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) asked if YTS placements replaced apprenticeships or other jobs. The answer to these questions was found “to vary by firm size where the deadweight effect and the substitution effect were as large as 42% and 20% of jobs, respectively, for firms with under 100 employees, and 28% and 4 % respectively for firms with over 1,000 employees” (Dolton 1993:1274 citing the work of Deakin and Pratten, 1987). Geographically, the situation became even more acute. On top of the ‘displacement effects’, it was also observed that post YTS destinations were profoundly affected by locally shaped markets. When comparing UK regions, Peck (1990:23) noted that less
…than half of those leaving YTS schemes in Scotland and the Northern region …[were] successful in obtaining regular jobs. In these areas almost one in three of YTS ‘graduates’ were found to be unemployed when contacted in the Training Agency’s 100 per cent follow-up survey. In the South East of England, by contrast, 71.4 per cent of trainees …[left] the scheme for regular jobs and the post-YTS unemployment rate …[was] comparatively low at 12.8 per cent.
In times of recession—which the early 1980s were subject to—this represented a particularly dire situation whereby depressed local economies in which there existed a deficit of supply-side demand for youth labour meant that the training and qualifications available through the YTS were often limited in value (Droy et al., 2019). With specific regard to this, the YTS failed to assure equality of work access for participants in different regions of the UK. In truth, the scheme failed to render sufficient additional assistance in local labour markets where demand deficits persisted prior to, and during, the inception and establishment of the YTS (Peck, 1990). Collectively, then, ‘deadweight loss’ and the ‘substitution effect’—as a result of ‘perverse’ incentives for employers (Prideaux, 2001; 2005)—along with regional variations (other than in the South East) had a serious impact upon the success of the YTS to the extent that youth unemployment was not universally reduced across the UK. Nor was it the case that the YTS was devoid of displacement and, as a result, caused increased unemployment for others.
New Labour, New Deals and ‘Perverse’ Incentives for Employers
As a consequence of the policies implemented by the Thatcher and Major Conservative Governments, New Labour (1997-2010) inherited an economy that was underperforming and plagued with significant yet fundamental weaknesses. This ‘legacy’ included a lack of investment in industrial capital and poor productivity performance (Coates, 2005) alongside income inequality at levels near to their post-war high (Hills, 2005). Critically, 1.7 million people were unemployed (Theodore, 2007:931). Set within this environment, the Department of Social Security’s (DSS) Green Paper New Ambitions for Our Country: A New Contract for Welfare (March 1998) constituted an ideal example of how the policies of New Labour redressed and utilised supply-side themes from the past to combat unemployment.
As with the constantly reoccurring themes of ‘education/re-education’, ‘obligation’, ‘mutual responsibility’ and ‘self-reliance’ in the UK and the US, the concept of ‘workfare’ became unequivocally entwined in the ‘New Deal’ idiom of the New Labour Party. ‘Opportunity’ was to be paternalistically enforced upon ‘dysfunctional’ or ‘workless’ individuals in a graphic demonstration of the positive exercise of functionalist/new communitarian thought and its associated interpretations of human behaviour (Monaghan and Prideaux, 2016; Prideaux, 2001; 2002; 2005; 2010; Theodore, 2007). To quote the 1998 Green Paper:
The Government’s aim …[was] to build the welfare state around work. The skills and energies of the workforce are the UK’s biggest economic asset. And for both individuals and families, paid work is the most secure means of averting poverty and dependence (DSS, March 1998, chapter 3:1).
In order to secure this aim, New Labour’s solutions were about helping people move from welfare to work through the New Deals and Employment Zones. Both of which were designed to develop personalised services to help people into work, to lower the barriers to work for those who are able to and want to work and, finally, by making work pay with the introduction of the national minimum wage and reforming the tax benefit system yet “ensuring that responsibilities and rights …[were] fairly matched” (DSS, March 1998, chapter 3:2).
