Oct 31 2009
Two Britains
When Conservatives were in power Labour used to fulminate about the persistence of high unemployment and low incomes in certain cities and counties. They thought then that more public spending in the poorer districts would do the job and would transform them. Over the last ten years there has been no shortage of public money going into these places. So how have they got on?
The three highest constituency figures for unemployment in September were Brimingham Ladywood (21.2%), Birmingham Sparkbrook (18%) and Birmingham Hodge Hill (16.9%). The top 25 highest unemployment constituencies include parts of Liverpool, Wolverhampton, Glasgow, Middlesbrough, the Welsh valleys and East London. In contrast the four lowest in England are Westmoreland (2%), West Dorset (2.1%), Witney (2.1%) and Henley (2.1%). This is strikingly similar to the results in the Tory years.
The regional breakdown is much as it ever was, with the South East, South West and East of England experiencing relatively low unemployment and the West Midlands, the North East and the poorer parts of London relatively high. The only exception to the old pattern is the position of Scotland. There unemployment has fallen below the national average. The three constituencies with the lowest levels of unemployment are all Scottish.
So what does this prove? It shows that in most cases the decision to spend much more public money has not triggered independent growth and job creation. Unemployment has remained obstinately high. Well intentioned efforts to lift educational standards, raise skill levels, attract in more businesses, create more entrepreneurs and improve the local built enivronment have not in the main brought about a self sustaining economic revival. A community only grows and prospers when the private sector can sustain its own growth, and when many creative and entrepreneurial people live there or are attracted in. There are still large areas of the inner cities, of the Midlands and the North where unemployment has remained too high through good times and bad, where huge public spending has failed to transform.
It also shows that in the case of Scotland, when you get above a certain threshold of public employment, you can influence down the unemployment numbers. Even there the old areas of highest unemployment have remained difficult to shift, and there has been no breakthrough in growth rates. London has outperformed Scotland by a country mile in growth over the last decade.
A sustainable and strong recovery requires a strong and competitive private sector, with access to the talent, property and money it needs to make a success of it. The world is an ever more competitive place. The latest figures should send a shiver down the spine, if we are still not in recovery and are still not exporting enough with the pound devalued as much as it has so far.
28 Responses to “Two Britains”
John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College...
If you throw enough money into the ghettos, all you do is make life more tolerable in there. By all means put enough money in to start the ball rolling, but only to help people find their own feet. I don’t mind whether this is by individuals moving out to move up, or by lifting the whole area.
Labour couldn’t even find them non-jobs in the bloated Public sector to help fiddle the figures, so there’s no way anyone can pretend that a blank cheque solves things.
The trick is in showing those trapped by the current system that the only solution is to take responsibility for yourself at the start of your adult life, and work. Giving out so much money that work is uneconomic is demonstrably crass.
Putting more emphasis on helping the disadvantaged to relocate to find work seems like a better way to spend the money.
They may have thrown public money at these boroughs, but they have made the benefit trap worse. While people who could only earn minimum wage lose 96p in the £ for any earned income, there will be no reduction in unemployment in these areas.
It all depends whether you believe in shirt-tails or saftey-nets are best way to improve the lot of the poor.
The lot of the poor has improved because they have ridden on the shirt-tails of WEALTH generated by the hard working members of society.
Saftey-nets are necessary, but they are meant for CATCHING not for DRAGGING the poor out of poverty.
Thank you for the analysis. I think I would like the Scottish position worked on a little more by the Party lest others use it to argue that if we just had 50% on the public payroll all would be well. Even Scotland can’t prosper by exporting diversity monitors or Quangos
With these all these New Labour inadequates in power for thirteen years.
We have had fight five un-necessary wars to get Blair his Congressional Medal of Honour.
That must have cost (many-ed) lives unneccesarily ended or destroyed!
The cost of British public services has increased four fold.
Education, health care, housing, pensions and policing have all declined in direct proportion to the countless £ billions of money showered in.
No one in Britain will now ever get (all-ed) of the pensions they paid for, or for which Labour so dishonestly promised.
