Why Tories should be awarded the “U-Turner” Prize

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Tory-Led Government U-Turns

By Gracie Samuels

David Cameron’s U-turns include broken election promises and policy reversals in government, here is a list, if I have left any off please post them in comments below and I will add them in.

  1.  U-turned  Andy Coulson –  finally got rid of Andy Coulson after he became embroiled in phone hacking story

  2. U-turned on Spending cuts – said there would be no drastic spending cuts – before embarking on an unprecedented round of austerity cuts. David Cameron said spending cuts during the early part of a Conservative government wouldn’t be ‘particularly extensive’

  3. U-turned on Pensioners Winter Fuel Allowance – saying he would not cut pensioners winter fuel allowance – then did

  4. U-turned on  the NHS…”There  will be no top down reorganisation of the NHS……David Cameron

  5. U-turned on not raising VAT  “We have absolutely no plans to raise VAT. Our first Budget is all about recognising we need to get spending under control rather than putting up tax”.

  6. U-turned Fuel tax Stabiliser –  its commitment to consult on a ‘fair fuel tax stabiliser

  7. U-Turned Knife Crime – said in opposition that anyone caught carrying a knife could expect a jail term – now scrapped.

  8. U-turned on Child benefit Cuts………”I’m not going to flannel you, I’m going to give it to you straight. I like the child benefit, I wouldn’t change child benefit, I wouldn’t means-test it, I don’t think that is a good idea.”……..David Cameron

  9. U-Turned – DLA – abolishing it for PIPs

  10. U-turned on saying no cuts to frontline services……”What I can tell you is, any cabinet minister, if I win the election, who comes to me and says: “Here are my plans” and they involve front-line reductions, they’ll be sent straight back to their department to go away and think again.”…….David Cameron

  11. U-turned EMA – said they would not scrap Educational Maintenance Allowance – then did.

  12. U-turned Tuition Fees – Clegg pledged not raise tuition fees then voted to treble them.

  13. U-turned on Future jobs Fund – Before the General Election, David Cameron praised the Future Jobs Fund as a “good scheme” and the Conservatives said they had “no plans to change existing Future Jobs Fund commitments”.

  14. U-turned on Lisbon treaty referendum –  “cast-iron guarantee” to hold a referendum on the Lisbon Treaty

  15. U-turned  defence scrapping Nimrods and sacking troops by email etc.

  16. U-turned on pledge to help disabled children and their parents.

  17. U-Turned on improving the systmen for disabled, sick or elderly Backing out on improving the system for those caring for sick or disabled or elderly loved ones

  18. U-turned on Education – Gove forced into so many u -turns found it impossible to get right

  19. U-turned on National Insurance contributions – “We’ll scrap the Gordon Brown’s jobs tax” – did for employers but employees contributions have risen 1%

  20. U-turned Recall MPs – scrapped pledge for public to be allowed to recall under-performing MP

  21. U-turned on  Forests -Forced to do a u-turn on selling off ancient woodlands (but this is till happening by stealth)

  22. U-turned on  School Sports programme – Forced to u-turn on cutting funding for school sports after public outcry and outcry from sporting heroes

  23. U-turned on  Bookstart- Forced to do a u-turn on cutting funding for “Bookstart” after public outcry

  24. U-turned on idea to pack the 1922 Committee with ministers after a Tory backbench rebellion

  25. U-turned  and got rid of his personal photographer after putting him on the public payroll  after public outcry

  26. U-turned on granting anonymity to rape suspects, were swiftly ditched in the face of a public outcry.

  27. U-turned on wearing lounge suit to royal wedding -and wore a morning suit to the royal wedding, after much barracking from the public and William Hague saying he would look an idiot in an ordinary suit.

  28. U-turned  Housing benefit – forced to  drop plans to impose a 10 per cent cut in housing benefit on the long-term unemployed after public outcry.

  29. U-turned on Free Milk. The health minister Anne Milton suggested scrapping free school milk for the under-fives to save money, but Downing Street retreated after Cameron was compared with Margaret Thatcher. The policy confusion led to the absurd scene of David Willetts defending the plan on The Andrew Marr Show while No 10 was in the act of briefing that it had been dropped.

  30. U-turned on NHS Direct – to replace NHS Direct with a cut-price “health advice service” prompted a wave of #savenhsdirect tweets and another John Prescott campaign. The Health Secretary soon backed down and promised that only the number would change HOWEVER this is sleight of hand as they are still radically changing NHS Direct. 