In a self-declared ambition to achieve “nothing less than a change of culture among benefit claimants” (March 1998, chapter 3:2), the first tranche of six New Deals was introduced between 1998 and 1999 in an attempt to steer a variety of non-employed groups through various “‘gateways’ into the labour market” (Hewitt, 2002:192). Using ‘carrot and stick’ measures (Hewitt, 2002; Driver, 2004) to coerce or encourage individuals into the paid labour market, each of the gateways—later condensed into the single ‘ONE’ gateway through which all claimants must pass (Hewitt, 2002)—began the process of targeting young unemployed people; the long-term unemployed; lone parents; those with a disability or long-term illness and; those who are partners of the unemployed or disabled people and those people who were aged 50 or more (Hewitt, 2002).
With the exception of lone mothers (who were compelled to attend a job interview), the majority of New Deal participants were given several work-oriented options. In this respect, the ‘deal’ for the young, was either to work with an employer who will receive a job subsidy of up to £60 per week; to undertake full-time education or training; to work with a voluntary sector organisation; or to work on the Environmental Taskforce (Prideaux, 2001:95). All of these options involved training but, as Gordon Brown (1997)—the then Chancellor of the Exchequer—declared, there would not “be a fifth option to stay at home on full benefit”. Accordingly, when these individuals signed on for benefit payments, they would be signing up for work where benefits would “be cut if young people refuse[d] to take up the opportunities” (Brown, 1997 cited in Theodore, 2007:931).
However, New Labour still held a benevolent attitude toward capitalism, the laissez-faire market and the implicit belief that through effective management of the economy and the working environment social cohesion could be extensively created. By contrast, White (2000) argued that one of the preconditions of welfare ‘contractualism’ (as epitomised by the New Deal conditionality principles) should be the provision of ‘real’ opportunities for the participants concerned. As Dwyer (2004) pointed out, the 1.25 million people helped back into work since the New Deals began should not be dismissed lightly. Nevertheless, a number of commentators (Grover and Stewart, 2000; Gray, 2001; Peck, 2001; Prideaux, 2001; 2005; Theodore, 2007) cast doubt over the portrayed success of the New Deals. In the cold light of the day, it could have been that capital was the real beneficiary rather than unemployed people or lone parents not participating in the paid labour market.
Indeed, it could be argued that the specifics of the New Deals—and, to be specific, the New Deal for the Young—echoed the failings of the YTS by providing a previously mentioned ‘perverse’ incentive for employers (Prideaux, 2001; 2005) that helped to provide lucrative gains for the unscrupulous or, equally, provide a financial ‘lifeline’ for struggling companies. At the level of unskilled employment, for example, the rewards that an employer could receive for recruiting a ‘New Deal’ participant encouraged the use of ‘workfare’ recruits rather than full-time employees. When competition is fierce, or during times of economic recession, it hardly made sense for many industrialists to employ an individual for 36 hours per week at a cost of £151.20 (calculated on the basis of a minimum rate of £4.20 per hour) when they could pay an individual as little as £91.20 with the difference being made up from a £60 per week ‘New Deal’ subsidy (DSS, March 1998, chapter 3:3-4).
Add to this a further grant of £750 per every welfare-to-work trainee (March 1998, chapter 3:4), it became clear that the use of a subsidised labour force offered an employer a substantial reward. More so, when there was no requirement to award a New deal participant with permanent employment after six months. As a result, recruiting a new cohort of ‘New Dealers’ provided the best economic option for employers and—in times of crisis or in the pursuit of profit—represented the only option for many companies (Prideaux, 2001; 2005).
To exacerbate these misgivings, Dwyer (2004) and Peck (2001) also remarked upon the unassuming job entry rates the New Deal schemes had achieved from their inception to March 2000. Overall, only a third of participants left to enter into paid work, while many of those who did leave the New Deal became trapped in ‘contingent employment’ in that they continually moved from one short-term, low-paid and inevitably insecure job to another. This was especially true of New Deal participants in local, economically depressed areas (Sunley et al. 2001) where the demand for jobs was poor and those that did exist were badly paid (despite the national minimum wage), lacked tenure and collateral due to the availability of a large pool of potentially unemployed New Deal ‘graduates’.
