The Prime Minister recently wrote an article in my local newspaper in which he effectively claimed that his Labour Government had saved Reading and the country from the recession. He wrote:
“We have reached the point where much of Labour’s help announced months ago is kicking in and making a big difference… This is not only significant national news. This is the story of real help delivered and experienced right here in Reading… The Treasury now estimates that some 500,000 jobs have been saved due to the Government’s economic intervention and assistance.”
That’s the view from the Downing Street bunker and I’m sure he hopes he can get away with it. I think he actually believes that he has personally saved the world at least three times since he became Prime Minister! You could take the view that, the man who refuses to fight an election (even for the leadership of his own party), needs to get out more, as he truly has no idea what is happening in the real world. But it's no good us simply being dismissive, we need to put this man’s view to the test. Did he save the economy? If his Government didn’t, who did?
Any reasonable analysis would give the Government positive points for some of its initiatives, such as business being able to defer some tax payments and the improvement to the capacity of JobCentre Plus. But there was also a lot of ill thought out rubbish that either existed mainly as press releases or short-term devices to create an image of care, concern and curative action. We could start with the £2.3 billion Automotive Assistance Programme, which has helped zero companies at the last count! The Working Capital Scheme is 80% unused and the Trade Credit Insurance scheme has helped 70 odd companies to the tune of £18 million from the £5 billion set aside.
I would contest that the Government’s efforts were at best hit and miss and certainly not the difference between 500,000 people holding on to their jobs. Indeed, the chair of the Statistics Authority, Sir Michael Scholar, has described the 500,000 figure as ‘speculative estimates’ and the Treasury advice was that the numbers of jobs saved by Government action was 250,000 to 450,000. Whatever the figure, what the Prime Minister and his Government know – but can’t and won’t acknowledge – is the efforts of individuals and small businesses themselves within the more flexible jobs market created during 18 years of Conservative Government.
What Brown should be doing is paying tribute to the many heroes of this recession who have taken real terms wage cuts, worked two or three day weeks, foregone bonuses, cut their household budgets, lived off redundancy payments rather than taking state handouts, moved back home with their parents and sold major family assets such as cars to save their home from being repossessed. In other words – done everything they can to get themselves, their small business and their families through this economic nightmare.
Where’s the evidence – well there is plenty. According to the ONS, full-time employment has fallen 2.9% over the past year whilst part-time employment has increased by 2.8%. With many companies offering work only on a part-time or short-term contractual basis. It is now the case that just under one million people are trapped in part-time work despite wanting full-time employment. The major casualties of the recession are men (hence the coined US term ‘mancession’). Whilst more than 120,000 women found new part-time work in the last quarter of 2009, 50,000 men were made redundant. Hence there was no big celebration from No.10 when the reduction in unemployment figures was announced.
A Chartered Institute of Personnel & Development (CIPD) survey conducted by YouGov in Dec 2009 found that 41% of employees have had a pay freeze. In general, pay increases in the public sector have been far higher than in the private sector. The average annual pay increase in the public sector was nearly triple that of the private sector; 2.8% compared to 1.1%. Labour market statistics released this month by the ONS contained figures showing bonuses across the whole economy fell by 9% in the three months to Nov 2009 compared with a year earlier.
These trends are confirmed by the CBI, whose recent survey says that over half of employers (55%) were planning a pay freeze to apply at their next pay review, only 4% of employers planned a pay increase above the rate of inflation. A third of employers (38%) have made changes to their bonus structures, 67% have reduced the average value of their bonus payments.
The gap of around 850,000 between UK unemployment and the unemployment benefits claimant count is partly a reflection of people choosing not to claim benefits (as well as people not being eligible to claim JSA). Many are believed to be middle class professionals living off redundancy pay or their savings.
Up to one million households have borrowed money on a credit card to pay their mortgage or rent over the past year according to housing charity Shelter. This figure represents 6% of UK homes. People in lower social groups have been the most likely to use their credit cards, but the middle classes have also been affected. Figures uncovered by my front bench colleagues show that one of Labour’s housing schemes has assisted only 15 families.
Abbey data published in July suggested that 1.6 million people aged 18-34 and 300,000 thousand aged 35-54 are living rent free with family or friends. In December, further Abbey data that suggested 440,000 people aged 25 to 34 and 471,000 aged 35-44 moved back in with their parents in 2009. Parents were forced to withdraw on average a fifth of their savings in order to cover such ‘unexpected’ expenses to cover food and board. Luxury holidays were also bottom of the pile for many families as the rise of the so-called ‘staycation’ in 2009 amounted to over 37 million people staying put over the holiday period. There has been some coverage of a recent proliferation of companies offering to buy gold and other jewellery, as people access family assets to stay afloat. There is also anecdotal evidence from my constituents, who have told me stories about selling family assets such as a car to make the mortgage payment.
I contend that the evidence shows that Gordon Brown and his divided Government did not save the economy from the worst of this recession. The real heroes are not Ministers but are living in your street, carrying on with their daily business but continuing to worry about the massive burden of Brown’s borrowing. However, it is indicative of this Prime Minister to claim the credit for the efforts of others. It is time to push back against Brown’s hubristic claims. By and large they are essentially false.