Adam Lent

A big eye-catching proposal from Demos’s Progressive Conservatism project today: roll-up five years worth of future housing benefit into one lump-sum payment of £17,000 and give it to people in poverty to use as a deposit on a house.  Sounds neat – the average price of a terraced house is about £170,000 (thus requiring a deposit of £17,000) and it would give poor people some asset based wealth.

In reality, I can see lots of potential problems with this but one big issue immediately strikes me: how will these proud new homeowners service the mortgage costs? 

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• Young hit by soaring jobless toll soars to record levels
  The Independent quotes Philip Shaw, UK Economist at Investec: "We suspect that the claimant count numbers are being biased down by individuals moving off the count onto government schemes such as the New Deal. While they would still effectively be jobless, on this measure they would no longer be classified as unemployed. Are people really finding jobs? Employment and hours worked fell sharply in the three months to May, so we think not."
• Best believe the worst in this tale of two systems
  Larry Elliot on the possible cause of the ILO and claimant count divergence

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Brendan Barber

Today’s Low Carbon Transition Plan is a very welcome document that maps out not just a proper response to the threat of climate chaos but also starts to map out the shape of the UK economy after the recession.

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Nicola Smith

Today’s figures show unemployment at 2,381,000 (1,438,000 men and 923,000 women), up 281,000 on the quarter and 753,000 on the year. This is the largest quarterly increase on record, beating the sharp spike we saw between the end of 2008 and 2009 as well as all of the unemployment rises of the 1980s recession. Between this rolling quarter (March – May 09) and the last (Feb – April 09) 120,000 more people lost their jobs. This is a faster rate of increase than we saw between the last two rolling quarters.

But today I was asked by a journalist what my view was on these ‘better than expected’ figures. This was a reference to the claimant count data for June 09, which show a relatively small monthly rise between May and June 2009. Is this significant?

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Nigel Stanley

Today’s unemployment figures once again underline that they are going to get a lot worse before they get better. Indeed it is likely to be years before we return to the levels of employment that we saw before the recession began to bite. But my impression is that unemployment is dropping down the media and political agenda (of course with honorable exceptions). It will be interesting therefore to see how the media reports today’s figures. I’m sure that they will receive wide coverage today and tomorrow, but they are not being treated as the national emergency that they are.

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Adam Lent

David Blanchflower spent most of 2008 being ridiculed for arguing that interest rates needed to be cut vigorously to prevent the coming recession.  When nearly everyone else was squealing about rising inflation, he was predicting that inflation would drop below the Bank of England’s 2% target in 2009 due to recessionary pressures.  How everyone laughed.

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• Not having it all
  The Fawcett society report on the pay and employment costs of motherhood.
• Gingerbread report: There’s only one of me
  A new report on the welfare reform bill from Gingerbread. The report criticises the Government’s plans to cut the benefits of single parents who do not take part in “work related activity” to Jobcentre Plus deadlines.
• Has the City learned anything?
  Robert Peston on Guernsey-based Resolution Ltd’s attempt to buy Friends Provident.

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Nicola Smith

Today we have published research which looks at the relationship between public spending and jobs increases since 1997-98. Our analysis concludes that a 10% cut on 2007-08 spending levels (the most recent period we have complete figures for) would lead to a reduction of around 200,000 public sector posts.

But it’s not just public sector employees (and service users) who would be affected. Around 29% of public sector expenditure goes directly to the private sector, and a ten per cent cut of these budgets would mean a reduction of around £16.8 billion in private sector investment from public funds. This would have an inevitable impact on private sector employment.

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• Our laboratories and colleges ought to define Britain, not our greed …
  Will Hutton is sick of hedge funds
• William Keegan: Remember, gentlemen, Thatcher’s cuts didn’t actually work
  The keenest chronicler of Mrs Thatcher's monetarism is worried that we may be about to make the same mistakes again.

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• Nonsense about public sector pensions
  David Lipsey on the British North America Committee report on public sector pensions that claims the cost of public sector pensions is 85 per cent of GDP: "It is a statistical howler that would make an “O” level student blush to compare this with the figure for GDP for a single year. To make matters worse, we can safely expect GDP to increase over the years to come (if it does not neither will pensions, reducing the actual liability). So the proportion of present GDP represented by the liabilities is even less relevant. What matters if anything is the proportion of future GDP that they represent.

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