Consequently, the belief that the culture of ‘worklessness’—which blamed the unemployed for their predicament and diverted attention from structural problems to supply-side solutions (Theodore, 2007)—needed to be tackled and changed as it was simply a misnomer that omitted to consider local economic conditions. ‘Contingent employment’, therefore, merely served to exacerbate and disguise the local and national (un)employment landscape even further.
Moreover, besides the lack of remuneration, security and future work in the paid labour market, there was also a problem emerging from “a hard-core of ‘low employability’ individuals who …[were] being recycled through the programme and back into benefits” (Sunley et al., 2001:501). Effectively, the reduction in unemployment caused by recruitment/conscription onto the New Deals lost its impetus after the first tranche of New ‘Dealers’ left the unemployment register. Arguably, subsequent tranches were mainly about replacing those deemed ‘unemployable’ whilst the so-called ‘unemployables’ were returning to claim benefits yet again. All-in-all, the previously cited 1.25 million helped back into work (Dwyer, 2004) could have been so much greater if geographical differences had been considered, recycling had been averted and the incentives given to employers had been conditional as opposed to being over-reliant on entrepreneurial ‘morality’.
When set against this backdrop of limited success, it is hard to argue that New Labour fulfilled White’s (2000) criterion of providing meaningful employment for individuals participating in the New Deal schemes. Nor is it easy to argue that such indications would deter physical or emotional feelings of alienation on behalf of the less successful participants and promote social inclusion through the revival of a sense community and belonging. In short, only the best achieved meaningful employment and only a small proportion of the best achieved any form of employment in economically depressed localities.
The Future Jobs Fund and the Onset of the Work Programme
In reaction to the global financial crash of 2008, (New) Labour—under the auspices of the last (New) Labour Prime Minster Gordon Brown and his Chancellor, Alastair Darling—introduced the Future Jobs Fund (FJF) in 2009. It was to be the first part of the Young Person’s Guarantee (introduced in 2010) where the former, as with the current Conservative Chancellor’s programme, was to be a financial subsidy scheme to create employment. In this instance, however, it was a scheme whereby “everyone under the age of 25 who has been out of work for 12 months will be offered a job or a place in training” (Ali, 2013:21 citing Darling, 22 April 2009).
As such, it was a programme designed to encourage the creation of up to 170,000 temporary jobs (Harari, 15th December 2011) through the provision of considerable employer incentives to take on young people primarily aged 18-24 (Marlow, et al., November 2012). Indeed, businesses were paid up to £6,500 for every job they created (Wilson and Shah, 10th July 2020) and each job had to be for 25 hours at least, last for 6 months, paid at the national minimum wage or more (Ali, 2013) and, most importantly, “must not lead to another individual (ie. an employee or contractor) losing their job or reducing their hours of paid employment” (Department for Work and Pensions, 2009 cited by Ali, 2013:24). In total, the allocated Government funding was to be around £1 billion (Harari, 15th December 2011).
Measuring the success or failure of the FJF has proven difficult. In part, this was a consequence of the short life of the scheme: a curtailed life that was exacerbated by political/ideological opposition and evaluation. However, not all appraisals were so dismissive. Despite Cameron’s declaration he could save £320 million (Marlow, et al., November 2012:9) and his conviction that the
…Future Jobs Fund …[had] been one of the most ineffective job schemes there’s been …The really damning evidence …[was] that it’s a six-month programme, but one month after the programme …[had finished] half the people that were on it …[were] back on the dole. It failed (Cameron, 17 March 2011 cited in alittleecon, 26th November 2012: no page).
...other research suggested that this viewpoint/evidence was incorrect. For example, Marlow et al. (November 2012:65) estimated—from and on behalf of DWP baseline assumptions—the benefits and costs of FJF equated to:
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.
