Former foreign secretary highlights costs of youth unemployment as he attacks George Osborne’s austerity measures
The Labour party is stirring. The appointment of Jon Cruddas as the party’s policy co-ordinator has been widely welcomed while Tony Blair is letting it be known that he supports Labour’s call for a renewed focus on growth.
And now David Miliband has popped up with a highly significant intervention. In a speech on the Queen’s speech in the House of Commons on Thursday, the former foreign secretary gave a stark warning of the dramatically escalating costs of youth unemployment.
Miliband said this will cost £30bn over the next ten years. This is a particularly startling figure because it represents a £2bn rise on the estimated cost of youth unemployment announced by Miliband just three months ago when he launched the Association of Chief Executive and Voluntary Organisations (ACEVO) commission on youth unemployment in February.
This is what Miliband told MPs on Thursday:
We costed the levels of youth unemployment on the basis of the figures for the first quarter of 2011, which showed a net present value cost of some £28bn. I asked the university of Bristol to rerun the figures for the last quarter of 2011, which it has done, and the calculation now stands at £30bn. In the space of 2011, the net present value cost has gone up by £2bn. That seems to me to be two billion reasons for a greater degree of urgency and effectiveness in government policy.
George Osborne had the grace to remain in the chamber for the speech by Miliband in which he outlined the “massive problem” of long term youth unemployment. He said that 260,000 young people have been unemployed for more than a year. A further 200,000 have been unemployed for more than six months – a situation that is getting worse.
Miliband, who said the government’s Work Programme is only helping one in 50 of the young unemployed find a job, called on the chancellor to take three steps:
• Require all public contracts over £1m to offer apprenticeships to young people.
• Bring forward from 2014 money to raise the size of the wage subsidy or the number of people helped. This was introduced last April and its impact is “at best unproven”, Miliband said.
• “Bite the bullet” and introduce a part-time job guarantee because every study shows that without this one year’s unemployment will become “three, four or five years’ unemployment”.
Miliband then used his speech to launch a powerful assault on the government’s claim that Britain has entered a double dip recession as a result of the troubles in the eurozone. The former foreign secretary said Europe “cannot be the alibi for the collapse of our economy” over the last 18 months. Britain has experienced worse growth than the following EU countries since Osborne announced his spending review in the autumn of 2010 – Germany, France, Poland, Sweden, Austria and Slovakia.
Miliband, who told the Guardian Open Weekend in March that the coalition was following a “masochistic strangulation strategy”, told MPs:
The chancellor’s claim about the problem that the eurozone mess is causing for our economy is actually undermining his own promise to rotate our economy from domestic demand to external demand. The question is: what should we do about that? He says that the lesson is to stay the course.
I say that when the external environment changes, we should change course. The storm in Europe is not a reason for us to stick to plan A; it is a reason to shift to plan B. There is a warning in the travails of the eurozone, but not the one that the government claim there is. Debts are rising today in Spain, Portugal, Italy and Ireland because fiscal policy is exacerbating the downturn in the economic cycle. The prime minister said in his speech today that we are ‘on track’, but Conservative austerity is not working at home and collective austerity is not working in Europe.
Miliband’s attack on the coalition show the Labour party is uniting around a message that the coalition’s strategy of austerity is “choking off demand”, as Ed Balls and Peter Mandelson wrote in the Guardian earlier this week.
Osborne had always thought that the divisions in the Labour party, in which Blairites felt that Balls was failing to place enough emphasis on deficit reduction, was a great strength for the coalition. But as Britain slips back into recession, and as voters in Europe tire of austerity, Labour is uniting around a message that the coalition’s deficit reduction plan is fast becoming a liability.
If the Master, as Osborne calls Blair, chooses to speak out the chancellor will be genuinely nervous.