become under the coalition – and the latest Labour Market Statistics have confirmed it. These showed, amongst other things, that there are now more people out of work than at any time since 1994, when John Major was Prime Minister, and that youth unemployment is now higher than at any time since the 1980s, when Thatcher was in power. And all the indications are that it is going to get worse.

According to the statistics (which mainly cover the quarter to end September 2011):

  • Overall unemployment increased by 129,000 to 2.62 million, or 8.3% of the economically active population, the highest figure for 17 years.
  • The number of people unemployed for over a year increased by 31,000 to 868,000 and the number unemployed for over two years increased by 13,000 to 422,000.
  • Unemployment amongst 16-24 year olds increased by 67,000 to 1.02 million, giving a youth unemployment rate of 21.9%. This is the highest youth unemployment has been since 1992 when current records began, but previous records suggest that the figures haven’t been this high since the mid 1980s.
  • The number of economically inactive people (not included in the unemployment statistics) increased by 64,000 to 9.36 million, or 23.3% of 16-64 year olds.
  • The number of people claiming Jobseeker’s Allowance (JSA) increased by 5,300 to 1.6 million, giving a claimant count of 5%.
  • The number of job vacancies increased by 7,000 to 462,000, leaving 5.67 unemployed people chasing every vacancy. Haringey in north London (where the summer riots began) is the hardest place in Britain to find a job, with 22.6 dole claimants chasing every vacancy. Lewisham in south London is the second hardest place to find a job, with 21.9 claimants chasing every vacancy.

The coalition is blaming everybody but themselves for this disaster and is shedding bucket loads of crocodile tears for unemployed youth in particular. Their Work Experience Programme is supposed to help young people into work by providing unpaid work experience in supermarkets and other big businesses to young JSA claimants. However, it has recently emerged that anybody accepting an unpaid placement on this scheme will have to continue working for eight weeks, for their JSA payment only, unless they opt out of the programme in the first week. And if they do leave, they can have their Jobseeker’s Allowance cut. So much for slavery being abolished!

*Update: October’s statistics have been published since the above article was written. These show that unemployment has risen again, by 128,000 to 2.64 million.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

Guest Blog Post: Richard Lynch on why we must have change in 2012

When David Cameron was giving his New Year message twelve months ago, he said that the coalition had pulled Britain out of the danger zone and had laid firm foundations for economic growth and for cutting the deficit. Yet it is now clear that the past year has been a disastrous one for the economy, with growth worse than Gordon Brown achieved when the country was emerging from recession and most economists predicting that a return to recession is likely in the first half of 2012. And as for the deficit, that is now higher than ever and will take longer to reduce than under the Alistair Darling plan which the coalition ridiculed at the time of the general election.

Promises to bear down on unemployment have also fallen flat with 2.64 million people now out of work and 5.67 unemployed people chasing every job vacancy. These are not only higher figures than applied at the worst point of the recession but the highest since 1994 when the Conservatives were last in power. And all the predictions are that there is worse to come, with the Chartered Institute of Personnel and Development (CIPD) expecting an increase to 2.85 million by the end of 2012 and Capital Economics expecting a rise to three million. And the coalition’s own Office for Budget Responsibility, which had predicted that public sector job losses would hit 400,000 by 2016, is now predicting 710,000 such losses by 2017.

Inflation has also been a huge failure for the coalition with the Retail Prices Index rising by 5% or more on 11 occasions in the first 11 months of 2011 (something which happened on only four occasions in the 13 years of the last Labour government). The Consumer Prices Index has not been quite as bad but has averaged 4.5% during the year and is now higher than the CPI in every other EU country, not to mention China, Japan and the USA. And rail fares have just risen by 5.9% on average, giving us the highest such fares in Europe.

Pay increases failed miserably to match inflation in 2011, with the gap between increases in average regular pay and the Retail Prices Index rising from 2.5% at the beginning of the year to 3.4% on the latest figures available. And, according to a recent CIPD survey, only 45% of workers got pay increases in 2011, with 48% having had their pay frozen and 5% having had it cut – worse figures than were ever seen during the recession.