In the light of Cameron’s Coalition (of Liberal Democrats and Conservatives 2010-2015) promise to save £320 million by ending the FJF, these estimates from the DWP clearly disputed the claims about the failure of the scheme (Marlow et al. November 2012:9; Portes, 23rd November 2012: no page) and, by implication, about the saving of such a vast sum of money. In actual fact, the opposite was true. The net figures cited above were particularly encouraging for a labour market programme: especially when they offered social benefits and gave the Treasury an economic return for their expenditure (Portes, 23rd November 2012). The economic return alone contradicted Cameron’s avowed saving. Moreover, the net social benefit of around £7,750 per participant also diminished the actual savings Cameron and his Coalition colleagues could have made from abandoning the FJF.
Nevertheless, the FJF was eventually replaced by the Work Programme (2011) which was a major new, integrated welfare-to-work measure introduced to target longer-term unemployed people and provide two years of support to help the unemployed into sustainable work. The programme was to be delivered "through a network of prime contractors and subcontractors, operating under a payment-by-results regime, with increased freedom to develop provision for the individuals they support” (Lane et al. 2013:1).
In total, 1.81 million people had been referred to the Work Programme up to December 2015 yet 1.13 million (62.5%) returned to Jobcentre Plus benefit provision (Dar, 21st March 2016:7; DWP, 22nd March 2018:6). Again, this was hardly a scheme that successfully replaced the FJF and saved £320 million pounds over the long-term (in that the 1.13 million returnees back onto benefits were at a cost to the Treasury). All-in-all, then, the abolition of the FJF was, debatably, more about differing political/ideological stances to that of New Labour and Labour respectively. In this respect, there was a definite lack of a real consensus amongst the political parties involved. And this could be a major problem when a crisis—whether it be pandemic or economic—hits the UK and the rest of the Western world.
Parting Observations and Forebodings: Learning from the Past?
From the above observations about past initiatives, it is possible to glean a number of lessons that have gone unheeded by Rishi Sunak in his Summer Economic Update (8th July 2020). Of primary concern was the YTS ‘colonisation’ of the secondary sector of the labour market (Peck, 1990) and the ‘New Keynesianism’ associated with the ensuing New Deals (Theodore, 2007). Both policy directions placed an emphasis upon supply-side economics to the detriment of the demand-side. And each limited the success of such directions given the blinkered neglect of employer difficulties, responsibilities and duties.
Put succinctly, the two programmes jointly relied heavily on the hope of employer-led recruitment yet, in actual fact, employment was vacancy-led which seriously affected the most depressed regions. Certainly, the YTS ‘colonisation’ involved the capture of the employment sector in which wages were low, “jobs unstable and unemployment a constant threat” (Peck, 1990:20) whereas the ‘New Keynesianism’ of the Blair Governments (1997-2007) led to regional ineffectiveness in "activating underemployed segments of the labour force through training, job-readiness programming and unemployment-benefit reforms that encourage (and increasingly compel) rapid entry into the paid labour market” (Theodore, 2007:929).
During and, no doubt, after the peak of the Covid-19 crisis/recession, Sunak’s (8th July 2020) ‘kickstart’ proposals seem limited to say the least. They appear destined to suffer from the same failings as the YTS and New Deals. Indeed, more questions than answers have arisen from this economic update. Where, for instance are the proposals to support/compensate employer’s loss of income during the crisis and what, exactly, will prevent them from—after January when the furlough bonus runs out—replacing higher paid workers with subsidised ‘kickstart’ labour (if the scheme continues beyond 6 months) or other sources of low-cost recruitment?
To say that the national minimum wage will counteract such practices is simply not the case as the minimum wage itself (because of the graduated hourly rates according to age) could encourage the employment of individuals under the age of 25 or even younger and, therefore, allow some, possibly desperate, employers to avoid—through another ‘perverse’ financial incentive (Prideaux, 2001)—paying the maximum hourly rate of £8.72 as opposed to £6.45 for 18-20 year olds (acas, 2020: no page).
