At the current rate of increase unemployment could be two million by April – a figure last reached in 2014 under the austerity of Conservative chancellor George Osborne. Youth unemployment has recently hit 14 per cent – also the highest level (outside of the pandemic) since the Osborne era.
For Labour, rising unemployment is always more damaging politically and should, as the party founded by organised workers through their trade unions, be more of a priority. When the great post-war Labour government ushered in a new settlement based on public ownership, strong trade unions and decent social security, unemployment didn’t rise above one million for the next 30 years.
Today, the official unemployment figure is only the tip of the iceberg – rising underemployment swells those numbers to over five million. This wider measure of unemployment covers both those in work but looking for more hours and those categorised as economically inactive but who want a job. On this measure there are currently more than seven people looking for work for every vacancy.
Young people are always the hardest hit when unemployment rises, because employers have more people looking for fewer jobs and can hire people with experience rather than having to invest in training new entrants to the labour market. That has serious consequences for young Britons. They want to earn money, of course – but they also want to feel their lives are actually going somewhere, and that the system isn’t entirely stacked against them.
Some have pointed to Rachel Reeves’s decision to increase employers’ national insurance as the reason for rising unemployment, but while that has not helped it is not the primary cause. Unemployment has been rising since late 2023, before Labour even got into power.
For youth unemployment the Chancellor’s NI rises are even less the cause, since the employment of many young people is exempt from employers’ national insurance (employers are not required to pay NI contributions for employees under 21, with additional reliefs for apprentices under 25).
Nevertheless, the crisis of rising unemployment is very much this Labour Government’s problem to tackle.
Pre-election, Labour was talking about creating “national missions” and “economic plans”. Labour in government needs to develop policies that can meet the unemployment crisis with a real push on skills training and apprenticeships for unemployed people to build the housing and infrastructure we need.
The problem for Labour is that it gutted its ambition. In 2021, I listened to Reeves, then shadow chancellor, announce a £28bn “Green Prosperity Plan” that would create “good new jobs in communities throughout Britain” and “protect our planet”. Just before the last election, Labour watered it down to homeopathic levels, and unemployment continues to rise.
Likewise on housing. In opposition, then shadow housing minister, Lisa Nandy, announced at Labour conference in 2022 that “council housing, council housing, council housing” would be the party’s mantra. Instead, Labour’s promise to build 1.5 million homes by 2029 comes with no specific target for council homes, and is totally reliant on deregulating planning and hoping private developers “build baby build”, in the cringey phrasing of the hapless Housing Secretary, Steve Reed.
Starmer’s Labour needs to dispense with the Blair-era playbook, and use state investment to create jobs and meet social need. Instead he has entrusted a youth unemployment strategy to the former health secretary, Alan Milburn.
Unsurprisingly, Milburn’s interventions to date have been underwhelming. “Just because you’ve got a mental health problem we shouldn’t be saying to people you can’t work,” he recently told the BBC, while ignoring the fact that the Government is cutting social security for young people with mental health conditions and waiting lists for mental health support remain incredibly long. The Government also attempted to cut personal independence payments last year, despite the benefit enabling many people with a mental health problem to work.
And underneath it all are young people who feel their lives are passing them by, desperate to find work and get on but crowded out for every vacancy they find.
Elektra Dodson, an 18-year-old from Cheshire, told The i Paper this week that she had been rejected from KFC three times despite having worked for McDonald’s in the past. After graduating from university, 24-year-old Esme Gordon-Craig found herself “back living at home with my parents, more than £80,000 in student debt, and riddled with panic“.
Beneath the stats, missions and promises, this is what youth unemployment looks like. And if Starmer wants to look to the past for solutions, he would be better off looking at Franklin D Roosevelt’s New Deal in the US, when government took control and invested in public works – something Starmer’s shadow cabinet reflected in opposition.
As Roosevelt said at his inauguration: “Our greatest primary task is to put people to work… It can be accomplished in part by direct recruiting by the government itself… accomplishing greatly needed projects to stimulate and reorganise the use of our natural resources.”
His administration put people to work building hospitals, housing and roads, reforesting nature and building flood defences. All of which seems eerily necessary nearly 100 years later on the other side of the Atlantic.
Starmer is in a fight to save his own job, but what better way to do that than by creating good jobs for others. He could do a lot worse than FDR’s approach. “The test of our progress is not whether we add more to the abundance of those who have much,” he said in that first address. “It is whether we provide enough for those who have little.”
It would also be a long overdue correction to Peter Mandelson’s New Labour era declaration that he was “intensely relaxed about people getting filthy rich”. It was the accompanying filth that brought him down, and has added to Starmer’s crisis.
To save himself, Starmer needs to clean up politics, disinfect Labour from New Labour’s sleaze, and most importantly of all, return to Labour’s founding purpose: fulfilling work, decent pay and a good life for all.
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