  31. U-Turned on privatising Blood Transfusion Service – Forced to cancel plans to privatise the Blood Transfusion service after public outcry.  Sections of the service which could be run by private firms include testing, processing and transport of blood and are part of a wider strategy to outsource more NHS services. 

  32. However, the proposals have faced objections on the grounds that people who donate blood do so for free, so private companies should not profit from this goodwill. 25,000 signatures from members of the public have already been amassed in under a week, as part of a union-organised petition protest against the plans.

One or two u-turns in a government is understandable, but this many in just one year shows a shocking level of dithering and of poor judgement, ill thought out policy, policy making on the hoof and an alarming level of incompetent cabinet ministers, right up to and including the prime minister.

Perhaps the Tories Should Be Awarded A

“U-Turner prize”?

The Future Jobs Fund: One of the most ineffective job schemes there’s been?

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The Future Jobs Fund: One of the most ineffective job schemes there’s been?

The Future Jobs Fund (FJF) was an employment subsidy brought in by the last Labour Government at the height of the recession to help tackle youth unemployment. It provided sufficient funds to create 100,000 6 month jobs for long term unemployed 18-24 year olds, paying minimum wage for 25 hours per week.

In September 2009, when the first young people started FJF posts, there were 99,000 18-24 years who had been claiming Job Seeker’s Allowance for over 6 months. When applications for the FJF closed in March 2011, this had fallen to 78,000. Today, 18 months later, there are almost 145,000 18-24 year old long term claimants of Job Seeker’s Allowance (source here). One of the Coalition’s first acts was to scrap the FJF. David Cameron had this to say about the decision:

“The Future Jobs Fund has been one of the most ineffective job schemes there’s been… The really damning evidence is that it’s a six-month programme, but one month after the programme [has finished] half the people that were on it are back on the dole. It failed.”

David Cameron, 17 March 2011

At the point he made that statement, no evaluation had been done on the efficacy of the programme, so there was really no basis for the PM’s pronouncement. To their credit though, the DWP did do an evaluation of the FJF and last week it was published (or sneaked out on a Friday with no press release if you are cynical like me). So now the results are in, was the FJF “one of the most ineffective job schemes there’s been”?

Jonathan Portes has written a very good blog post on the evaluationhere, and his organisation NIESR peer-reviewed DWP’s work on this. He writes:

The bottom line is that the impact of the Future Jobs Fund (FJF) on the chances of participants being employed and/or off benefit was substantial, significant and positive. 2 years after starting the progamme (so long after the programme itself had ended, so the participants were back in the open labour market), participants were 11 percentage points more likely to be in unsubsidised employment.  

This is a very large impact for an active labour market programme (considerably larger than that found for New Deal for Young People, for example) suggesting that the programme had a large and lasting impact on participants’ attachment to and ability to succeed in the labour market. 

The FJF  programme is estimated to result in:

  • a net benefit to participants of approximately £4,000 per participant; 
  • a net benefit to employers of approximately £6,850 per participant; 
  • a net cost to the Exchequer of  approximately £3,100 per participant; 
  • and a net benefit to society of approximately £7,750 per participant.

…we know now; the Prime Minister was wrong.”

Not for the first time then, David Cameron has said something, based on no evidence, only to be subsequently proved wrong. So much for evidence-based policy. Contrast this with the Mandatory Work Activity. A similar evaluation concluded that this programme generated no impact on employment. How did the Government respond to this finding? It extended the programme! Ideology trumps facts again.

Back to the FJF. I had some peripheral involvement in the programme in my local area. The majority of the job placements were with local community and voluntary organisations. It was win win. The organisations were able to increase their capacity (very Big Society!), and the individuals were given a chance to try something new and get into the workplace (in some cases for the first time). The key benefit of FJF was that participants were actually in a job – they were being paid. They felt that someone had finally given them a chance after months of rejection. The increase in their self-confidence should not be underestimated, and this seems to be reflected in the evaluation results. After the 6 months were up, participants were much more capable of securing further work than would otherwise have been the case. You cannot replicate this feeling of self-worth with unemployed work experience placements at Poundland.

The FJF has been replaced by the Work Programme and the Youth Contract. The fact that long term youth unemployment has doubled since the FJF was scrapped, suggests these new programmes are not working.