Pensions have also been hit hard, and not only in the public sector (where two million people from 30 unions struck on 30 November – more than took action during the general strike). The Association of Consulting Actuaries recently said that there has been a ‘seismic collapse’ in private sector pension provision, with nine out of 10 private sector defined benefit schemes now closed to new entrants and 25% of companies planning to dispense with such schemes entirely in the next five years. According to other reports, employee participation in occupational pension funds is now at its lowest level since 1956 and 65% of employees have no such pensions and will only have the state pension to look forward to when they retire.

Because of the above and other factors, living standards have fallen sharply in the past year, with poorer families and those with children the worst affected. And all the indications are that this trend will continue, with the Institute of Fiscal Studies predicting that half a million more children will fall into ‘absolute poverty’ by 2015-16. This is not only reversing the fall in child poverty which we saw in recent years but indicates a level of impoverishment which has no precedent in modern times. And living standards are collapsing for older people as well, according to Age UK, with 1.8 million pensioners below the poverty line and local authority care services for the elderly cut by 4.5% in 2011.

While this is happening, the poor are being fleeced by pay-day loan companies like Wonga which can charge interest rates of up to 5,000% a year and by companies running ‘rent to own’ schemes which allow the poor access to cookers, washing machines and other necessities, but at outrageous prices. Pawnbrokers have also been doing a booming business and are making record profits from those who find themselves having to use their services.

The coalition says that all this austerity is inevitable because we have been living beyond our means and that we all have to make sacrifices before we can get back to the good times. Yet Britain is still one of the richest countries in the world (seventh richest according to the most recent assessment) and is awash with millionaires, multi millionaires, billionaires and cash-rich corporations for whom the good times have never disappeared.

These include corporate executives like Mick Davis of Xstrata, who made £18.4 million last year, Bart Brecht of Reckitt Benckiser, who made £17.9 million, Michael Spencer of ICAP, who made £13.4 million and Terry Leahy of Tesco, who made £12 million.

They also include Phil Bentley, CEO of British Gas, whose remuneration package was £4 million last year and Dave Hartnett, the HMRC head who agreed to let Goldman Sachs off interest payments of £10 million, who will be retiring this year with a reported £80,000 a year pension and a cash lump sum of £160,000.  And F1 Chief Bernie Ecclestone has been so untouched by the hard times that he has been able to put £3 billion in a trust fund for his two daughters and reportedly gave £27.5 million to a banker to encourage him not to disclose information about that fund to HMRC. (His daughter Petra lives in a £54 million mansion in LA and had £12 million spent on her wedding. His daughter Tamara lives in a £45 million London mansion which has a spa and massage parlour for her dogs, as well as other features.)

It is because of people like these that income inequality is rising faster in the UK than in any other developed nation, as the OECD recently pointed out in a report called Divided we stand: why inequality keeps rising. That report said that the richest 0.1% of people in the UK own 5% of the country’s wealth, the richest 1% own 14%, and the poorest 30% of people own only 3%. Yet it is the poorest who are affected most by the coalition’s austerity programme!

In his 2012 New Year statement, David Cameron said that he ‘gets it’ when people tell him they are suffering because of job insecurity and rising prices – and it wouldn’t be a surprise if he ‘feels their pain’ as well. But what he doesn’t get is that it is his austerity programme which is destroying the economy, because people who have lost their jobs are not paying taxes to bring down the deficit and people whose living standards are being squeezed are not able to spend on the goods and services which other people are providing; consequently, economic growth is being choked off.

And what some of us are not getting is that there is an alternative to these attacks on our jobs, living standards, the welfare state and our rights at work and that we can turn them back if we stop believing the lies we are being fed and join the growing resistance to coalition and employer austerity policies at work and in our communities in 2012. Let’s do it!

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

GUEST BLOG POST FROM RICHARD LYNCH ON UNEMPLOYMENT

Unemployment goes from bad to worse

Unemployment in Britain is now at its worst for 17 years, youth unemployment is at its highest since records began and 10% of Londoners are out of work. These are just some of the unacceptable features of the October Labour Market Statistics and all the indications are that things are going to get worse rather than better over the coming period.

