Labour Lifts-Off Into 2012

Ed Miliband is seeking to relaunch his leadership and confound his critics by unveiling a clear vision for the Labour party of 2012.

On Monday, he began a media blitz that outlined what a future Labour government would look like. His speech at the OXO Tower guaranteed that Labour would continue to promote fairness and social justice “even in tough times”, but made it abundantly clear that it would be “a different party from the one we were in the past.” At a stroke, Ed appeared to banish the ghosts of New Labour while allaying the fears of those critics who believe he wants to take party policy back to the days of tax-and-spend.

It was a forceful speech made by a leader with fire in his belly. Polling at the end of 2011 revealed that while the Prime Minister enjoys a +5 point personal rating on his job performance, Ed is burdened with a -17 rating, putting him just ahead of Nick Clegg on -19. Labour’s lacklustre support among the electorate has led some erstwhile friends of the leader to openly criticise his handling of the party. Ed needed to begin the New Year with a gutsy show of character that made clear where he stood on the policy spectrum- especially in regards to the economy.

However, while the delivery was impressive, the content revealed that there is still some way to go before Ed and the party can make a coherent case on where they stand. The references to “tough times”, and admittance that “whoever is the next Prime Minister will not have money to spend” suggest that Ed is adopting the doctrine of fiscal conservatism that underpins the Coalition’s support and was recently advocated by the authors of ‘In the Black Labour’. While Ed attempts a positive spin on this by arguing that he will co-opt the private sector in the mission to improve the living standards of the vulnerable, the underlying principle still resembles that which motivated New Labour. The rhetoric also contradicts messages coming from elsewhere in the Labour Party, especially from the Shadow Chancellor, who in previous months has argued that short-term stimulus is more important than immediate fiscal contraction.

Contracting-out the task of providing fairness and social justice to the private sector isn’t exactly what some on the left want to see Labour support. What is more distressing, however, is the lack of inventive policy positions or promising reforms that would get the electorate excited about a future Labour government.

This is where think-tanks like the Fabian Society step in. In the recent Fabian Review¸ society chair Andrew Harrop argued that Labour should move away from ‘short-term Keynesianism’ and Osbornomics alike by committing to spending, rather than prohibiting it, but only spending on investment and unemployment relief.  He also suggested that Labour could steal a march on the Coalition and reboot the economy with a stimulus programme based on short-term tax cuts. The promise of a fiscal stimulus that appeals to the electorate and outflanks the Right could put Ed’s name back in lights- provided he retains a commitment to strong infrastructure spending and the welfare state.

That last proviso is an important one. As Ed seeks to convey a clear message on what the Labour Party stands for and what policies it would implement, he has to be careful not to abandon the values and language of democratic socialism. He was right to state that “my Labour Party is not going to bow to the outdated idea that says that government cannot help”, and as the Left rallies for a new campaign against the misguided policies of the Coalition,  many look forward to hearing more about what a Miliband government would do to bolster the state’s ability to create a more progressive society.

Louie Woodall is Assistant Editor of the Young Fabians Blog

‘In the Black Labour’: A roadmap to defeat?

Louie Woodall responds to Stephen Boyle’s argument for a new economic strategy based on ‘fiscal conservatism’.

The question absorbing Labour leaders, activists, and think-tanks alike is how the party can earn back its economic credibility. Recently, a quartet of Labour thinkers published ‘In the Black Labour’ , which offers one answer to this question. However, the paper does little to advance a distinctive economic strategy that traditional voters and activists can relate to, and does even less to bolster Labour’s chances at the next election.

The fundamental problem with ‘In the Black Labour’ is that it does not provide the alternative narrative that an opposition is supposed to offer the electorate. The authors are essentially trying to sell the electorate the same product pedalled by the Coalition: austerity, a small state, and the fictitious ‘Big Society’.

