The Article, authored by Fraser Nelson, originally appeared in the Spectator.
How can there be a labour shortage and record joblessness?
At a time of a worker shortage, we are somehow managing to keep 5.3 million people on out-of-work benefits. This is too much, says Suella Braverman. My colleague Stephen Daisley fervently disagrees and in his riposte, he quotes various figures about how Britain doesn’t spend very much on welfare compared to other countries. This is precisely what New Labour argued when it was keeping five million on benefits throughout the boom years and the argument didn’t stack up then either. The below shows the problem to which Braverman alludes: it really is quite a scandal and points to massive government failure.
Set aside the wasted money: keeping 5.3 million working-age people in out-of-work benefits in a period of job vacancy abundance is a waste of lives and potential. The Tories actually managed to tackle this before Covid, moving the participation rate – the number of people in work– to a record high of 64.4 per cent. But this crashed during lockdown and never recovered.
The problem isn’t idle Brits: we’re talking about the same country that two years ago had record-high participation. The problem is with a welfare state that should be doing far more to help people find work: in new sectors. Studies show that staying on welfare is bad for physical and mental health, family life and of course the economy.
We have had hotels restricted to part-time opening because they can’t get staff, airport chaos due to lack of baggage handlers and more vacancies than any time in history. So Boris Johnson’s government somehow managed to combine mass joblessness with mass labour shortage at the same time. It’s inexcusable and, as Suella Braverman says, a sign of a deep dysfunction in the welfare state.
Every country needs a strong welfare net. Citizens need and deserve protection from poverty when times get tough and recessions strike. But right now, a third of all households are in receipt of means-tested benefits. Is that really where we think the line should be drawn? This is the kind of question Tories should be asking if they are serious about reform – but too many shy away, worried that they’d be shouted down.
Many of the reforms are easy to make. Right now, those on the workless component of Universal Credit can get out of seeing a job consultant if they do nine hours of work a week. Shouldn’t that be closer to 25 hours given the vacancies on offer? And the 5.3 million on out-of-work benefits, a truly scandalous figure when you think about how long-term unemployment becomes self-reinforcing after a while, is national. Across the country there are some real welfare hotspots, communities hit hard by welfare state dysfunction which no one is pointing out because this Tory government and the Labour opposition have taken their eye off this ball. They look at record vacancies and assume welfare is low. If only.
My colleagues at The Spectator data hub have mined the government database to produce the below map of welfare hotspots. In each of these places, there are also a great many job vacancies. Yes, some people will be too sick to do work – but 5.3 million people? This is a huge cost: but the cost is human potential is a far greater tragedy than the missing economic boost. Suella Braverman is quite right to say that a reforming Tory government should do something about it.