Budget: employment initiatives fail to convince

The unenviable task of delivering a budget in the context of the worst global downturn since the 1930s fell to Alastair Darling on Wednesday 22^nd April.  Addressing the Commons some three hours after the publication of the worst set of unemployment figures for twelve years, he claimed that the UK economy would contract by 3.5% this year but recover to grow by 1.25% next year and by 3.5% in each of the three years after that.

But the City remained largely cynical, with most observers regarding his figures as somewhere between "unrealistic" and "wildly optimistic".

However our main concern is with the chancellor's £2.7bn package of employment-related initiatives.  While the biggest component of this is the £1.7bn of extra funding earmarked for the Job Centre programme and the Flexible New Deal (which provides ‘intensive' help for people who've been out of work for more than a year), probably the most eye-catching development is the ‘Young Person Guarantee Scheme' - a commitment to provide all under-25s who've been out of work for at least a year with a job or a training place.  Designed to avoid the creation of another 1980s-style ‘lost generation', this scheme is due to get under way "in early 2010."

Besides this, the chancellor announced £250m worth of new money for training and subsidies, specifically targeted at providing people with skills and experience in growth sectors with strong future demand, and a similar amount to create some 54,000 new sixth-form places, thus enabling more 16-17-year-olds to remain in education.  In addition, statutory redundancy pay is to rise from £350 to £380 a week.

The chancellor claimed that the support he had provided would effectively protect up to half a million jobs, although business, unions and employers' organisations generally remained less than convinced.

The TUC said the government had failed to attack unemployment with the same determination it had employed to save the banks, and also claimed that the timescale for helping for the young jobless was "not urgent enough."

Steve Radley, chief economist at the Engineering Employers' Federation, said it was "disappointing that the government has not felt able to back companies' efforts to avoid redundancies."

Chris Ball, chief executive of TAEN (The Age and Employment Network) accused the chancellor of neglecting the interests of mid-life and older workers.

While recognising that the chancellor's room for manoeuvre was "limited", the CIPD's chief economist John Philpott broadly welcomed the package of support for the long-term youth unemployed, but with one important caveat: "The experience of past schemes is that they provide short-term relief to the young jobless but do little to enhance their long-term employability.  Providing support which is more than simply ‘make work' will be the acid test of this new initiative."

The CMI (Chartered Management Institute) claims the budget measures will create short-term relief for a select band of workers while offering little hope for long-term growth.  "Whilst welcoming the chancellor's determination to protect young people from unemployment and the possibility of creating a lost generation, the budget misses the opportunity to tackle skills shortages across the workforce," says chief executive Ruth Spellman.  "There is a risk that, by guaranteeing employment and training for those under 25, the measures will simply displace problems of re-skilling and unemployment to another part if the job market."  She concludes that the chancellor has "missed an opportunity to back policies that reward investment in people and lay the foundations for long-term sustainable growth."