Updated: Jul 28, 2021
Simon Prideaux & Claudia Radiven
Johnson’s Conservatives and the ‘Kickstart’ Back to Prosperity
In a Parliamentary response to the ongoing Coronavirus (Covid-19) crisis of 2020, Rishi Sunak—the UK’s Chancellor of the Exchequer—announced (in his Summer Economic Update) that Boris Johnson’s Conservative Government was going to ‘kickstart’ the economy by protecting, supporting and creating jobs. The Government, he argued, had a clear goal to “give businesses the confidence to retain and hire, to create jobs in every part of our country, to give young people a better start and to give people everywhere the opportunity of a fresh start” (Sunak, 8th July 2020: column 973).
To do this, the Government would, in the main, push through a financial package designed to help 16-24 year olds (BBC, 8th July 2020; Kimber, 8th July 2020) who are the most affected cohort by virtue of being “two and a half times as likely to work in a sector that has been closed” (Sunak, 8th July 2020: column 975). Support for this group would be for 6 months, starting in August 2020, and would involve a total expenditure of £2 billion (Kuenssberg, 7th July 2020; Partington, 8th July 2020; Parliament, 8th July 2020; Wilson and Shah, 10th July 2020). Indeed for each ‘kickstart’ job, the Government—with this summer update—pledged to cover the cost of at least “25 hours’ work a week at the National Minimum Wage of £4.55 …[per hour] for under 18s, £6.45 for 18 to 20-year-olds, and £8.20 for 21 to 24-year-olds” (BBC, 8th July 2020: no page).
Moreover, Sunak (8th July 2020) also professed to a £9 billion allocation of support (by paying a £1,000 bonus per employee) to bring back all 9 million people who have been furloughed during the pandemic (Kimber, 8th July 2020; Parliament, 8th July 2020). However, for businesses to get the bonus each employee must be paid at least an average of £520 per month from November to January (Sunak, 8th July 2020: column 974). In sum, this would be the equivalent of the lower earnings limit in National Insurance. Furthermore, Sunak (8th July 2020) continued with these themes when he addressed traineeships and apprenticeships. Both, he voiced, would be the subject of further subsidised incentives to increase skill levels and create more work possibilities.
In relation to traineeships, the Government was prepared to pay companies £1,000 to take on trainees aged 16 to 24 given that traineeships have always been “a proven scheme to get young people ready for work” (Sunak, 8th July 2020: column 975). Nonetheless, for companies to benefit from trainee grants, they must provide work experience placements, education including English and maths and work preparation for a period of six weeks to six months. Furthermore, £100m was guaranteed to help 18-19-year olds leaving school or college to find work in high demand sectors through places on Level 2 and 3 training courses. And, in order to do so, a further £17m investment was set aside to increase the number of available places by threefold in sector-based work academies during 2020/21 (BBC, 8th July 2020; Parliament, 8th July 2020).
Although not all of the future recipients of the grants associated with Sunak’s (8th July 2020) new revitalised apprenticeships can be specifically classed as youth, the incentives do, nevertheless, attempt to reinvigorate work opportunities for a vulnerable group who are still relatively young and greatly affected by the Covid-19 lockdown in the UK. As a consequence, the Summer Economic Update (8th July 2020) outlined the Treasury’s intention to pay £2,000 per apprentice employers hire (Parliament, 8th July 2020: no page). This would be in addition to the £1,500 paid for hiring young apprentices with an education, health and care plan. With this in mind, the Chancellor encouraged businesses ‘small and large’ to ‘take advantage’ of the offer over the next six months (BBC, 8th July 2020; Sunak, 8th July 2020). For those who are older, though, “a brand-new bonus will be introduced to employ apprentices 25 years old and over, with a payment of £1,500” (Parliament, 8th July 2020: no page).
Even so, and despite the good intentions, the question of whether these policies from Johnson’s Conservatives could be successful or not can only be judged over time or by past experiences. In this latter respect, Sunak’s (8th July 2020) proposals are not new (Kimber, 8th July 2020; Kuenssberg, 7th July 2020): especially when it centres around the intention to alleviate youth unemployment. Without doubt, similar employment measures had been undertaken by Governments since the 1930s and, as this article will demonstrate, have been a constant reoccurring theme.
