Why Osborne's plans are causing me sleepless nights

 By altogetherfool

I found it hard to sleep last night. While I dreaded hearing the announcement of the public spending cuts back in October, I dread the government pretence of a ‘fair’ tax structure, perspective on ‘growth’ and half-hearted attempt to ‘rebalance’ the economy even more. This government seems to think it’s ‘fair’ to give with one hand and take more from the other, enough to pay lip-service to green growth and sufficient to create a few miserly business incentives in a few areas to re-balance our severely South East and service-sector lopsided economy.

As someone passionate about economic equality it is difficult not to feel pretty downhearted right now. But I had to get to sleep (and not start thinking about Libya) so I tried to focus on some possible positive aspects of today’s planned announcement, here they are (with some of my cynical questions attached).

Youth unemployment: More than one in five young people aged 16-25 years old are out of work.  One in ten has been so for 6 months or more. There is a real imperative to act and act fast. Today, the Chancellor George Osborne is due to announce 50,000 new apprenticeships and 80,000 work placements. It is good they are doing something. Here are my questions:

1. There are almost a million young people out of work. Will 50,000 apprenticeships and 80,000 work placements be enough to help all the young people who need it?
2. In which sectors will these jobs be created in and where: Unsurprisingly, economically depressed areas tend to have a higher proportion of young people out of work. Will the apprenticeships be concentrated in these areas of highest need? If so, will there be enough flourishing enterprises to take young people on. After all, the government only provides half the costs and businesses will tell you that it’s expensive to train a young person. Plus, are these going to be in sectors that give young people access to well-paid careers in the future?
3. Will there be jobs for young people to go into at the end of 2 month work placements or will they return to the job centre more dejected than ever?

There’s part of me that just this thinks this is a short term solution, but maybe it’s ok to just to keep (some) young people busy and prevent unemployment scarring while the economy gets better. Assuming it will get better soon.

Enterprise zones: There is expected to be an announcement of at least ten ‘enterprise zones’ – areas where there are significant business tax exemptions and development incentives. This idea was behind the Docklands revival in the 80s and early 90s. This idea could deliver more than the simple National Insurance contribution waiver announced last year, which we found to be insufficient at tackling low enterprise growth in deprived areas, but:

1. Will enterprise zones be able to counteract other government measures which are likely to increase geographical inequalities? Public sector cuts will hit the poorest areas most both in terms of services and jobs, and new measures introduced through the Localism Bill will mean that local authorities will be able to retain their business taxes as they rise, making already enterprise-rich local authorities richer still.
2. Evaluations of the old enterprise zones showed a significant displacement of jobs – at a time when we need more jobs not simply a shift of where they are, how will the new enterprise zones ensure that history is not repeated?

 All in all maybe there are some good ideas here but we’ll have to wait and see how they are implemented on the ground and how they interact with a turbulent economy.

Who am I kidding?! I’m clearly still feeling pretty bleak.