The editor of this site, Paul Goodman, asked me to answer the question: “Whatever happened to the Left’s passion for full employment?”
I should say at once that I have failed, in what follows, to provide anything like an adequate answer. But I hope I may provoke answers from more expert observers, who have studied the subject more profoundly than I have done.
For Goodman’s question draws attention to one of the most remarkable changes in post-war British politics, yet one which has also ceased to attract notice. According to the Office of National Statistics, we now have almost two and a half million people, or 7.7 per cent of the workforce, unemployed, but this figure in no way dominates the political landscape.
When I was young – I was born in 1958 – the monthly unemployment figure was a big story, given top billing on the television news. Nowadays the subject has become so un-newsworthy that I would guess many people do not even know how high the figure is.
On 19 November 1971, The Times declared in its leader column: “It is morally, economically, socially and politically intolerable that unemployment should remain at its present level.” Unemployment was then approaching one million, a level which it had not exceeded – apart from one month in February 1947 – since May 1940. There is no doubt that The Times, edited by William Rees-Mogg, reflected the general belief that such a high level was intolerable.
As Robin Harris remarks in Not For Turning, his life of Margaret Thatcher: “The headline unemployment figure was still seen by most of the media, by the Opposition and by the older generation of Conservative MPs as the single most important gauge of whether economic policy was working.”
The Prime Minister, Edward Heath, “fully subscribed” to this view. As his colleague Jim Prior later wrote, “Ted…utterly despised and detested the pre-war Conservative Governments who had tolerated between two and three million unemployed.”
In January 1972, the unemployment figure broke through one million, and Harold Wilson, Leader of the Opposition, taunted Heath as “the first dole-queue millionaire since Neville Chamberlain”, Prime Minister until May 1940. Dennis Skinner, an ex-miner who was then the new Member for Bolsover, stood in front of Heath and shook his fist in his face. The Speaker was forced to suspend the sitting.
In an attempt to reduce unemployment, Heath had already embarked on a series of U-turns. A conspicuous early measure, in February 1972, was the decision to bail out Upper Clyde Shipbuilders (UCS). As his authorised biographer, Philip Ziegler, says, “fear of unemployment was by far the most important factor in convincing Heath that intervention in such cases as UCS was on balance justifiable”. If its four shipyards were closed, 4,300 jobs would be lost and the Chief Constable of Glasgow warned that he would need an extra 5,000 police officers to cope with the resulting civil unrest.
Space precludes a full account of Heath’s failure. His U-turns certainly did not save the Conservatives. He took Britain in to the European Economic Community, as it was then known, but lost the two elections of 1974.
Thoughtful Tories began to question whether Heath’s U-turns had done the slightest good. More fundamentally, they began to doubt whether the Government could create jobs. Sir Keith Joseph and others set up the Centre for Policy Studies (CPS). Robin Harris, who worked for the Conservative Party from 1978, observed the intellectual revolution which was taking place, notably at the CPS, and told me when I consulted him about the subject of this article:
“I remember the point that Keith Joseph used to make in the 1970s and early 1980s – which really annoyed the Left – that ‘jobs occur’. What he meant is that they happen in the ordinary course of things in a functioning economy, you don’t need to create them. Indeed, ‘job creation’, which was then an accepted term, was simply a matter of shifting jobs from (usually viable) businesses to other (often unviable) businesses. Governments didn’t create jobs – businesses did, by satisfying customers. Governments and trade unions could by contrast both destroy jobs – the former by taxes and regulations etcetera, and the latter by misuse of industrial power to hang on to inefficiencies like restrictive practices.”
The idea that the Government could not be held responsible for creating full employment, but only for creating the conditions in which employment could thrive, was an enormous change. Harris went on:
“Such was the doctrine. But when did people actually believe it? Some time in the early to mid eighties probably. Again I can’t give chapter and verse but in the course of the eighties I do recall two measurable changes of opinion. The first was that polls showed people no longer thought that the Government was solely or even mainly to blame for high unemployment – the trade unions were by now regarded as at least as much to blame. The second change was that people didn’t think that the Labour Party was significantly better able to lower unemployment, i.e. the issue had been neutralised, which was very significant.”
Heath had failed, but the subsequent Labour government had failed too. These failures played a vital role in discrediting the expectation that the Government could ensure full employment. Over at The Times, Rees-Mogg and Peter Jay were abandoning that orthodoxy. In 1976, Jay drafted a speech for his father-in-law, James Callaghan, the Prime Minister, to deliver to the Labour party conference. It contained this direct attack on the post-war orthodoxy:
“We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you, in all candour, that this option no longer exists, and that in so far as it ever did exist it only worked by injecting bigger doses of inflation into the economy followed by higher levels of unemployment as the next step.”
Margaret Thatcher had by now replaced Heath as Tory leader, but most of her senior colleagues still preferred Heath’s approach to economic questions. Some months before the 1979 election, the Tories launched their famous poster of a dole queue with the words “Labour Isn’t Working”. Harris relates that Thatcher only consented to this poster against her better judgment. She foresaw that unemployment, one and a half million under Labour, was likely to rise further under a Conservative Government: not that she foresaw the level of over three million which was reached in January 1982 and lasted until 1987.
