ToUChstone blog: A public policy blog from the TUC

Philip Pearson

Lord Heseltine thunders at the FT today for an “extremely misleading” report that the Regional Growth Fund will create just 41,000 jobs, costing up to £200,000 to create a single post. Not so, says Lord Heseltine, who chairs the RGF advisory panel. The fund “will create 328,000 jobs … As I made clear to your reporter, I do not accept the figure of 41,000 jobs, which gives a misleading impression of the impact of the fund.” So who is right? The FT headlined a review last Friday by the National Audit Office of the government’s flagship to create private sector jobs where public sector job losses would cut deepest.  The NAO found that the 219 successful projects would create 117,000 full time equivalent jobs. Of these, 41,000 are additional full-time equivalent private sector jobs. The average cost if £33,000 per job, with a tenth of projects exceeding £106,000 per job.

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Scarlet Harris

While the unemployment figures make the headlines with depressing regularity, what is less well reported is the level of underemployment. TUC analysis out today shows that the number of people who are working part time because they can’t find full time work is rising dramatically.

While there are still many more women than  men who report that they do not want full time work (854,000 men as opposed to 4,287,000 women at the last count), there has been a notable decrease in the number of women who do not want full time work. This is matched by an increase in women who are working part time because they can’t find a full time job.

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Anjum Klair

TUC analysis published today using official figures, shows that the number of men doing part-time jobs because they can’t find full-time work more than doubled to nearly 600,000 between December 2007 and December 2011. The number of under-employed women has increased by 74% to 780,000, bringing the total number of people in involuntary part-time work to a record 1.38 million.

The proportion of women working part-time that don’t want a full-time job, often because of family and caring responsibilities, has also been falling. This shows that the recent rise in part-time employment has mainly come about through necessity rather than choice.

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• Why history will judge us harshly
  A brilliant post by Jonathan Portes on trhe Not the Treasury View blog.
  He says: "with long-term government borrowing as cheap as in living memory, with unemployed workers and plenty of spare capacity and with the UK suffering from both creaking infrastructure and a chronic lack of housing supply, now is the time for government to borrow and invest. This is not just basic macroeconomics, it is common sense. "

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Owen Tudor

The largest state in Germany – North Rhine Westphalia, with 18m people, over a fifth of the German nation – has been voting today and the exit polls suggest that the current minority red-green coalition of the SPD and the Greens will achieve an outright majority, with over 50% of the popular vote – exit polls say the Greens remained on 12% and the SDP regained the votes they lost in 2010, rising from 35% to 39%.

But the big story really has to be the continuing decline of Chancellor Merkel’s CDU, who – again, this is according to exit polls, and I’ll update later when the final tally is in – saw their vote decline by a quarter from 35% to 26%. With Germany’s General Election due next year, this almost makes Merkel’s administration a lame duck, and it can’t even be blamed on the collapse of her coalition partners the FDP (whose vote again held up, as it did last week in Schelswig-Holstein).

In Germany’s most populous state, covering cities like Dusseldorf and Cologne, this is a major blow, and, coupled with Hollande’s ascent to the French Presidency, will put German-led austerity in Europe under increasing pressure this summer. The 23 May informal summit of EU leaders will not quite see Merkel isolated, but certainly increasingly embattled.

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Owen Tudor

The European Court of Justice ruled on Thursday that public bodes can take into account social and environmental concerns when deciding on who gets public procurement contracts. Cost is definitely not the only issue, as successive British Governments have claimed – most recently in the Bombardier case. Ignoring the social and environmental impacts of public procurement - issues like paying fair wages, providing training, and local sourcing of products - is therefore a political choice, not a requirement of European directives.

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Owen Tudor

I spoke last night at a TUC/Foreign Policy Centre roundtable in Cardiff, sponsored by the London office of the European Commission, about the impact of current European developments on the social model. Here’s an edited version of my remarks.

As last weekend showed, it’s not safe to speculate about what’s happening in Europe, because the detail keeps changing – and this month’s plethora of Presidential, Parliamentary, regional and local elections
suggest the primacy of the bond markets may have to give way to the primacy of electorates. However, we do seem to be living between two competing narratives.

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• “Never working families” – a misleading sound-bite?
  In the 'Inequalities' blog, Lindsey Macmillan and Paul Gregg look at the evidence about inter-generational unemployment. There’s lot less than politicians and media sometimes suggest: “only 0.3% or 15,000 households are in a position where both generations have never worked” and in a third of these households the younger generation has been unemployed less than 1 year.
  There +is+ inter-generational worklessness, but “it is only in the labour markets with high unemployment that sons with workless dads are disproportionately more likely to be workless than sons with employed dads.”
• Taxing the 1%: Why the top tax rate could be over 80%
  Thomas Piketty, Emmanuel Saez & Stefanie Stantcheva look at 18 OECD countries and disputes the claim that low taxes on the rich raise productivity and economic growth. The optimal top tax rate could be over 80% and no one but the mega rich would lose out.
• Youth Transitions, the Labour Market and Entry into Employment
  A new SKOPE pamphlet by Ewart Keep looks at what puts people off training & education (amongst other things).
  If people know that they are members of a group or come from an area where people tend only to get lousy jobs (or none) they may not see much point in education & training. Raising the number & quality of jobs available may change their minds.
  The UK has a high percentage of graduates working in jobs that don't require degrees: suggests over-supply & is likely to exacerbate problems for those who aren't graduates. If you see yourself as destined for unemployment or a bad job you will be even less likely to find learning attractive.
  It is less and less credible to say education isn't producing numeracy & literacy skills. What it does fail to provide are maturity, a positive attitude and work experience – but these are best obtained in workplaces; they really should be seen as employers' responsibility.

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Richard Exell

One of the justifications for the benefit cap in the Welfare Reform Act has always been that Housing Benefit (which is the main benefit that will be affected) is effectively subsidising landlords’ high rents. As David Freud told the Work and Pensions Committee:

We are expecting a large number of people who receive less housing benefit to be able to negotiate their rents downwards.

I’ve always been sceptical about this claim and the latest mortgage and landlord possession statistics from the Ministry of Justice suggest that this is a really bad time to rely on tenants’ ability to persuade landlords to cut their rents.

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Duncan Weldon

Research we’ve published today shows that over the past year high inflation has hit the poorest much harder than the high earners.

A variety of factors both domestic (such as the hike in VAT) and global (a rising oil price following the Arab Spring) pushed inflation higher in 2011, but as different households spend a  differing proportion of their income on different items, the impact of rising prices has been far from uniform.

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