Recovering from the Great Depression in the 1930s
If truth be known, the Great Depression of the 1930s had a limited impact on the UK economy, particularly when compared to the effects internationally. In short, the depression did not lead to any severe adjustments of economic policy within the UK (Richardson, 1969:3-4). The unemployment issues of the time were largely put down to “structural rather than cyclical” factors and, it was argued, the recovery was largely due to the surge of new industries (Richardson, 1962:363). However, with issues relating to supply and demand, Northern industrial areas, in particular, suffered severe unemployment and increased difficulties in recovery compared to their Southern or Midland counterparts. In addition, unemployment varied across industries, age of employee and skill levels.
To add insult to injury, the longer individuals spent on work relief, the less employable they became. Indeed, the more time spent out of work affected reputations as skills were judged to fade whilst unemployment continued (Hatton and Thomas, 2010). All-in-all, it “was clear that unemployment was the major effect of the Great Depression as far as the UK …[was] concerned. The proportion of workers who were unemployed rose to a peak of 17 per cent in 1932” (Crafts and Fearon, 2010:295). Yet—in terms of youth employment during the economic downturn of the 1930s—the young were not disproportionately represented on the unemployment register. Rather, youth unemployment variances tended to lay “in different hiring and redundancy practices” (Eichengreen, 1987:300). Of paramount importance, was the undeniable fact they were practices that encouraged employers— in the burgeoning new industries—to prefer the recruitment of
…workers without previous experience in other sectors. Workers with prior experience might demand higher wages (particularly if their previous experience was in a skilled job), import entrenched attitudes about work pace and organization, or be more inclined toward trade-union membership (Eichengreen, 1987:296).
And, it has to be said, although these practices were abhorrent in contemporary circumstances (especially the anti-trade union sentiments), they, nonetheless, led to the suppression of the old, staple trades of coal, iron, steel, textiles, shipbuilding and general engineering to the benefit of new industries (involving motor vehicles, electrical goods, rayon, scientific equipment, rubber, chemicals and diverse light manufacturing) who began to dominate and stimulate—by virtue of their innovative and unique position—an unusually strong demand for new-to-the-job juveniles untainted by previous employment training and values (Eichengreen, 1987). In effect, the youth of the 1930s were ‘moulded’ to suit the new potentially longer-lasting demands of up-and-coming industries.
On the other hand, the 1930s crisis witnessed a spate of party, industrial and fiscal consensus whereby 1931, in particular, became a watershed year for UK economic policy. In the eyes of Dobbin (1993:22), the new industrial policies were not simply about governmental regime change as these policies were “antithetical to Conservative traditions, and they were orthogonal to Labour's stated agenda of socialization of the economy”. Put simply, “MacDonald's policies as Labour leader, as well as those of his coalition National Government between 1931 and 1935 and those of Conservative Stanley Baldwin's Government after 1935, did not reflect traditional British party agendas”.
Consequently, the gold standard was abandoned whilst sterling was devalued to allow monetary policy to be duly free from its obligation to support gold reserves and, as a result, could then be used as a tool for economic expansion.
Crucially, the crisis “also provided the incentive for Britain to turn away from an emotional commitment to free trade” (Crafts and Fearon, 2010:296). Accordingly, this environment of agreement meant that economic policy was less about ‘means’ (ie. the continuance of the competitive laissez-faire system and the re-conceptualisation of stable trading conditions) and “more geared to specific ends (economic recovery, lower unemployment, restructured staple industries)” (Booth, 1987:518).
Naturally, the 1930s in the UK were not without policy failure. The problems surrounding regional disparities being a case in point. Disparity in the regions was, however, investigated and acknowledged. Certainly, by the late 1930s an extensive volume of information on unemployment duration was collected as worries about long-term unemployment intensified (Crafts, 1987). No doubt, this worry cum concern was inevitably associated with the worsening situation of “the traditional export staples, coal mining, shipbuilding, engineering, cotton and iron and steel” (Crafts, 1987:422). Unfortunately, the problems surrounding regional differentials were not resolved despite governmental concern.