None will now ever be affordable thanks to Browns lack of one shred of financial acumen or fiscal prudence.
Ambition, Our Armies, Compassion & Caring, Education, Health provision, Communities, Democracy, Decency, Fairness, Freedom, House of Lords, Justice, Law & Order, Parliament, Prosperity, Pro-active Policing, our Safety, Security & Soverignty & Trust have all been needlessly abolished by these New Labour biggots.
The Tory Golden legacy has been transfomed in just over a decade into £3 trillion New Labour public debt.
The Westminster Parliament has been stripped of power. So President Blair could rule us from Europe with Tanks and Rocket Launchers not by consent from the ballot box.
Happily for us in this, fate was for once now proved not to be on Blairs side!
Because the EU Ministers have at the last hour seen through all his hubris, smarm, smears, spin and utter falsehoods.
………
Would have put him in the odd situation he could not have ever afforded to be the EU President.
Despite its vast salarly and trappings on offer!
It would have deprived him the huge income for directorships etc that dazzled & beguiled bankers and financiers who were daft enough to be paying him.
In anticipation for all the influence he might have afforded them if he had he been EU president!
David Milliband might look wonderful standing beside the ….., unkept, scowling & wallowing, blinkered grandstanding universily unwanted Brown.
Yet how callow would he look if he was up against the real competition other EU Countries have in abundance?
David Cameron is best placed to nurse a destroyed & deverstated Britain back to some semblance of a Fair & Prosperous Democracy.
But he must repeal every single bit of legislation the New Labour Conspiracy Government ever enacted, against the interests of the British people.
It won’t be easy, it won’t be quick but with Cameron & his team it will we can be sure be done!
The depressing thing is that if you point out these imbalances to Labour people, they simply say that the situation would be even worse without their expenditure. When Brown and Darling equate public spending with investment, they really mean it.
One fact that most people are too delicate to mention – unemployment pay in the south east is definitely not enough to live on; in areas with lower rents you have more of a chance.
If we are to move to something like the American Workfare system, with lower total social protection expenditure, we need complementary measures to get a dynamic economy and reduced unemployment. Getting rid of income tax for people on low incomes (the 10% tax band should have been converted to 0%, not 20%) and reducing unemployment benefit in areas with low rents would help. A bit cruel, but what are the alternatives?
Off-topic but topical, Mr Redwood, within a few hours the European Commission will be legally reduced to a one man band.
All the present Commissioners other than the recently re-appointed President Barroso will become ex-Commissioners at midnight CET, when their five year terms expire.
There’s a pretence that their terms have been extended until after the Lisbon Treaty has come into force, but that is simply not permitted under the relevant provisions in the treaties.
If anyone doubts that, they could try asking:
“Precisely which treaty articles have been used to allow the Commissioners to remain in post beyond the end of their five year terms?”
There’ll be no answer, because there are no such treaty articles.
So much for the rule of law within the EU.
Bear in mind that Parliament has incorporated these treaties into our national law, and therefore ministers and officials are breaking our law if they turn a blind eye to any breach of the treaties.
Will the Conservatives be chasing this up, and publicly insisting that the law must be obeyed?
If not, why not?
Do I need air to breathe? Do I need water to slake my thirst? Do we need a larger private sector to provide employment and growth? Absolutely.
Mr Redwood, you are almost stating the ‘bleeding obvious’ – such a pity that it is not that obvious to the Labour party!
Well said.
Fulminate that’s a lovely word Mercurial and exciting, it is associated with the flintlock and other “fire” arms’~~’: The trouble with Labours policy on unemployment is that assumes you can fill a sink by tipping our money into it…Such Sink Estates are built on places that are simply never going to raise people up. Rather than wasting money on these areas it would be better to bull doze them and move their people to “higher” ground. Of course this will sound like the babbal of a fool to the men of clay!, but to you John I am certain it makes good sense. The lay lines are not a fig-e-meant of our imaginations but a vital tool, in the management of our Nation.