By placing ‘fiscal conservatism’ at the heart of its strategy, ‘In the Black Labour’ cedes the moral argument on the economy to the Conservatives and attempts to move the party onto the Coalition’s turf. It is easy to see why this would be an attractive course to take in the current political climate. November polling revealed that some 30% of respondents still blame the debts racked up by the previous Labour government for the continued economic slump

However, it also revealed that 46% believe Osborne needs to slow the pace of austerity, and that 35% favour a programme of public works to create jobs. Labour needs to remember that by 2015, the Coalition will no longer be able to capitalise on the excuse that their failures originated in the actions of the previous government. Osborne would have had a full term to place the country on the road to economic recovery, something which many indicators suggest he is far from achieving. Telling the electorate that it favours the government’s strategy but disagrees on the tools to achieve it will make Labour look uninspired and shallow to the victims of the Coalition’s policies.

By promising rigid controls over future budgets, the authors miss the opportunity to excite the electorate with a positive vision of economic growth. It is difficult to convince people that by cutting the deficit, more jobs and higher wages will follow. Labour should instead promote a programme of public works, with a focus on housing and infrastructure, and continue to sponsor the ‘green industrial revolution’ promised in the last manifesto. The Coalition is making tentative steps in these areas, and Labour should steal a march on them by promising a much more extensive campaign. ‘Effective Keynesianism’ can be sold to the electorate without recourse to fiscal conservatism.

Labour should not shackle itself to the same ideology dictating the actions of the Conservatives by promoting macho fiscal discipline over the more desirable aim of a resurgent economy. It should not reject deficit spending outright just to win back the votes of the City. The very idea that any government could commit to producing a budget surplus within a fixed timescale- as suggested by the authors of this pamphlet- is ludicrous considering the volatility of national and international economies. Setting targets that cannot be realistically met is an own goal in politics- just look at Osborne’s current woes.

Labour is suffering a crisis of identity, and every centre-left thinker is casting around for a narrative it can adopt that fits with the party’s heritage, while accommodating the current economic reality we face. ‘In the Black Labour’ seeks to gain the party short-term popularity by copying the Coalition’s approach to the public finances and planting the red flag squarely in centre ground. The authors should remember that the centre ground is always in motion, and may be some way more to left by 2015 than it is now if Tory policies fail to achieve their objectives.

Louie Woodall is a member of the Young Fabians and Assistant Editor of the Young Fabians Blog

‘In the Black Labour’: A roadmap to victory?

Stephen Boyle assesses the relevance of ‘In The Black Labour’.

With the coalition showing signs of fraying and Vince Cable supposedly so furious at David Cameron’s “veto” that he considered resigning, the odds of the coalition lasting a full term has dropped considerably since Friday.

While Europe is currently dominating the agenda, any election in the near future will inevitably pivot towards the ailing domestic economy. Worryingly,  it is on economic ground that Labour most lack credibility with the electorate. Recent polling data from Lord Ashcroft and YouGov shows that despite people’s lack of confidence in the current government, they trust Labour even less to deal with the current economic climate.

Last week saw the publication of In the black Labour which aims to broach this gap. The authors’ proposed remedy is to marry fiscal conservativism with equality of opportunity.

I believe In the Black Labour points the right way for the party. Labour desperately needs a credible alternative to the coalition’s cuts. The five point plan is all well and good, but its emphasis on the “nice” side of dealing with slow or no growth, in terms of taxing bankers, investing in youth education and infrastructure must be coupled with a more open acceptance of the necessity for cuts. At the moment this message is failing to chime with an electorate that still views Labour as culpable for the current mess. In order to re-establish credibility we need to accept that we made mistakes in the past, and unambiguously commit ourselves to acting in a fiscally responsible way in the future.

As to the first point, we need to be more open to the fact that we made mistakes during our time in power. Look to the abolition of the 10p tax rate as one example. In his recent book, Alistair Darling makes clear the political and economic costs this disastrous policy caused. Being candid that we made mistakes in the past, owning them, and speaking about how we have learned lessons would go a long way to re-establish credibility. This should not be couched in the passive voice of “mistakes were made” as if they were agentless, floating in the ether, but rather owned by us. We made mistakes. We have learned from them.

