Events | 2010.01.24
PM boosted by fall in unemployment
PM seizes on first joblessness fall since recession to boost recovery talk and raise prospect of billions in savings
Gordon Brown received a double pre-election boost today as the first fall in the government\'s key jobless measure since the start of the recession raised the prospect of £17bn in savings from falling unemployment over the next five years.
Signalling Downing Street\'s confidence about a pick-up in the economy after the toughest year since 1921, Brown sought to contrast the rapid turnaround in the labour market over the past six months with the five years it took for unemployment to peak after the recession of the early 1980s. He said job guarantees for the young and extra spending to help the unemployed find work had helped prevent a bigger increase in the jobless total. "For this government, unemployment is not a price worth paying," he said in the Commons.
With the election campaign set to be dominated by the economy and the state of the public finances, from next week the government will guarantee work experience, training or a job to any young person under 25 who has been unemployed for more than six months. Ministers will seek to highlight differences with the two Conservative recessions of the 1980s and 1990s by pointing to the impact of rapid cuts in interest rates to 0.5% and pay restraint.
The surprise 7,000 drop in the government\'s main measure of unemployment in the three months to November left the total 450,000 lower than was assumed by the National Audit Office at the time of last year\'s budget – a saving of £2bn a year to the state coffers between now and 2015. The shake-out in the labour market a year ago prompted forecasts that the jobless total could hit 3 million by the end of last year, but today\'s fall left the total at 2.46 million.
Today\'s upbeat news was tempered by a drop in employment as students stopped looking for work, the loss of full-time jobs and a 29,000 increase in long-term unemployment – those out of work for more than a year – to 631,000, the highest level since 1997. But the second monthly fall in the government\'s alternative measure of joblessness – the number of people out of work and claiming benefit – raised hopes in Whitehall that the tide in unemployment has now turned. The claimant count fell by 15,200 to 1.61 million.
Last spring, the NAO had unemployment rising until 2011 and then remaining constant, but the latest Treasury estimates show the jobless total falling between now and 2014 – saving a further £7bn in public spending.
Yvette Cooper, the work and pensions secretary said even using the more cautious NAO assumptions, the government would save £10bn in benefits for the £5bn spent on anti-unemployment measures.
"We\'re investing around £2bn extra this year and £3bn extra next year in additional help and support for the unemployed – money the Conservatives repeatedly opposed," she said. "Yet that investment is already paying off, helping families across the country and saving £2bn this year alone compared to the budget plans. George Osborne [shadow chancellor] said we couldn\'t afford this investment in the unemployed, the truth is we can\'t afford not to."Government sources said that lower unemployment would see reduced spending on Jobseekers\' Allowance, council tax and housing benefit. They added that an increase in part-time work would mean a higher bill for tax credits, which top up low incomes.
Cooper warned that reduced demand for workers after strong pre-Christmas hiring meant that the next few months would remain difficult for the labour market, with the likelihood that unemployment would rise. "That is why we are determined to keep increasing the help and support to get people into work and training."
Official figures show that tougher rules for claiming benefits, a willingness of workers to accept pay restraint and part-time working, and a beefing up of Job Centres have resulted in people leaving unemployment more quickly than in previous recessions.
Over the past year, 70% of claimants have come off benefits within six months, compared with 63% in the downturn of the early 1990s and 60% in the recession of the early 1980s.
Theresa May, the shadow work and pensions secretary, said: "Any fall in the level of unemployment is welcome news, but today\'s figures are still cause for concern.
"Economic inactivity has hit a record high and there are 2.3 million people out there, out of work and who want a job, but aren\'t included in the unemployment figures. We still have a long way to go to undo the damage done by Labour\'s recession."
For more information, please visit
http://www.guardian.co.uk/business/2010/[...]employment-drop-brown-election
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