Back in November I took issue with the idea, espoused by Jackie Ashley and others, that “welfare reform” could cut either the welfare bill or the deficit. Policies that simply made life on benefits more intolerable, I said, were worse than useless considering that there were 5 unemployed workers for every vacancy. People cannot be cajoled into non-existent jobs.
Well now it appears that the official government watchdog, and indeed the respected Chartered Institute of Personnel and Development agree with me. The CIPD project that unemployment will reach 2.7million as the cuts begin to bite. Meanwhile the government’s Office for Budget Responsibility has forecast a £1.4 billion increase in welfare payments. Not long ago Clegg told us that cuts to the welfare budget were “unavoidable”. Well, if so, he has achieved the impossible.
The bitter irony about the Conservatives is that despite their Victorian rhetoric about “cracking down on scroungers” they always seem to preside over huge increases in welfare payments. While Norway was able to put its proceeds from North Sea gas into a “rainy day fund”, which it is now using to great effect, Thatcher spent much of the money keeping three million unemployed people alive.
This gap between rhetoric and reality arises for the simple reason that managing unemployment is not the same thing as running a nursery. Putting the unemployed on the naughty step until the private sector comes to collect them will not conquer mass joblessness. Keeping unemployment, and the welfare bill, down depends upon a actively managing the economy to ensure that sufficient demand exists, that fluctuations can be mitigated and that people have the skills they need.
One remark that offers a clue as to the mentality of this government is Clegg’s statement, some months back, that benefits should not be there to “compensate the poor for their predicament”. By “predicament” he meant the fact that people would by otherwise unable to eat. By “compensate” he meant the relatively meagre payments that just about enable people to just about do so. In Clegg’s Orange Book world men make their own luck. Back in reality, however, Clegg and Cameron preside over an economic system in which periodic bouts of unemployment – of disequiblium between the number of people and the number of jobs – have been a recurring feature. Ensuring that those who take the hit can survive, is the least the government can do. A serious plan to get Britain working again – one more plausible than Osbourne’s private sector prayers, or Duncan Smith’s naughty step – is the least we ought to demand.