After that message has had time to sink in, we can demonstrate our commitment to acting responsibly. That will mean setting clear and unambiguous targets for the levels of national debt and public expenditure. This means that we will have to look for new ways of achieving social justice with less money, a challenge to which the Fabian’s new year conference admirably rises.

By accepting the severity of the current situation we can build a message that draws on the values Labour epitomises and that are most appealing to voters. The current cuts disproportionately target the lowest paid workers and women. Labour’s message should be that we accept the need for cuts; we know that it is wrong to leave a legacy of debt for the next generation, but we will act in such a way as to spread the burden more fairly across society.

Those viewing the policy debate since Labour lost power must have felt like they were looking through a kaleidoscope as an array of colour-coded publications cascaded by. Blue, Purple and Red have all raised their standards in the ongoing battle to define the next generation of Labour policies. While many of the colours will no doubt fade over time I believe In the Black Labour should be at the heart of what the next Labour administration does.

It is time now to start planning for the reality that austerity will outlive the current parliament and last into the next. A Labour party that does not accept that reality and put it at the fore of their message risks being seen as the greater of two evils in comparison to a resolute and ideologically driven Tory administration.

Stephen Boyle is a member of the Young Fabians.

The Future of Fair Pay

Recently, the Young Fabians unveiled ‘Recovering the Economic Initiative’, a guide for Labour on how to restore its economic credibility. The recommendations are broad in scope, yet all focus on placing growth, fairness and responsibility at the heart of future policy.

One of the flagship policy successes of the 1997 Labour government was one that guaranteed fairness for all workers. The National Minimum Wage Act enshrined in law the right of workers to be paid a fair wage for their labour. The opening sections of the Bill state in clear terms that a worker is entitled to this wage – it is not a perk, a bonus, or an earned privilege, but an entitlement: a basic right.

However, for over a decade Conservatives have been attacking this right, and by fair means or foul have attempted to undermine it. When Tories- including David Cameron- campaigned against the minimum wage in 1997, hourly wages of £1.20 were common and legal. Even today, some Conservatives still seek to undermine the very idea of a national minimum wage- by taking the ‘national’ out of it altogether. Chris Chope tried his luck in March, forwarding a Private Member’s Bill that threatened to cut the rate in certain regions of the country. Besides fundamentally missing the point of a ‘national’ minimum wage, the Bill promised to randomly condemn thousands of people to poverty wages for living in the wrong place.

This is not the time to cut the minimum wage. It’s the time to take it a step further. The current rate may protect employees from exploitation, and free them from poverty jobs. But it does not do enough for workers in these extraordinary times.

The Joseph Rowntree Foundation reported in July that a single person needs to earn £15,000 before tax to afford an acceptable standard of living. However, a worker on the current minimum wage, working 40-hour weeks for 52 weeks, can only earn just over £12,600. This rate of pay doesn’t even apply to workers under 21 years of age. Thousands of young adults are placed on a lower rate, meaning that the minimum wage effectively discriminates against them. Is the work performed by a 21-year-old really worth £1.10 more per hour than that performed by a 20-year-old?

Labour shouldn’t see the National Minimum Wage as the end of the road- but the beginning of the journey towards true wage fairness. Ed Miliband made a start on this with his Living Wage Campaign during the Labour leadership race, but this has been quietly dropped from Labour’s current agenda.

Worringly, Labour in the recent past has been flirting with the idea of a minimum wage that varies across the country. Gordon Brown thought about introducing a variable scheme in 2007, and it’s certainly gaining popularity on the left today, where the need to look economically credible seems to be overriding all other concerns. The flawed logic of some is that a minimum wage prices people out of employment- but what good is employment if you can’t live off your income?

Yes, there are regional variations in inflation. Yes, it’s more expensive to live in some parts of Britain than it is in others. Yes, small businesses may struggle with wage costs. But these are all problems that can be solved without undermining the idea of a fair wage. Labour should be seeking to attack the Conservatives from a different angle, by reviving the Living Wage Campaign and standardising the rate across all ages to end the downright immoral age discrimination the current scheme enforces. Tories, economists, and businesses all thought the minimum wage would lead to mass unemployment and national bankruptcy. They think the same would happen today with a Living Wage. They were wrong then, and they’d be wrong today.