If that is rather to plain speaking I give permission for knights to cover over this post…Water Management and Civil engineers have always grasped this fact:::
Which puts Scotland in a vicious circle. Electing leaders who do not want to grow the economy through free markets rather than UK money really would produce significantly greater unemployment & poverty. Not doing sokeeps us in comparative decline. I know this question applies everywhere but the cost of reform is more acute here.
One option is independence.
Another is fiscal autonomy – that Cameron set Scotland’s budget as a set proportion of taxes we raise. I think that proportion should be slightly higher than in England because a disproportionate amount of UK spending (Foriegn Office, most military bases, central government bureaucracy) is in England. I think, for balance we could also claim most of the oil money or all of it initiailly, declining over time. It would also then be necessary for us to control our corporation tax rate, as Ireland does.
I don’t say this would make the Scottish Conservatives popular but then the party here is so scared of saying anything radical that it isn’t worth voting for anyway.
Brown has been going on about the recession in Germany was bigger than the UK. In GDP terms it was. But when you look at it in terms FDD (final domestic demand) you get a different picture which shows the benefits of having a large export capability.
I can never find UK data for FDD, we must call it something else. But when your FDD is higher than your GDP, your economy has a structural problem that foreigners have to finance. The UK has a problem here for all the reasons JR has stated. You can see from the numbers that the ratio of private consumption to public consumption and fixed investment, are probably where the problem is for the UK.
The OECD works it out for countries that do not publish it and the OECD Economic Outlook lists them with a commentary. If you have the inclination, it is worth a read.
The sentence in the UK commentary made me smile. “A continued strong focus on labour force activation policies is also warranted to buttress medium term labour supply”. He could have just said, get those idle b******s off their a***s and cut back on the welfare cheques.
http://www.oecd.org/document/52/0,3343,en_2649_33733_19726196_1_1_1_1,00.html
John,
Eight years ago I decided to go self employed and start up a business. An excellent introductory course was available and was well attended (there was clearly no lack of people willing to try and to not simply become an unemployed statistic). We were advised that only 1 in 10 would still be trading after 3 years.
I now know why.
Starting up a business is a dire process almost doomed from the start, because so very few of us have anything other than guts and dreams. Terminally lacking in business acumen.
But there is a much greater reason than simple lack of experience (which can be overcome by regular training sessions) for why so many fail. That reason is that the system is not designed for startups to stand a chance.
Startups need ;
Loans which will not serve as millstones, i.e. zero or very low interest, with security that they will not be called in on a bank managers whim. Are they available – NO
Insurance cover that does not penalise them for lack of trading record. Is it available – NO
Low tax, or no tax, concessions for turnover to cover one or two incomes. Most of this concession will go back either into investment in the business or straight back into the economy. Is it available — NO! Startups have to service all the costs that a large company might.
Encouragement for large companies to utilise startups. Do they get it – NO, the incentive is to use large companies who tick all the boxes such as Quality, Environmental, Training standards (ISO 9002 etc.).
Instead the government pours money into large corporations when the lions share goes to feeding the bonus schemes of the directors, then straight off shore instead of feeding back into the economy.
Am I still in business? Yes – but only just, my standard of living is well below the poverty line, but I am still solvent. This government has tried its best to strangle me out of existence, and I have no doubt that your party would be no different.
Business is a bit like farming – you can feed the fertility of the soil and take a sustainable crop each year, or you can go for cash crops and bleed away any fertility the land has left.
Stability relies on diversity and diversity relies on feeding the grass roots and keeping them healthy.
Do I expect your party or the libs to do this — NO
So who do you think I might be looking to vote for at the next election ????
Do you mean Labour’s empty rhetoric was just empty rhetoric? A neat illustration of what big government can’t do regardless of what they spend or how much they wish for something to be true.
The joys of national pay settlements.
Small businesses in the North cannot compete with the pay and perks offered by the public sector – hence all the talent goes into the public sector and leaving no money or talent available for private sector growth.
There is nothing wrong with taxpayers money being used to invest in, for instance, state of the art buildings and transport infrastructure, but once these are built the state needs only to maintain the facilities. Providing services from these should be down to private businesses. Competition can then thrive. As long as the state employs vast amounts of people in poor areas, the private sector will never grow as it cannot compete.