The FJF showed that government can create jobs, and when it does the private sector and wider society benefit. The FJF was quite a modest programme. We could, and should be much more ambitious. The intervention I favour is the MMT Job Guarantee, which I have tried to outline here.

ThinkLeft says:  This post is particularly relevant in view of the fact that official figures show that only one in 28 unemployed people referred to the government’s welfare-to-work programme has been found a job for six months – failing to meet the government’s target.

An analysis by the Guardian reveals that none of the 18 Work Programme contractors – 15 of which are private companies – managed to get 5.5% of unemployed people referred to the scheme a job for half a year in the 14 months until July 2012, despite the government having spent £435m on the scheme so far.

Related posts:

Why Can’t we have Full Employment? by alittleecon

“Of Course the Government Can Create Jobs!” by alittleecon

Is ‘Austerity’ intended to increase unemployment and suppress wages? 

 

The Work Programme. Is this the best that we can do?

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First posted on September 26, 2012 at 

The Work Programme. Is this the best we can do?  by 

“…we’re overturning the convention of recent times: the idea that it’s governments that create jobs. No, they don’t – businesses do.”

David Cameron writing in the Daily Mail, 1 Oct, 2011

When the coalition took power in May 2010, one of their first acts was to scrap Labour’s Future Jobs Fund and to announce they were replacing it and all other Labour unemployment programmes with a cheaper alternative – The Work Programme.

The success of the Work Programme depends upon (mainly) lead private sector welfare to work companies helping the long term unemployed find work. They have a great deal of flexibility in the methods they use to achieve this, and the Work Programme is compulsory once someone has been unemployed for 12 months (and earlier for young people). They are paid on the basis of payment by results.

The only problem is that the Work Programme does not seem to be working (e.g. see here and here) and many of the organisations involved are starting to have doubts their continuing involvement. The Government insists all is well, but they have been very coy about releasing official data on performance.

The basic problem with the Work Programme can be explained with the following simple analogy. Imagine there are 100 dogs and I bury 95 bones in the ground and send the dogs out to find them. It’s easy to see that at least 5 dogs will return without a bone. In order to improve their chances of finding a bone, I might provide some extra training to the 5(+) dogs who came back empty-pawed. Now when I rebury the bones, the dogs that I trained come back with a bone. Unfortunately 5 other dogs returned without a bone. No matter how much training I give the dogs, as long as there are only 95 bones,  there will always be some dogs who cannot find a bone. The only solution then is for me to bury an extra 5 bones*.

The Work Programme however, does not create any jobs (other than for a few thousand ‘employment advisors’ and contract managers), and can only ‘shuffle’ the unemployed. Some will find work, but only at the expense of others.

The Work Programme is what economists would call a supply side policy. The idea is that unemployed people lack the skills and/or attitude that employers are looking for and if these attributes can be instilled into those looking for work, the private sector will jump at the chance to hire them. You hear this a lot from  Government and in the media. This misses the wood for the trees though. The problem not that the unemployed are not employable (though some may be). The problem is a lack of jobs. The Work Programme cannot address this problem.

This post began with a quote from David Cameron, because there seems to be a prevailing view that only the private sector can create jobs (though hundreds of thousands of doctors, nurses, teachers etc might disagree). Private sector good, public sector bad. Because of this, our politicians fiddle with schemes like the Work Programme, while all around them millions of people are unable to find work. Think of the lost potential! The young people leaving school and university with little of no prospect of a fulfilling career. Imagine how much more prosperous we could be as nation if we could just put those unused resources to work!

So to return to the title of this post, is the Work Programme the best we can do to address our unemployment crisis? I think not only can we do better, we must do better, and a failure to act represents a gross dereliction of duty by our Government.

So what could we do? My last post tackled the canard that “There’s no money left”. Armed with the knowledge that this is not true, what policy options are there?

One option would be to just do what a lot of commentators on the left are advocating at the moment – to raise demand through increased spending on capital projects or reduced taxation on low earners. Without question, that would reduce unemployment quickly, but there would come a point where the impact would reduce as the new jobs would be unevenly spread around the country and large capital projects tend to require higher skills nowadays. For example, in the 30s, the WPA in the US provided millions of jobs to low skilled workers on ‘shovel-ready’ projects. Today, sophisticated machinery does the job that in the past was done by hand.