You can download ‘Recovering the Economic Initiative’ here.

Louie Woodall is a Young Fabian Member and Assistant Editor of the Young Fabians Blog

Public v Private: The Wrong War

Yesterday, up to two million public sector workers went on strike in protest against reforms to their pensions.

 The largest strike action since the 1979 ‘Winter of Discontent’ was casually brushed off by David Cameron as “a damp squib”, a statement that woefully underestimated the extent of the disruption caused and the strength of feeling across the country. One poll reported that 44% opposed the changes to public sector pensions while another indicated that 61% of survey respondents thought the strikes were justified.

However, throughout the day the internet and media outlets were dominated by verbal clashes between public sector and private sector workers. The picture that emerged on message boards, blogs and news websites was of a country at war with itself. Public servants were accused of “living in a fantasy world” while private workers were urged to recognise that they too should fight for better pensions rather than complain about public sector employees enjoying an easy ride.

Britain needs to move away from this idea of a country divided into two spheres, with one set of rules for public workers, and another for private ones. The Prime Minister’s recession motto: “We’re all in this together” cuts both ways. The current economic crisis does not have to be understood as a requirement on government to squeeze everyone’s standard of living. In fact, it can be seen as a reason for everyone to unite and refuse pay cuts, pension raids or redundancies- regardless of whether they work in the private or public sectors.

Both sets of workers have more in common than most seem to think. A recent study by the Institute for Fiscal studies shows that, while at the moment public sector wages are above those of private workers, they are forecast to fall in line with them over the next two years. Average public sector and private sector salaries will be roughly the same by 2014-15. So much for the argument that public servants are living easy while the private sector suffers. As for the complaint that private workers can’t defend themselves by striking like public workers can- just look at the actions taken by Unilever staff, who voted overwhelmingly in favour of strike action in response to a threat to their pensions.

It is vital that all political groups- and Labour most of all- work to shatter the illusion that public and private sector workers are chalk and cheese. The IFS is predicting a 3% fall in average incomes for everyone next year, in a report arguing that what Britain is living through now is worse than that suffered in the 1970s.

We are all in this together, and we should all work together to secure fair salaries, decent pensions, and acceptable living standards for public and private sector workers alike.

The Squeezed Middle: How To Build A Fairer Economy

In this member post, Jeevun Sandher – a member of the Young Fabian Renewing and Reforming our Economy Policy Commission - reflects on how Labour can build a fairer economy.

Most of us have a vague idea of what the “squeezed middle” is. However, a precise definition seems to elude many in the Labour movement. Understanding precisely who this group is and designing economic policy to promote their interests is the key to building a fairer economy.

To define the “squeezed middle” we could do much worse than to look at the work of the Resolution Foundation, an organisation working to improve the lives of people with low-to-middle incomes. For them, this group constitute about 11 million working adults who tend to earn less than the median income but are above the bottom ten percent in the income distribution.

In short, they are people who are neither too rich nor too poor. They are too wealthy to get substantial state support, but too poor to flourish in an open market economy. Increasing amounts of them are unable to buy homes, and struggle with household bills. More than half have less than one month’s income in savings and face comparatively higher rates of inflation (due to the basket of goods that they buy).

However, the real tragedy for the squeezed middle is that while the economy grew by 11 % between 2003 and 2008, the median wage remained static. At the same time, those on higher wages saw their pay packets increase and executive pay rose exponentially. The squeezed middle saw their living standards reduce at a time when the economy grew and productivity rose, giving the lie to the neo-liberal idea that people are paid their “marginal product” – that the wage chosen by the market is a fair wage.

This problem runs straight to the heart of Labour’s “fairness” strategy. By and large, these are people who work hard, do the right thing, but still struggle to stay afloat in an increasingly precarious economic climate. Meanwhile, CEO’s saw their pay rise dramatically in the decade before the financial crisis and bankers continue to take home multi-million pound bonuses.

The challenge for Labour at the next election is to construct a vision that rewards hard work and shapes a free and fair economy. There is no silver bullet, however. What is needed is a raft of policies to build an economy in which all gain when there is growth.