Consider these two scenarios-
First; the government pours trillions into the banks – straight into the hands of the CEOs – where does it go?
Answer, straight into high profit loans and into bonus packages and then straight off-shore.
Second; the government divides those trillions up amongst all the small businesses so that the lions share goes to companies of 5 or less employees and gives it away as tax free grants – now where does this all go?
Answer, well first off, it goes straight into the banks, where the government wanted it to go. Then pretty quickly, it goes into the economy – paying wages, paying outstanding debts (helping keep those larger companies afloat) and investing in plant and growing the businesses. In turn, all of this money goes straight back into the banks and starts to feed the economy by winding up demand from the grass roots.
Yes, eventually it will all be ending up in those offshore accounts, but by fertilising the grass roots first, it has a much slower route and does much more good along the way.
But then, one of these scenarios is reality, and the other one is common sense – AKA a Pipe Dream.
Re “Well intentioned efforts to lift educational standards” they may have spent more money in some of these areas, but the education standards remain terrible, there are many simple reasons, would you teach in a problematic area where you are likely to get beaten up and get little support under the current arrangements? exactly, changing the education landscape needs much more radical action than simply throwing money at the status quo
What do you want us to export? What is your outline strategy for how the UK makes its way in the world as a high cost high tax economy? Are you sure we can compete with nations happy to build polluting factories that wouldnt be allowed here?
Poor expectations for the people are a large part of the problem
Bureaucratic socialism is a bankrupt philosophy. The only way it can be sustained is by creating a client state controlled by an arbitrary and democratically and legally unaccountable quangocracy. The evidence is in your analysis.
The areas of persistent unemployment, mostly, have no further economic reason to be. The world has moved on. Sustaining the populations with benefits merely cements the unemployment. People are a mobile factor of production. They have to move to where the work is and where they can add economic value and create wealth.
The EU is the primary quango designed to pertuate this dreadful state of affairs. Sooner or later we will have to leave it, or we’ll atrophy into the East Germany, but with X Factor and MacDonalds.
The Big Question for politicians of the right is how you sell freedom.
Fact of the matter is John that no matter how much money or effort you put into certain areas or projects, if the will of the local population and Local Government/Councils are not behind it, you waste your time.
Its the same in areas where it would seem everything is going well, if the will is not there for any project, it will fail.
The situation is that many of the areas you have listed were in the past centres of volume manufacturing. As you are aware in recent blogs, manufacturing on any sort of large scale is dying in this Country.
We now seem to be fixated on service industries, or public employment (both seem to be growing although produce little). And the finance industry seems to Centre mainly in London and its surroundings.
Service industries do not usually pay much, Public Service Industries are regarded as a very safe option, with a decent salary (national wage scales so good in remote areas), good holiday entitlement, sick leave policy, and an excellent pension system.
The Benefits system is also in part to blame as it can discourage people who are on long term Benefits from finding a job which may not last.
It usually takes many months to get all of the Benefits you are entitled to sorted out (due to the complexity and inflexibility of the ssystem and the way it works) and once you have your Benefits people are unwilling to go through the system again (waiting more months) for the risk of either partime work, temporary work or self employment, because of the very hassle to get back into the system if that employment fails.
The simple fact is if there is a Public service job on offer with all of its benefits, security, pension, sick leave, Holidays, and reasonable wages, against a commercial private company paying average wages for the area, its no real contest which is the better choice for most.
Years and years of Government grants to entice Companies to move to other areas, has only ever shown limited success.
Hello! You might like to spell Middlesbrough correctly! It could be seen as a real lack of interest in the town if you cannot even spell the name correctly!
@DerekSmith
In July the EU announced a microcredit (<£25k) facility for small businesses: http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=547
We really must concentrate our efforts on the million or so young (18-24) unemployed – a significant number are graduates. How many of these with relevant training and modest grants (to cover their first year start-up costs like insurance) could succeed in business?
John – re Scotland – the constituencies with lowest unemployment are all Oil/Gas related. These seats receive the lowest council tax support from Mr Salmond.
