As we painfully emerge from the depth of this recession, there are a number of important policy lessons to learn.
First of all, it was not benefit scroungers who got us into this mess. It was over borrowing, fuelled by greedy lenders, including the major banks, who seduced many of us into believing we could afford to live on credit. Public policy was also partly to blame – deregulation in financial markets, and across a range of previously controlled public utilities and other providers of public and private services. The contracted-out culture was central to the growth of the 90s – government spending being a major factor in fuelling the empire of growth.
As the reality of public spending cuts now impacts both jobs and services, it is all too obvious that both banks and individuals are cutting back, producing the deflationary cycle which has been the predominant feature of the last few years.
In these circumstances, government must act for the long-term enabling localities to survive and develop through economic regeneration, providing to jobs and growth. This is the only effective long-term way to develop a sustainable future – not fuelled by debt but by goods and services manufactured and delivered in the UK.
The recent government emphasis in localism is a welcome development as long as it is accompanied by a national strategy for economic development and social renewal. This strategy includes banks lending to businesses and building entrepreneurial activity, a flowing FE and HE sector offering a wide range of business reward skills and a housing infrastructure which is much better able to deal with demand. Local organisations can then engage, inspire and challenge citizens to get involved in their community. Employers can provide opportunities which reflect local needs and circumstances. They can take advantage of low interest rates and incentives to invest. But they need literacy, numeracy, and employability skills. This is borne out by all the recent research.
We need a clear commitment to lifelong learning which demands action from individuals, employers, government (both national and local) and the adult community learning sector. The individuals need to be proactive about learning as well as earning. The need for higher level skills means that many have to enhance their skills levels at work. For those in full time employment, the gap needs to be addressed at a local college, or in an adult learning environment. For government the challenge is to incentivise the right behaviour – publicise vocational qualifications. A-Levels and degrees are not the only answers to some of our major skills deficit issues. As well as apprenticeships and traineeships, we need a platform for learning for all adults as they transition into work, and a managed process for developing earning-learning opportunities for those in work. This is the route out of benefit dependency, and also the problem we now have of in-work poverty, i.e. individuals trapped by low incomes with few prospects of advancement at work without the necessary skills and training.
BIS and DWP need to work collaboratively to ensure that we are not lifting individuals off the dole queue to place them in low paid, unsustainable jobs where there is no scope for skills enhancement or development. There are also practical challenges: arbitrary rules have arbitrary and sometimes unintended consequences.
We can’t reverse the damage of the past three years, but we can create a better future. Investment in education and skills rather than social security is the answer.