To begin with, those in the squeezed middle tend to be those with low-to-medium level skills. Any economic strategy must be focused first on investment in education, in order to build up human capital. Given the increasing returns to education we have seen in the past 30 years, this is just common sense.

However, it is important to note that this does not merely mean reducing tuition fees. As a recent IFS study has pointed out, those with similar A-level grades tend to go to university in the same proportion but it is much less likely that the poorest students will get the top A-level grades. Earlier intervention is key (e.g. Sure Start, the pupil premium etc.) to promoting social mobility and building people’s skills.

But this should just be the beginning. For too long Labour has accepted the Thatcherite free market consensus as gospel, and only aimed to tweak it at the edges to help those on low to middle incomes with measures such as tax credits and lower basic tax rates.

It is time to consider and undertake more radical measures. We must design policies which create better corporate governance structures as well as more accountability and transparency surrounding pay in the private sector. Only then can we ensure that all people will share in the proceeds of growth and be paid a fair wage. Hopefully, with these goals in mind we can create a compelling economic vision that helps us win the next election.

Jeevun Sandher is a member of the Young Fabian Reforming and Renewing our Economy Policy Commission.

The pensions generation

In this member post, Young Fabian member James Gill argues that it has never been more important for young people to consider savign towards their retirement.

Last Tuesday, I attended a rather eye-opening Young Fabian Future of Finance Network discussion on the issue of Pension Reform and what it means for young people. Rachel Reeves MP, Shadow Minister for Pensions, attended the roundtable.

Before the meeting, I was but another lost young soul unfamiliar with the intricacies and importance of the need for young people in today’s economic climate to become engaged in pension discussions. Now I’m a sprightful Young Fabian committed now to increasing the knowledge that young people have of pensions.

Before, the word ‘pension’ seemed distant and something associated with retirees, or with people seeking to start building for their retirement in their mid-40s. But – as we discussed at the roundtable – as job insecurity and increased living costs kick into graduate life, saving for a pension should increasingly become a habit of younger workers as well as elders.

Knowledge of pensions is more vital than ever as we lurch towards another year of stiff job competition, a sluggish economy and a squeeze on the lifestyles and choices of many low and middle income citizens in this country.

As a recent graduate in history who has been looking for job opportunities for just under two months – and who has got £23,000 worth of student debt to pay off on top of maintaining a sustainable lifestyle for a young person – I will be looking for the earliest opportunity to start saving up for a good pension for later in life.

Yet only 15% of 16-24 year olds are currently saving for pensions in comparison to 58% of workers in their 40s and 50s, with the consequence that most people in their working prime of their 30s have no or very little pension wealth. This does not bode well for the future generation of young workers, in particularly those attending university from 2012 onwards who will leave with a prospective debt of around £53,000 and with predictions of an increase in graduates competing for jobs (the current average being 80 per job).

Shifting between occupations has to be considered as well. Some people in the mid-twenties have had up to four jobs (one per year) since leaving higher education, making the ability to save towards a pension considerably more challenging compared to previous generations with greater longevity in employment with specific employers.

The need to educate our fellow young on the need for pension saving is more pressing than ever.

In a world of constrained finances, we need to save and scrimp our pennies. And while pensions may seem to many a concern only for the elderly, they are increasingly linked to broader economic issues such as whether we can remain in employment, downward pressure on wages and increases in the cost of living.

James Gill is a member of the Young Fabians.

Pensions – keeping a roof over our heads

In this member post, Daniel Wilson Craw reflects on discussions at this week’s Future of Finance event on pensions with Shadow Pensions Minister Rachel Reeves MP.

Free tertiary education. A job for life. Affordable housing. Final salary pension. All a thing of the past. The children of the baby boomer generation are looking increasingly likely to be worse off than their parents.