The option I prefer is called a Job Guarantee (JG) or Employer of Last Resort (ELR). This is a concept proposed by Minsky and expanded upon and developed by economists from a branch of economics know as Modern Monetary Theory. For more scholarly articles, I recommend reading this comprehensive explanation of the JG, or a series of articles which can be found at the Levy Institute here.

What is a JG/ELR then? In simple terms, it is a backstop provided by the government. The government would provide the funding to provide a job for everyone who is willing and able to work, but who cannot find a job in the private sector or regular public sector. While central government would provide the funding, the jobs could actually be created in the voluntary sector or local government, doing work which provides community benefit. There are almost limitless types of work which could be provided which the private sector for whatever reason do not find profitable. Just because they are not profitable, doesn’t mean they are not socially useful. Examples of jobs would be caring for the elderly, community gardening, youth work, sports coaching, music lessons, after school clubs and many, many more.

The JG wage could start at the minimum wage and be gradually increased to a living wage level. In effect, the JG wage would become the de facto minimum wage. Any employer trying to pay less would be unable to recruit staff. This could mean some low wage work becomes no longer profitable. These will tend to be the worst jobs in society, so in general, that would be a good thing.

JG jobs could come with accredited training so that workers can build the skills necessary to transition to permanent work elsewhere. Jobs suitable for those looking to return to work after a period out of the labour market due to ill health could also be created. A JG could operate alongside existing benefits so the decision to take a JG job would be entirely up to the individual. It may be that they would prefer to look for a regular job whilst remaining on benefits.That would be fine.

As well as being a path the full employment, a JG would mean that booms and busts would be shallower. At the moment, when a recession hits, things economists call automatic stabilisers kick in. This means tax receipts fall and out of work benefits rise and this stops the economy from falling into the abyss. The problem is, at the moment the automatic stabilisers are not powerful enough to reignite the economy. A JG would change this by lessening the severity of the slump. The size of the pool or JG workers would rise and fall depending on the state of the economy. In recession, the pool would be large, but as the economy recovers, the majority would transition back to regular jobs.

Another macroeconomic impact would be to ensure a modicum of price stability. At the moment, economists and politicians place a great deal of emphasis on inflation. The Bank of England has a target for inflation of 2.5% and Mervyn King must write a letter to George Osborne every month that inflation exceeds that target (he’s been writing a lot of letters lately).

The trouble is, as the economy starts to reach full capacity, the risks of inflation increase. Mainstream economists believe that there is a trade-off between inflation and unemployment, which is the main reason why we haven’t had true full employment for about 40 years. Keeping unemployment above a certain threshold has been deliberate. A JG changes this because the JG sets a floor on wages which prevents wages elsewhere in the economy from rising too fast as the economy reaches full capacity. So we can have full employment and price stability. At the moment there is a belief that it is either all, and price stability is considered more important.

I want to finish with a quote from Michal Kalecki’s masterful 1943 essay “Political Aspects of Full Employment” (I highly recommend reading the whole thing which can be accessed here):

A solid majority of economists is now of the opinion that, even in a capitalist system, full employment may be secured by a government spending programme, provided there is in existence adequate plan to employ all existing labour power, and provided adequate supplies of necessary foreign raw-materials may be obtained in exchange for exports.

So we already know how to achieve the goal of full employment. It is practical and affordable. We just need the political will and determination to get there. The Labour Party are currently doing a lot of soul searching to try to win back the support of the British people, but if they truly want to become the party of working people again, they need to get serious about full employment. There have been some promising noises from certain quarters. The IPPR, supported by David Miliband back a type of JG for young people and those unemployed for over 12 months, but it lacks ambition. They need to be braver. They need to be bolder.

PS. There is a very good video here of a presentation given by Bill Mitchell (one of the architects of the JG concept) to the European Commission’s recent “Jobs for Europe” conference. It’s encouraging these ideas are being discussed at this level. The video’s about 25 minutes long. It’s well worth a watch.

*For a more detailed version of the dogs and bones example, see this post by Bill Mitchell.

Related Links:

http://alittleecon.wordpress.com/2012/09/26/the-work-programme-is-this-the-best-we-can-do/

https://think-left.org/2012/09/25/the-fundamental-deceit-of-theres-no-money-left/

https://think-left.org/2012/08/07/professor-bill-mitchell-the-need-for-full-employment/

https://think-left.org/2012/06/30/is-austerity-intended-to-increase-unemployment-and-suppress-wages/