Furthermore, where does Sunak’s (8th July 2020) speech take into account the geographical employment disparities that exist across the UK and, crucially, where are the proposals to counter contingent employment, local job displacement (with its associated creation of a ‘reserve army of labour’) and demand-led differences? All of these questions suggest that the contemporary ‘kickstart’ proposals are destined to fail due to a lack of historical awareness on Rishi Sunak’s and his advisory team’s part.
…receipts in 2020-21 are £133 billion lower (thanks largely to a smaller economy) and spending is £135 billion higher (thanks to policy and higher unemployment) than we forecast in March. This lifts public sector net borrowing (PSNB) to £322 billion or 16 per cent of GDP, the highest peacetime level in at least 300 years …[and] this excludes the cost of the measures announced by the Chancellor on 8 July.
Despite this controversial GDP high, Rishi Sunak continued to add to the deficit by using his summer statement (8th July 2020) to outline a new package of job support worth up to £30bn. This figure, of course, is still on the increase and will be vastly greater given that Covid-19 is beginning to increase yet again in July 2020. According to the Financial Times (Giles et al, 8th July 2020: no page), the UK deficit is thus likely to reach 18 per cent or more of national income which is almost twice the size of the peak deficit in the 2008-09 global financial crisis.
Even though the Chancellor said his speech to Parliament marked the moment that the UK could move from protecting the economy to supporting and creating jobs as the Covid-19 lockdown was gradually lifted, his new package took the total cost of the Treasury’s economic support measures since March, 2020 to around £189bn. When the loss of tax revenues over the pandemic is taken into account, the deficit is likely to reach an unprecedented £361.5bn (Giles et al, 8th July 2020: no page). Given this, it was hardly surprising that Keir Starmer (the new leader of the Labour Party in opposition) stated that the UK “needed something the last Labour government did, which was a Future Jobs Fund, which made sure that for young people they’re not out of work for more than six months” (Smith, M. citing Starmer 24 June 2020: no page).
Perhaps, then, some lessons could be taken from both the 1930s and the FJF. Besides the many negatives from the past which Johnson’s Conservatives should have learnt from, the more discernible positives highlighted in this article ought to have been taken on board. The FJF, for instance, managed to take discussions about youth unemployment/youth ‘culture’ away the ‘underclass’ debate. Rather than implicitly implying that such a ‘class’ took the easy option of claiming benefits as opposed to working in the paid labour market (Prideaux, 2001; 2005; 2010), (New) Labour—to a significant extent—shifted ‘conditionality’ (Dwyer, 2004) towards employers and rectified some of the failings of the New Deal schemes. Thus, the incentives for employers to rotate participants and displace employees in existing employment was partially negated (albeit for six months initially) by the specific conditions of the scheme.
Conversely, this latter element of employer ‘conditionality’, in terms of permanent employment after the placement had expired, was noticeably missing from Sunak’s ‘kickstart’ update on the 8th of July 2020. Likewise, this summer update tended to avoid a discussion of communal benefit and, as a consequence, force ‘responsibility’ back onto individuals to grasp employment opportunities or training. As a result, the voluntary aspect of the FJF (implicit in Alistair Darling’s 2009 use of the term ‘offered’) was sadly absent to the detriment of future success and understanding of the complexities surrounding the creation of new, sustainable jobs after the demise of the current crisis.
Penultimately, it is also important to note that the 1930s laid out the value of cross-party consensus or, as Booth (1987:512) would prefer, “delegated management”. As stipulated earlier, evidence from political activities during the Great Depression pointed to a lack of, or little, political dissension of any affect. The very existence of a coalition National Government certainly bore testament to that. Moreover, unlike the painful but necessary measures—during a financial as opposed to a pandemic crisis—relating to deflation, the abandonment of the gold standard (Crafts and Fearon, 2010; Temin and Vines, 2013), increasing wage pressures and increased cuts in benefit, the recognition of ‘structural’ factors rather than ‘cyclical’ or ‘individual’ factors (Richardson, 1962) became a unifying focus of political attention: an attention and direction that would not go amiss during the current period in the UK.