The statistics show that:

  • Overall unemployment increased by 114,000 to 2.57 million (8.1% of the economically active population) in the three months to end August. This is the highest unemployment Britain has seen since October 1994, when the last Tory government was in power.
  • Unemployment amongst Jobseeker’s Allowance claimants increased (for the seventh month in a row) by 17,500 to 1.6 million, giving a claimant count of 5%.
  • Unemployment amongst 16-24 year olds increased by 74,000 to 991,000, giving a youth unemployment rate of 21.3% – the highest figures since comparable records began in 1992.

Other groups who were also badly hit included workers aged 65 and over whose numbers fell by 74,000, the biggest fall in workers of that age group since records began in 1992. (This was largely due to employers pushing out older workers before the October abolition of the 65 default retirement age.) Public sector workers were also hard hit, with employment in that sector falling by 111,000 to 6.04 million. Part-time workers were hard hit as well, with the number of such workers falling by 175,000 to 7.7million.

In addition to this, the number of economically inactive people (not included in the unemployment figures) increased by 26,000 to 9.35 million, giving an inactivity rate of 23.3%. These figures, which this newsletter has not highlighted before, include 2.32 million looking after homes and families, 2.28 million students, 2.16 million long-term sick, 1.57 million retired people below the age of 65 and others who are temporarily sick or who have simply given up trying to find work.

The number of job vacancies in the economy increased by 1,000 to 462,000 but this still leaves an average of 5.56 unemployed people chasing every job.

The Chartered Institute of Personnel and Development, by no means a left-wing or anti-business organisation, described the latest figures as ‘truly horrific’ and pointed out that one in three unemployed people have now been out of work for over a year. It also pointed out the damage being done to the economy by the destruction of almost a quarter of a million public sector jobs in the coalition’s first year in office. The Institute made what was for them a remarkably radical (and sensible) call for the coalition to temporarily halt further public sector job cuts, which they described as an ‘own goal’ at a time of high and rising unemployment and economic stagnation.

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.

Youth unemployment rates are painful

Over a million young people out of work under the Tory Liberals! I am shocked to read that since January there has been an 83 per cent rise in young people on the dole for six months or more (Source: Labour Party).

On the doorstep, young people in Dudden Hill are angry with the lack of opportunities that are available to them to gain an in into the labour market. They are ready willing and able but the Government’s austerity measures and lack of investment has cut off opportunities.

It hurts that we have a Government that believes unemployment is a price worth paying. There is an alternative to cut slower, which would recognise the human cost of the cuts.

I have blogged here about the Labour 5 point plan for jobs LINK.

The importance of the Future Jobs Fund which was introduced by Gordon Brown – later to be scrapped by Clegg, Teather, Cameron and co – should not be underestimated. What it meant that was while it may have been the case that there are not enough jobs, or enough growth in our economy to get young people into jobs, what the fund did was give opportunities to young people to be job ready and gain practical experience. This is far more valuable to our economy, the taxpayer and the individual and their family than for paying to keep them on the dole.

Tory Liberal millionaire ministers who enjoyed free University education at Oxbridge University, only later to come into power and impose tuition fees of a maximum £9k a year on young people today, have failed to understand the needs of the 16 to 24 age group.

Along with economic policy change, we also need fundamental political change. The Government should also lower the voting age to 16. If people were able to vote at 16, then maybe the voice of young people would be listened to more.

Labour’s five point plan for jobs

The Labour Party has developed a five point plan for jobs to get the economy moving again. Lessons of history should have taught us by now that unemployment is not a price worth paying. The unemployment figure is not a statistic but it is the life of an individual and their family affected. That is why it is right that attention is drawn to the lack of activity from this Government in growing the economy and creating jobs for people.

Instead the slash and burn Osbornomics approach is hurting the prospects of economic growth.
Click on image to see the plan on the Labour Party website.