Indeed the Labour Government’s failure to have a manufacturing strategy has let its own seats down badly as you imply. Glasgow City still has very high unemployment. Mr Brown’s own seat in Kirkcaldy and Cowdenbeath is very bad too.
It’s all just marvellous if you’ve got a job. You fat…….
An old broken record but I believe it still plays a true tune – I think that the main problem in these problem areas is the complete and utter breakdown of the family unit and the tradional values associated with it. Now, when I see a young woman with a child on her own I’m embarrased to ask about the father because it’s taken as read that a lot of families now are single parent, for whatever reason. It’s accepted now that there is nothing wrong with being a single parent, in fact it almost seems encouraged in some media reports but I really believe that this is slowly eroding the moral fabric of this country.
Reading about the 1920’s and the struggle for welfare payments for genuinely destitute workers, with the national strike, the walk on London, etc. I think that our forebears must be turning in their graves now that ‘benefit recipient’ is a career choice for so many people rather than a short term band-aid until people can find a job again.
@SJB – what a joke.
The banks get trillions and 8,000 micro LOANS are proposed per year for the whole of the EU.
It is too late now, because the money has already been given to the banks, and it is no surprise that it has had no effect other than stimulate obscene bonuses.
Don’t get me wrong, 100 million investment in our youth is excellent, just that it should have been MUCH MUCH MORE.
Lost opportunity – but what else do we expect from our masters.
With effect from 23:00 GMT October 31st, there are now 26 vacant posts on the European Commission.
Jose Manuel Barroso was recently re-appointed as President according to the correct procedures laid down in the treaties, but the five year terms of the 26 other persons who were previously Commissioners have now expired.
The claim that their terms have been extended is a mere pretence, there being no treaty provision which permits the term of a Commissioner to be extended.
If they now impersonate European Commissioners and continue to draw salaries and expenses and purport to carry out the functions of a Commissioner, then they will be putting themselves at personal risk of both criminal and civil prosecution, and their actions and decisions will be legally null and void.
Fundamental problem with the welfare trap is that it encourages folk to do nothing
The incentives in the system should be setup to do a training course, or get some extra education, it is crazy that anyone trying to drag themselves up by education or training is massively financially hammered compared with those staying at home watching daytime TV
The state backed housing provision, council houses and housing association, also act against mobility of the workforce, once you have a decent house somewhere the incentives are very much to stay with it, acting against any desire to move town to somewhere with jobs in your skillset
folk on the worst estates should be able to send their kids to state schools anywhere, even if it means we have to turn some of them into borders, its the only way to give the next generation a chance
we really need to figure out what the leading edge high value work is that a high cost high tax UK can lead with, and then be very careful about protecting that IP
stop flooding the country with folk on inter company transfer visas undercutting the UK workforce and removing the incentive for UK employers to train the UK workforce
its not rocket science
Do you know what? I am appalled to find that I agree, for once, with Bazman!
OUCH!
When I was on the rock’n'roll in the 1990s that is exactly how I felt too. You know the one about scratching the limo with your house keys? Well, I nearly (but noy quite) got down to that. I won’t even talk about the humiliating and, yes, almost dishonest and venal little things I had to do to survive.
Seeing an unemployed ex MD in tears when he got a parking ticket was not nice.
Do you know what would help?
This is not going ot be popular.
Dividing the sexes up.
Boys of 16 have largely been replaced by obedient, part time, charming and efficient middle aged women. They have often had children of their own so they are excellent at organisation and people skills too.
Girls of 16 are, let’s admit it, far more employable than rather smelly, naughty, cleverclever teenage boys who throw things.
Result: massive unemployment of 16 year old boys with predictable results. And young teenage boys grow, rapidy, into sperm donors and middle aged drunks.
[...] If that is rather to plain speaking I give permission for knights to cover over this post…Water Management and Civil engineers have always grasped this fact::: # Neil Craig on 31 Oct 2009 at 11:36 am. Which puts Scotland in a vicious circle . Electing leaders who do not want to grow the economy through free markets rather than UK money really would produce significantly greater unemployment & poverty. Not doing sokeeps us in comparative decline. …More [...]