The Young Fabians recently considered the implications of the last of these, and how individuals entering the world of work can be encouraged to start putting money aside in a pension scheme. There was a broad consensus that better financial education was needed and the demise of the Child Trust Fund – as a way to get citizens in the habit of saving from an early – was not. The pension industry’s marketing of itself to young people was found wanting, particularly as their selling points – the tax-free nature, the employer contributions – were not familiar to some of the young professionals in the session itself.

Rachel Reeves MP noted that formulation of pensions policy involved, quite rightly, the likes of the ABI, the financial services sector and employers, but seemed to have ignored the views of the very people who it was aimed at.

While the pensions industry could be given a kick up the arse, I get the feeling a significant barrier to take-up is the effect of the economic downturn. Since 2008 there have been three trends.

Firstly people, particularly the young, have a lot less job security and are less likely to want to put money away for a long period of time when they might need some in the bank in case things take a turn for the worse.

Secondly, with the cost of borrowing pushed down, there is no incentive to save as it is difficult to find an interest rate which will beat inflation.

Thirdly, the shortcomings of the financial markets as a generator of wealth have been exposed, so that the “value of investments may fall as well as rise” warning on financial products is even more ominous for an unseasoned investor.

Talking about pensions is not enough to address the generational divide. Even if we all signed up for a pension, retirement doesn’t sound like fun. With credit still crunched and house prices still out of the reach of thirtysomethings, there are going to be a lot of people who will not own a home outright by the time they retire.

Only one in twenty over-65s currently live in the private rented sector with three quarters in owner occupation and a fifth in social housing. In comparison, 36% of 25-34-year-olds rent in the private sector. Now of course many of them will buy eventually, but the rate of those still renting when they hit 65 (or whenever we’ll retire) is going to be a lot higher than 5% the way things are going. Apparently if I continue paying £1200 into my pension pot per year and assuming it earns an average of 7% growth a year, I will get around £5000 per year in retirement. This sum would barely cover rent this year, let alone after 40 years of inflation.

Housing will have to be made a lot more affordable if the pensioners of the mid 21^st century are going to keep a roof over their heads.

Dan Wilson Craw is a Young Fabian Future of Finance Network member.

Blueprint for a New Economy

In this Guest Post, Bren Albiston, a member of the Young Fabian Renewing and Reforming Our Economy Policy Commission, explores the ways in which we can change the way the country does business.

We have a big decision to make as to what future we want for this country.

Do we want to continue ever further down the road of an economic system that rewards rent-seeking more than productivity? Do we want to sustain an unfair system that generates friction between the Square Mile and the rest of the economy?

No. We can, and need to, improve this sorry state of affairs.

We have to grow our economy at more than 3% a year until 2035 in order to make up the losses incurred from the double-whammy of the credit crunch and recession. If we fail, we will lose something in the order of £4 trillion of productivity* . The task may seem insurmountable, but we must work to secure as much of that 4 trillion as we can.

Our capitalism is broken. This has been made clear by years of recession and static growth. We continue to pay the price of other people’s hubris; those who thought they could predict the unpredictable.

Despite this, we are still over-reliant on a financial system that is too cautious to invest. At the same time, the government is scaling back the public sector, our most potent means of inducing social mobility. We must reinvent the way we do business and the way that we create and encourage growth, not just because we need to recover economically, but because we need to recover socially as well.

Britain should not be afraid of taking the lead in reform. There are many ways in which the nation could change the way it does business. The establishment of a properly funded and empowered ‘Green’ investment bank is one option. As Will Hutton suggests, we should explore the benefits of a ‘Knowledge Bank’, a ‘Life Sciences Bank’ and perhaps a ‘National Infrastructure Bank’.

Through these institutions, we can invest in the technologies and expertise required to rebuild our economy. A new lending infrastructure will incentivise innovation, while benefiting traditional funding streams at the same time.

The new system would channel funds to those areas that are thought to be risky bets by orthodox lenders. However, it would need the backing of the state to succeed. It alone can provide the security and effective strategic direction needed, alongside a highly autonomous set of investment apparatus to keep its influence in check.

Fairness and just desserts should be the foundation stones of our new capitalism. In many ways, small business does more for this country than big business. At present, we neglect the small- and medium-sized businesses and leave them exposed to the predatory practices of our largest firms.

