24 Nov 2011

‘Back to the Future’ jobs fund for a lost generation

A billion pounds, opportunities for 500,000 18-24-year-olds, and funding for work placements, apprenticeships and work experience to fend off the scourge of youth unemployment. Yes, that is the tone of an announcement we are expecting from the Deputy Prime Minister Nick Clegg tomorrow.

It’s called the “youth contract”. And if it sounds familiar, then that’s because it is. Two years ago Labour launched a programme called the young person’s guarantee, that offered 470,000 opportunities for training, internships, work placements etc.

This is a big announcement for the coalition. Clearly it is a reaction to the dreadful jobs numbers last week, that saw youth joblessness top a million for the first time. Bottom line here: it is likely to bring down youth unemployment.

It is important, particularly because the coalition cancelled £1.3bn of these schemes, including the future jobs fund, on the 12th and 36th days of the coalition’s existence. So this seems like a spectacular U-turn. At the very least, one might wonder if the million mark would ever have been reached if they had just kept the schemes in the first place.

There are differences. The youth contract will be more geared towards private sector jobs rather than the local authority and charity work that dominated the future jobs fund. It is also more of an expansion of the DWP’s work programme. The subsidies offered to employers are smaller, too – around £2,000 to £2,500 per job rather than the £6,000 subsidy offered by Labour’s scheme.

But the concession that wage subsidies to employees are a worthy use of public money is a philosophical change from the coalition. The future jobs fund featured on the very first list of Labour Whitehall waste culled by then Chief Secretary David Laws within the first fortnight of the coalition.

“It sounds like it’s going to be very familiar, very much like the future jobs fund for the same 18-24-year-olds. It’s a shame they didn’t think of it before. But will it be paid for on the backs of low to middle income families?” said Gavin Kelly, chief executive of the Resolution Foundation who helped Downing street design the original Labour Jobs Fund. (see his blog here).

Essentially it seems that the Lib Dems, and in particular Mr Clegg, have gone out of their way to get this youth jobs package. But the chancellor has insisted it is paid for somehow. The most likely victims are those expecting across-the-board 5.2 per cent increases in tax credits, benefits and pensions after September’s high RPI number.

While the Conservative are unlikely to let their pensioner vote bank suffer from real cuts, the FT suggests that Mr Clegg has ruled out real benefit cuts. And that leaves tax credits to take the hit. And that means low-to-middle income families that have already been hit by cuts to childcare credits could be hit again.

Protecting spending on these tax credits has been how the government has been able to claim it is not plunging children into poverty. The child poverty target could end up paying for this youth jobs guarantee. We’ll know on Tuesday.

(HT to @jonslater74 for the Back to the Future Jobs fund title. And @ajrhayman for this official DWP report into Gordon Brown’s FJF:  http://research.dwp.gov.uk/asd/asd5/ih2011-2012/ihr1.pdf )

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