How did this intolerable level of unemployment come to be tolerated? Part of the answer is that it wasn’t: a large part of the electorate rejected and continues to reject what became known as Thatcherism. In 1945 the Tories suffered a crashing defeat because they were blamed for the unemployment of the 1930s. In recent years, they have suffered three heavy general election defeats – and in 2010 an incomplete victory – in part because they are blamed for the unemployment of the 1980s.
Nevertheless, Thatcher won three elections in a row, and John Major, her immediate successor, gained a fourth victory in 1992. She exploded the assumption that high unemployment precludes success at the polls. And when all due allowance is made for the weakness of her opponents, it has to be said that attitudes to unemployment changed. As Shirley Letwin wrote in The Anatomy of Thatcherism, published in 1992:
“While the media were promising disaster, the Government was emphasizing making it easier for people to move from areas of high unemployment to those where jobs were waiting by removing rent controls and selling council houses and flats. Norman Tebbit’s notorious advice to the unemployed to ‘get on your bike’ offended the bien pensants more than the bike riders. There was a new emphasis, too, on training schemes, on incentives for workers to take lower-paid jobs when others were not available, on part-time work. The Labour Party began attacking the Conservatives not with unemployment figures but with demands for more investment in training…What was novel in Mrs Thatcher’s response was not her optimism – democratic politicians are professional optimists – but her emphasis on recognizing that in the human world nothing is fixed forever, that there are always new, as yet undreamed-of possibilities, that what seems impossible today might become commonplace tomorrow…As these Thatcherite responses became increasingly familiar, Britons began to think less in terms of unchangeable security and more in terms of the potentialities of taking a risk; they became readier to recognise the blessings of uncertainty. They may not have acquired the vigorous virtues but they had at least become familiar with a more vigorous attitude to the vicissitudes of a human existence.”
James Plunkett, director of policy at the Resolution Foundation, offers some other explanations for the lower political impact of high unemployment: “The first thing to say is that in relation to expectations, although things are bad, they’re dramatically better than people thought.” During this recession, the unemployment rate has been far lower than in the two previous recessions, in the 1980s and the 1990s. Wages have taken the brunt of this downturn: “It’s quite unprecedented for wages to fall for this sustained period. Since 2009, median pay is down by about £3,000 – a fall in the region of ten per cent depending on who you’re looking at.”
In the 1980s, unemployment tended to affect old-fashioned, male-dominated industries – mining, steel, shipbuilding – whose full-time workers fell into full-time unemployment in such huge numbers that it seemed unreasonable to suppose that they could all find new jobs. Nowadays, a worker’s hours are more likely to be squeezed. There are many more part-time workers and many more women in the workforce. Nor is a full-time job any longer a guarantee of prosperity: it may mean you are paid so little you are still living in poverty.
So the distinction between employment and unemployment has in some ways become much less clear. We have seen the rise of the underemployed worker, who is constrained to engage in a restless search for more work. We have also seen heavy immigration by eager and energetic workers who have demonstrated that there is work to be found if only one is keen enough to find it.
In both the middle and the working classes, we have observed what Ferdinand Mount has described as “the decline of acceptable idleness”. The welfare reforms are popular because most of us are no longer prepared to tolerate people sitting around for year after year doing nothing at public expense. In the City of London, where senior partners might a generation ago have been able to sit around contemplating important or indeed unimportant matters over a leisurely lunch, a manic workaholic culture has taken hold, with vital decisions taken by exhausted people driving themselves and everyone else in the firm to the limits of endurance. Even in the humble trade of journalism, people no longer laugh about how little time they spend working and how much they spend drinking. One result of this push for increased productivity is that no political columnist writes as well as Alan Watkins wrote.
We live in an age that is more puritanical than we realise, and what puritan ever felt much sympathy with the unemployed? The instinct is to blame the unemployed person for being idle. The Prime Minister chooses to present himself as the champion of “hard-working families” who are engaged in a “global race”: a management consultant’s version of St Paul. The Left competes with this by insisting that it too believes with Calvinistic fervour in hard-working families.
In 1931, Philip Snowden, the first Labour Chancellor of the Exchequer, advocated a cut in unemployment benefit of ten per cent, in order to cut the deficit and obtain fresh foreign loans so Britain could stay on the gold standard. Unemployment had risen from 1.3 million to 2.5 million since Labour won the 1929 general election. But this horrific increase only made Snowden more determined to pursue an orthodox course. As Roy Jenkins suggests, in his book The Chancellors, Snowden’s
“essential approach was that bad times necessarily meant hardship and that Labour could prove its political maturity only by being prepared to press the hair shirt on itself and on its natural constituency with as much courage as Tories or Liberals. In any event he rather liked hair shirts.”
I wonder whether there is an element of this in Labour’s refusal in recent years to make more of the issue of unemployment. Once again, the party wants to “prove its political maturity”, but nowadays it does so by subscribing to an essentially Thatcherite orthodoxy.