Reliance upon ‘would be’ juvenile workers from depressed areas migrating to more prosperous areas (Garside and Hatton, 1985) or living off a substantially reduced (from 1931 until the budgets for 1934-35 and 1935-36) unemployment benefit if eligible (Zimmermann and Saalfeld, 1988), whilst awaiting an economic and regional upturn was simply inadequate to say the least. Nor, as will become clear, would it be the only time government policies left a significant proportion of the population in the ‘outer’ regions wanting. And yet, to reiterate, unemployed youths were not disproportionately represented in the unemployment figures of the time. But that could be down to the fact that school leavers at the age of 14 could not enter onto an apprenticeship until they were 15 ½ years old for girls or 16 years of age for boys and, in the interim, had to rely on casual, temporary and demoralising work rather than benefits (Eichengreen, 1987).
Displacement and the Youth Training Scheme
Back in the 1980s, the Manpower Services Commission (MSC)—in its Youth Task Group Report (April 1982)—forecast that unemployment amongst 16 and 17-year olds would reach 57% and 48% respectively by September 1984 unless positive action was taken (O’Hagan, 1983:14). Partially as a response to this report and the imminent threat to youth employment, the first Thatcher Government (1979-1983) introduced the Youth Training Scheme (YTS) in April 1983 to replace the countercyclical, temporary Job Creation Programme (1975-78), the Work Experience Programme (1976-78) and the Youth Opportunities Programme (1978-83) (Brian et al., 1990).
Approximately 460,000 places would be provided on the YTS at a cost of £1 billion (Finn, 1984:145) and, because of such, the YTS was seen as part of the answer “to the twin problems of increasing unemployment and a growing skills shortage” (Kitson, 1999:23) due to its primary concentration on giving 16-year-old school-leavers (and some unemployed 17-year-olds) one year of work experience with an employer and the provision/allowance of ‘off-the-job’ training and education (Hart et al, 1986; Jones, 1988; Peck, 1990). Quite simply, the YTS was intended to “provide all the youngsters who …[took] part with a better start to working and adult life …through an integrated programme of training, education and work experience” (Tebbit, 2nd February 1983:309).
With this arrangement, young first year trainees received a small weekly allowance of £27.30 (Hart et al, 1986:44) financed by the government, whereas employers were invited—if not expected—to supplement this if they chose to do so (O’Higgins, 1994). Overall, the stated aim of the programme was to provide a “permanent bridge between school and work” (MSC, 1982 cited in Peck, 1990:24) yet it came at a cost to the Treasury of £1,850—from 1984 to 1985—for each place provided (Hart et al, 1986:44). In particular, though, the YTS was intended to enhance the employment prospects of young people (Chapman and Tooze, 1987) and, as a result of such endeavours, help them avoid the possibility of long-term unemployment.
Nevertheless, this benign picture of how the YTS would alleviate unemployment issues did not hold true for long. Although Norman Tebbit—the still incumbent Employment Secretary during the second Thatcher Government (1983-1987)—described the YTS as ‘far-reaching and ambitious’, the magazine New Society saw it as a “cheap and convincing ‘camouflage’ to reduce the number of young people on the unemployed register”. Worse still, this YTS camouflage of youth unemployment had ‘displacement effects’: effects that could be divided into
...‘deadweight loss’ where employers substitute programme trainees for, say, apprentices that would otherwise have been taken on, so that in effect the firm’s training bill is paid for by the government with no net increase in training provision, and the ‘substitution effect’—where programme trainees are substituted for some other kind of workers (e.g. part-timers or older workers) and unemployment is created elsewhere (Dolton 1993:1273).
By way of substantiation, Deakin and Pratten (1987) attempted to investigate the ‘displacement effects’ on employment. In their investigation of the practices arising out of the recruitment of YTS participants, Deakin and Pratten (1987)