Similarly, the 1930s’ ‘moulding’ of the youth to the needs of the emerging industries (as in the IT arena today) and the abandonment of long-standing free-trade ideology (Temin and Vines, 2013) would also have been a welcome addition to the UK policy direction in 2020-21. Geographically, however, concerted efforts to counter regional depression would not have gone awry either. Rishi Sunak (8th July 2020) could and should have considered regional variance in more depth as opposed to adopting the 1930s penchant for myopia and resorting to a pacification of the ‘outer’ regions (Crafts, 1987) with financial assistance to become ‘job ready’ and available. Consideration of the demand-led failings and not supply-side economics would have provided a more holistic picture of the local disparities and, as a result of such provision, help facilitate more decisive help for the ‘outer’ regions. Without doubt, this would have reflected a more positive example of what political cooperation and consultation could achieve in the present climate. Sadly, though, this has not happened.
To add further insult to injury, it is also telling that these apprentice opportunities will not be readily available once economic ‘normality’ is resumed (supposedly after July 19th, 2020) as too many businesses will have gone into bankruptcy while the available workforce may be depleted by trauma, long-Covid and the cancellation of needed hospital treatment for other ailments. When combined, such a neglect to consider/anticipate a fall in the demand for labour and the prospect of a diminished workforce could mean that the expected and optimistic economic recovery predicted by Johnson and Sunak is in serious jeopardy.
This lack of forethought is also conspicuous when it comes to education in general. For instance, working class youth (who are now suffering greatly from new strains of Covid-19) have not and still are not being offered viable alternatives that enable them to escape manual or 'precarious' retail/service based work to become medical doctors, surgeons, barristers/lawyers, academics or architects to name but a few hi-skilled (Prideaux, 2001) occupations that are not beyond the youth of lower class origin. As a result, the effects of such policy directions proposed by Sunak and the Conservatives are not only short-sighted but devastating to the future of working class youth after Covid. Such policy directions will inflict untold social harm in terms of restricting opportunity, social mobility and destroying feelings of self-worth and lifetime security. And by restricting these avenues for development, the effects will unravel longitudinally as well as geographically and not only illicit feelings of alienation but also affect communal, local and national economic prosperity as time unravels.
Finally, though, when all is stripped down to the bone, one ultimate question remains: how is this deficit Rishi Sunak (8th July 2020) is accruing going to be reduced? There is one obvious answer. Through greater tax revenue and an increase in productivity. That said, the debates as to who, exactly, are burdened with this extra taxation are endless. One thing for sure is that under the persistent privatised neoliberal/laissez-faire strand of Thatcherism (Gamble, 1988)—which has been continued by New Labour, Labour, the Coalition and Conservatives alike (Gamble, 2010; Roulstone and Prideaux, 2012)—the majority of individuals in the paid labour market will be the ones who bear the brunt since they are the recipients of the ‘trickle-down’ effect once productivity increases (Aghion and Bolton, 1997). Yet they are the very same people who have suffered the most during these trying times.
The alternative of taxing the wealthy and the entrepreneurial elite would not be an option: particularly for a Conservative Government. In other words, those that profit the most from the laissez-faire market will, for ideological reasons, be left alone to generate more wealth and employment. To do otherwise, would be seen as a disincentive and, as such, would encourage entrepreneurs, the wealthy and large businesses to either refrain from economic investment/job creation to maximise profits or seek more favourable tax havens/locations elsewhere. Of course, the actual solution to this predicament will only unravel over time. And it will not be without hardships and challenges whatever form they may become manifest.
Nevertheless, learning the lessons from the past—which has not happened as yet—would, in all fairness, be the first step toward societal and economic recovery in the UK. Political unity and consistency of direction would, therefore, be the essential but unrequited key to the successful triumph over the Covid-19 crisis and its associated turmoil.