These giants operate largely unchallenged by both smaller competitors and government watchdogs. A study in 2005 revealed that the more competing firms were matched in terms of performance and productivity, the more they tended to register new patents** . We need a competition framework that actively promotes competition rather than protecting incumbent corporations.

Unfortunately, the balance between today’s consumers and tomorrow’s is too heavily in favour of the former. In consequence, there is little room for innovation and even less for emerging companies to replace those which are uncompetitive. We need an infrastructure capable of sustaining new corporate growth and innovation.

Britain is, in many respects, a world-leader in high technology and services. Yet as our manufacturing sector continues to decline, we remain over-reliant on financial institutions as the engines of growth. As the state retreats from its key role in encouraging social mobility, we are faced with a huge task: we need to reconstruct our capitalism to benefit society, and we need new institutions to help us do that.

• You can learn more about what the ‘Renewing and Reforming Our Economy’ Policy Commission has been doing by clicking here.

* H.M Treasury (2009) Pre-Budget Report: Securing the Recovery: Growth and Opportunity, HMSO. See Also: Will Hutton (2010) Them and Us. Little, Brown.

** Phillippe Aghion, Richard Blundell, Rachel Griffith, Peter Howitt and Susan Prantl (2005) ‘The Effects of Entry on incumbent Innovation and Productivity’, CEPR Discussion Paper No. DP5323.

Responding to the riots – Insights from Brixton

Tony Blair asked us to reject the idea that Britain is broken. However, the Young Fabians – never to accept any one view without question, debate and a few committee meetings - thought that further investigation was and is necessary. Certainly, there was blatant opportunist criminality in the youth riots and, likely, a small minority who operate ‘beyond the pale’ involved. But the scale, spread and nature of the unrest does seem to indicate something more; something wrong with our society. A very large number of young people have demonstrated a lack of connection to, or investment in, their communities and a separation from the norms of society. It would be wrong to be complacent about this challenge.

Of course, the issues can’t be looked at in isolation. The roots are in education, in the economy, in housing, in public service provision, and elsewhere. But just because something is complicated isn’t a justification for giving up on constructive solutions.

Over the last five months, Joani Reid has been leading the Young Fabian “Securing the Future of the Next Generation” Policy Commission to provide analysis of the broader problems hitting British youth.

As part of the effort to analyse the issues, last week, the Young Fabians teamed up with A4e to visit Brixton to try and better understand the skills and employment challenges in the area. Myself, Joel Mullan, Vincenzo Rampulla and Joani Reid all took part in the site visit and held a series of interviews at the Brixton A4e training centre.

What follows is not an exhaustive analysis, but a short personal report from what felt like a very worthwhile visit – and something that the current Young Fabian Executive would like to repeat, with other partners and other areas.

Firstly – without comparing it to its competitors (because we didn’t visit any on this occasion) – I, for one, was very impressed by A4e as an outfit.

There was a huge amount of optimism and energy in the building. I suggested that a lack of jobs in the economy might be an insurmountable problem for the centre, but they went on to tell me about all the vacancy relationships they’d built up to secure job opportunities. For example, a recently secured relationship with WHSmith enabled them to link forthcoming major recruitment rounds with training programmes in local areas.

I was also impressed by A4e’s emphasis on making sure the people of an area benefitted from big investment projects. It was clear that they rejected the idea that high value added investment, like the Silicon Roundabout, are just opportunities for high skilled talent to move into the area, but advocated, with enough time, planning and upskilling, the opportunities for unemployed local people. This approach offers a stern challenge to those who are satisfied with mere trickle-down benefits for the local community from cleaning jobs and selling sandwiches.

At a broader level here are a five big insights for policy thinking that I took away from the interviews and meetings:

1. We need a tailored and sequenced approach to helping jobseekers.

People differ widely and so do their needs. In Brixton, the range was from job-hungry out of work professionals who had just been hit by the downturn, to those in need of skills training and with an appetite to learn, to those with much more severe health, drugs, drink, or housing problems. Particularly for those in at-risk categories, their issues need to be dealt with in the right order in order to be effective, and to reach sustainable and gainful employment as an end goal. One size doesn’t fit all. We shouldn’t talk as if it does.

