So this is what the Lib Dems are for…

25 November 2011

Nick Clegg should be congratulated for doing the right thing by reviving the Future Jobs
Fund and the Young Person’s Guarantee, for that is what the Youth Contract is in all but name.

This is, of course, another U-turn. As Chris Bryant tweeted rather brutally after Clegg’s announcement, if the government wanted to save young people from the scrapheap, why did it put them
there in the first place. It never made sense to abolish the Future Jobs Fund without putting anything in its place and ministers never sounded convinced when they said the Work Programme would
deliver for young people.

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It is to the eternal credit of Clegg and those around him that they realised a job subsidy was an essential intervention in a stagnant jobs market. This is not easy to stomach for those who
believed the market would eventually provide the solutions — not least Iain Duncan Smith and Chris Grayling who until now have stubbornly stuck to the line that the Work Programme would
deliver for young people.

Why and how did Clegg see the light? Part of it was political: a recognition that the Coalition was being hit hard by Labour’s ‘lost generation’ rhetoric. But they also chose to
listen, taking soundings from those in the third sector who knew what they were talking about on this issue (something Conservative ministers in the Department for Work and Pensions and elsewhere
in government could learn from).

The new system will provide a job subsidy of £2,275 (i.e. half of the amount on the original scheme), and we will have to see if this is enough of an incentive to employers. It also turns out
the scheme will be delivered by the ‘prime contractors‘ such as Serco, G4S and A4e who are already at full stretch delivering the Work Programme.

We are not out of the woods yet, but this could turn out to be an example of good old-fashioned Lib Dem compromise, saving the Coalition from its more ideological instincts. 

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Show comments
  • rndtechnologies786

    Your view is good.

  • Steve Tierney

    The markets WOULD provide, handsomely, if the shackles were ever removed.

    But while we continue skewing, subsidising, socialising and regulating everything to death this sort of “pretend job” is all that will ever be available.

    And it’ll get worse.

  • libertarian

    @Nick Kaplan

    Excellent post 100% correct

  • Richard

    “i.e. half of the amount on the original scheme”

    While the private ‘prime contractors’ trouser the other half as an award.

  • Erica Blair

    Nick, was that the same Reagan who left Bush snr with such a huge deficit he had to raise taxes despite his ‘read my lips’ promises?

  • Patrick Cull

    @Nick Kaplan – or “If it moves tax it. If it doesn’t move, kick it until it moves and then tax it!”

  • john miller

    A classic case of ideology governing the solution.

    The State drowns the employer in red tape, decrees the minimum it can p[ay for any job and extracts its pound of flesh in the form of employment taxes, then taxes the individual as soon as he/she earns a ridiculously low amount.

    Oh! That screws the labour market!? Well, the solution must be more State intervention!

    Not really, old son.

  • Nick Kaplan

    This really does bring to mind Reagan’s famous criticism of leftist economics:

    ‘If it moves tax it, if it continues to move regulate it, if it stops moving subsidise it.’

    It is surely complete madness to introduce the vast amount of employment regulation and keep the ridiculous tax on employment that is employers NI and then to complain that there are not enough jobs and that the free market is therefore failing and then to spend huge sums of other people’s money subsiding otherwise unsustainable jobs in a futile attempt to deny the reality the government itself created!

    Why not just cutback on the tax and red-tape and let small business across the country create jobs in industries people are actually willing to patronise rather than subsidise jobs that the government deems politically useful?

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