Labour’s New Take on Beveridge
There is a danger that all the Government’s efforts to bolster the economy will be engulfed by rising unemployment and the collapse in consumer confidence. We hear a lot about business confidence, but it is consumers who buy the goods and services and if they are so frightened that they stop spending, the situation plummets ever faster downwards.
When President Franklin D Roosevelt (FDR) was inaugurated on 4th March 1933, it was against the background of the Wall Street Crash and the deepening Depression. His famous speech on the theme “the only thing we have to fear is fear itself” outlined that his central aim was to rebuild consumer confidence and he succeeded. He was a new leader and he demonstrated firmness of purpose with a clear sense of direction and optimism, although I should say that a lot of the myths about FDR’s New Deal are wrong. The Americans did not have many shovel-ready New Deal schemes—to use the jargon of the time. But people believed that at last there was a workable plan and steady leadership and confidence returned leading to a revival of fortunes. When we look at the problems of the 1930s and what President Roosevelt did, we find that confidence was right at the heart of what he achieved.
How can you have confidence in Britain’s current leadership? In the Brown Recession, Government bungling has led to a sense of insecurity for all ages. How ironic it is, given Labour’s history, that their new take on Beveridge seems to be ‘Insecurity from the Cradle to the Grave.’ It’s not just that they contributed to the crisis by their raid on pension funds, failing to regulate the banks properly, by borrowing too much and encouraging the public to max out on credit, it’s also the drift over Northern Rock, the inadequate rescue packages for the financial system and the mess over Sir Fred’s pension. It all looks like an amateur production and the impact hits all ages, damaging confidence.
A child born today is already saddled with £17,000 of Government debt. Youth unemployment has risen since 1997 and long-term Youth unemployment will rise faster during the recession. Fathers and mothers face massive job losses. The most recent month’s rise in unemployment at 0.5 per cent is the worst on record. Experts expect unemployment to rise from 2 million to over 3.1 million and reach the highest ever level within a year or so. Yet, the Government just does not get it. The night before the dreadful figures were released, James Purnell MP, Work and Pensions Secretary was reported in the Evening Standard as saying that unemployment was rising more slowly than in the previous recession. Over 500 Jobcentres have closed in recent years and the Government is not ready for the unemployment challenge.
As jobs go and credit is tightened, home repossessions are rising. In my local County Court, the number of Court days available for repossession cases has trebled in recent months.
With very little return on savings, pensioners are badly hit and pension funds’ losses on the Stock Market are worrying for those about to retire. Many may have to look to the Pensions Protection Fund for help if their employers go bust. The Woolworths’ scheme may already be heading in that direction. Over coming months some of our largest pension schemes will have their three-yearly valuations and there will be big deficits. We must just hope that these do not push more companies under or lead to levies on good pension schemes to meet the losses of the bad. The Government has promised to make more substantial increases to the State Pension in the future, but no one knows when. In the meantime they keep using sleight of hand to subtly reduce benefits whilst simultaneously announcing generous sounding increases. So, this year we have seen the Savings Credit cut back, National Insurance Contributions increased, the Carers’ Allowance earnings threshold frozen and no proper recognition of the true rate of inflation for pensioners.
And the actions of Government have been baffling. How can the Government adopt the rhetoric of FDR – New Deal-style infrastructure projects and all – and then suspend 100 of the FE Colleges’ building schemes? At North Herts College they have a “shovel-ready” building scheme with builders ready as promised and now it’s on hold with no visible strategy for the way forward. Many are suggesting that we could tackle fuel poverty and provide energy and environmental benefits by undertaking insulation and Green energy projects, but the Government has rejected the proposals.
We have heard much from Government schemes about how they will help business, such as the Working Capital Scheme, their loan guarantee scheme, jobs schemes, mortgage help schemes, but none are delivering as they should and many have not even started months after the press announcements.
Since November, Conservatives have been calling for a substantial Loan Guarantee Scheme to help small and medium size businesses secure the credit lines they need to retain jobs and stay afloat. The Government have promised to do something, but months later there is no action on the ground. This just will not do. Every month that passes means businesses and jobs lost and confidence eroded. The danger is that with all ages fearful of job losses, home repossessions, incomes in retirement and a slow unsteady Government response, the situation will continue to go from bad to worse. The time has come for new leadership in Britain and a real sense of policy direction coupled with the ability to get the job done. It’s time for the Conservatives to undertake our historic mission of clearing up the mess left by Labour.