Budget 2012: Osborne hasn’t done enough to help unemployed in the north


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Katie Schmuecker, associate director of IPPR North, looks at the impact of the budget on the north of England

The chancellor began his statement with a forecast that unemployment is set to peak at nearly nine per cent in 2012 before falling back to around 6 per cent by 2016.

George-Osborne-corpseThis is cold comfort for those areas which already have unemployment rates that far exceed this forecast peak – places like Middlesbrough, Manchester, Liverpool and Hull. Furthermore, recent IPPR North analysis finds the north is already experiencing a jobs double dip recession.

The Budget had quite a lot to say about changing tax thresholds and investment in infrastructure, but it had little direct to say about the problem of unemployment.

Of course, some of the tax and investment measures are welcome, and may help boost growth and employment. Indeed, Osborne’s admission that under-investment in transport infrastructure in the north has been chronic is right.

What he didn’t mention is his own government’s planned investment in infrastructure perpetuates the imbalance, with £2,700 per head committed to forthcoming projects in London and the South East compared to just £5 per head in the north east.

In this context the commitment to extend the Northern Hub rail project to improve transport connections between towns and cities in the north of England is very welcome. But we need many more projects like this (pdf) in order to even begin to tip the balance.

 


See also:

The south is on its way out of recession, but the north is stuck 15 Dec 2011

Public sector jobs are growing in London and the South East; here’s why 11 Nov 2011

Economic outlook getting bleaker and bleaker for the North, Wales and Scotland 13 Sep 2011

Beyond London and the East, the UK is suffering an ‘Osborne jobs deficit’ 18 Aug 2011

Two nation Conservatism: VAT rise hits North harder than South 6 Dec 2010


 

Projects like Northern Hub are important because they create jobs in the short term and create the conditions for growth in the longer term. But when considered alongside the north’s high unemployment rate we have to ask whether it is sufficient.

The problem is particularly acute in a number of cold spots, where the number of unemployed people far exceeds the number of jobs being advertised locally – in the most severely affected areas there are up to 35 job seekers chasing each vacancy advertised with the job centre.

In these areas, people that have been out of work for more than a year face a double whammy.

Not only do they find themselves in a group of people whose future work and earnings prospects are scarred by the experience of long term unemployment, they also find themselves competing in a fiercely competitive local jobs market.

This is why IPPR North has been calling for a targeted jobs guarantee that would apply in areas with the highest jobseekers to vacancies ratio – for example those with a ratio that is twice the national average.

It would work in a similar way to the government’s ‘Youth Contract’: individuals out of work for more than 12 months in designated areas would be offered a minimum wage job, which they would be obliged to take up or provide their own alternative.

Such a measure would have done a number of things for the chancellor.

It would address a political problem by demonstrating his concern for some of the most economically hard pressed areas. More importantly, it would help to combat the negative effects of long term unemployment for individuals living in some of the most economically challenged places, as well as avoid storing up greater problems for the future.

This has to be chalked up as a missed opportunity.

 


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  • http://www.facebook.com/people/Lesley-Farrington/100000142606023 Lesley Farrington

    How would extending workfare, even if it is on minimum wage for 25 hours, help create real jobs? It would just replace existing ones and offer a sheep dip solution for many highly qualified and/or capable people; a way into dead end service sector work rather than into proper re-training and education. We need proper investment in people and industry to help us grow for the future not just into a low wage, low skill economy and a race to the bottom.

  • Anonymous

    We can get some tax cuts to get the North going.

    Tell us about Ed’s plan on capping benefits. What should the cap be on the Wirral?

  • Anonymous

    Ah yes, cut further to ensure further grinding poverty. As always.

  • Anonymous

    Pointless. Those areas need basic infrastructure to handle the people who will be displaced by housing benefit policy. Considering jobs is a waste of time.

  • Mr. Sensible

    And how do they think regional inequalities will be solved by regionalizing public sector pay?

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