2. Business, educators and jobseekers shouldn’t operate in isolation.

Our current general modus operandi – of employers wandering blindly into skills shortages, trainers training without a clear view of an end goal, and jobseekers floundering in the middle – indicates some room for improvement. It may make more sense to encourage as much communication and planning between: what businesses need, which they often know many months in advance of the time; what the educators can provide; and the aspirations and development-reach of the jobseeker. The free market is a brutally efficient model of clearing, but it is not perfection. There is value in thinking about the limits of a wage/price solution. Greater understanding and planning across the silos can help.

3. Culture matters and for-profit shouldn’t be a dirty word.

Organisational culture is of the utmost significance. It struck me very telling that A4e refer jobseekers as ‘customers’.

Public service in general should be very far removed from a tick-box process of ‘recipients’, and be, as far as possible, about enabling committed and motivated individuals to have a personal stake in the experience of public service ‘customers’. This is not to bash state provision, just a nudge to try and dislodge any automated revulsion to the concept of for-profit public service. At the very least, we should try and incorporate the motivation and innovation that ‘for-profit’ can, sometimes, demonstrate into all aspects of public service.

4. We should do everything we can to make work pay.

In interviews with ‘customers’, it was clear that there was an entrenched view out there that welfare can pay more than work can. We need to tread carefully here, maintaining the protection for the vulnerable, for mothers and for the down-and-out. But we must do all we can to make employment attractive. While it feels like there is some way to go on this challenging agenda, it is should be at the forefront of policy makers minds. Part of the solution must lie with a relentless effort to raise aspirations in all communities, especially the most deprived.

This is no easy feat.

5. We need bigger thinking on internships.

In an interview with a highly educated jobseeker with two degrees and ambitions in the fashion industry, who had been out of work for over a year, it struck that he was being led on a path that was corrosive to his sense of purpose and confidence, as well as being costly to the economy. His university careers advice centred on the importance of getting experience and an internship to make it in his career of choice. Many readers in the political world will, no doubt, be familiar with this advice. He was financial-capital poor, but human-capital rich. If he went on an internship, he claimed he would lose his housing benefit and employment benefit; a non-option without family support in London. If he took a minimum wage job, the option presented to him by the jobseeker system, he saw only the prospect of working very long hours just to keep his head above water, without any surplus income to save.

The unsympathetic might say he should take whatever job is coming, and be grateful. But surely it makes no sense to consign those who have benefitted from a high level of education to the near poverty trap of minimum wage jobs – not from the perspective of jobseekers self-worth, nor when trying to enable the greatest possible constructive contributions to society, nor when trying to make good on the state’s investment in education, and nor in our effort to encourage the flourishing of high value added employment in the UK.

A potential solution might be (with lots of weaknesses no-doubt, but also some merit): a one-shot universal jobseekers credit for, let’s say, a 6-month unpaid internship? Bolstering skills development, entrenching high-value added jobs and making the UK a more attractive place to locate business, all the while costing the state less (bearing in mind how long this category might otherwise be on welfare). Accepting internship exists rather than trying to wish them away, this could level the playing field for entry to high-skilled professions and be a significant boost for businesses.

‘One Big Chance’ internships – you heard it here first.

Policy Commissions and Young Fabian next steps: everyone should get involved

Joani and Joel are taking forward the thinking in the “Securing the Future of the Next Generation” Policy Commission. The next Anticipations edition will also have a heavy focus on the Squeezed Youth theme.

Tony Blair may be right about the need to focus on the hard to reach dysfunctional families. Or perhaps we do have a broken society and there are big ideas needed to address a lack of hope or prospects in communities up and down the country, hitting the young hardest.

Regardless, if you want to contribute to the thinking and the debate, there are plenty of opportunities with the Young Fabians. Stay tuned for information about a debate on what to learn from the riots.

Please get in touch if you would like to be involved, at any level.

Nick Maxwell is Partnerships Officer for the Young Fabians