Desperate times call for... - RSA

Desperate times call for...


The shocking unemployment statistics demand a proper response from our political class but will we see it?

Largely because the media exploit any such admission, politicians are loath to admit that their judgements are often fine and that all significant policy decisions involve risks and downsides as well as benefits. As a former Government advisor and a long time policy wonk I know that any honest evaluation of a policy decision involves weighing up good and bad points; if there was a policy out there that had only benefits it would have been identified and implemented a long time ago.

Today the Government is blaming the global financial crisis for the unemployment statistics while Labour (a cogent but slightly too cheerful Liam Byrne) is calling on George Osborne to adopt the Opposition’s five point recovery plan. Both Parties claim their approach is entirely right and the other side’s totally wrong. Neither claim is true. More importantly, neither offers any comfort to the almost one in five 16-24 year olds now out of work.

In such extreme circumstances it is worth the thought experiment of exploring the what the political parties might do now if they genuinely put the public interest first.

In economic terms, there is little question the Coalition could press its foot less hard on the austerity pedal and put more money into jobs, wages and purses without being grossly irresponsible. This seems to be the majority view of economists, and even international bodies like the IMF are warning that austerity could be self-defeating.  But the Government is also right when it says that credibility is important in volatile markets. An apparent fiscal u-turn in the UK could be portrayed as panic or the beginning of a bigger political capitulation and this could lead, among other things, to an increase in the interest we have to pay on our national borrowing.

In this equation, politics matter. The recent gridlock in America had a direct impact on the country’s economic rating and on the markets. So, if the Coalition and Labour were to agree a package which combined a short term injection of public funding with a cross-party agreement to stick to a now slightly extended period of fiscal balancing it could powerfully reassure markets that the UK isn’t about to give up the ghost on getting the finances under control.  The Coalition is the elected Government so it would be its prerogative to determine the content of the growth package, but Labour could show statesmanship (which surely wouldn’t do Ed Miliband’s credibility any harm) by supporting the general thrust of the package and being measured in its criticisms and alternatives.

The Osborne phrase ‘We’re all in this together’ is now used exclusively to taunt the Coalition, but if the political class were able to up their game and collaborate it might take on a new resonance. In such a context part of a growth plan could be to call on business, employee organisations and ordinary citizens to make their contribution to getting us through these dark hours. In the year after the credit crunch there were many examples of employees taking voluntary pay cuts or agreeing work sharing schemes.

This morning an academic on Radio 4 called for more workers to offer to reduce their hours to create more jobs. A growth plan could include temporary regulations to enable employees to take a fixed term reduction in their hours in the context of an agreement by the employer to maintain the organisation's wage bill but allocate the released hours and costs to create new jobs. Even if such measures were marginal in their impact they would at least lift the national mood out of the terrible despond in which it is now mired.

Like any competitive activity, the problem of changing political conventions lies in who goes first. For the Government to ask the Opposition to enter into talks might look like weakness and, anyway, as I said, the Coalition is the elected administration. So, my bold - and no doubt naïve and doomed – appeal for a cross party strategy to offer hope to the nation’s jobless – would have to start with Labour.

How about changing the current party line – which is to demand the Government adopt Labour’s five point plan - and instead offer to enter into genuine talks with the Coalition about a national recovery plan. The Coalition would probably scoff but the voters, at least, might appreciate it.

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