Supply side reforms just don’t work when it comes to creating jobs

Posted on

As my  TUC colleague Nicola Smith has noted on the Touchstone blog:

New data on the operation of the Government’s National Insurance Holiday Scheme has now been laid in the House of Commons library.  When this scheme was announced, it was estimated that over three years 400,000 new businesses would benefit by having a lower tax bill from employing new staff and that 800,000 new jobs would be created.

Today’s data reveals that over the first year of its operation 3,345 employers have taken advantage of the scheme (1% of the total anticipated number) and that the NICS holiday has been claimed for 12,411 employees (2% of the anticipated number of jobs).

What’s more in the region that currently has the highest unemployment rate (the North East where unemployment is 11.7%) only 587 employers have used the scheme, supporting 571 jobs.  To put this in some context over the same period of time the unemployment level in the NE has risen by 24,000 and the employment level has fallen by 23,000.

Far from “ensuring all parts of our country contribute to a more balanced and sustainable economic future” this scheme has created barely no jobs – as we predicted at the time. But with unemployment now at 2.63 million there is no pleasure in saying we told you so.

Supply side reforms like this - where the rules are changed to supposedly encourage work - simply don't work.

There is only one agency that can create the jobs this country needs now - and that is the government. I know there are those in Labour who oppose such moves - calling for fiscal conservatism and so the inevitable ascendancy of the 1% - but they have to be ignored.

On messaging no is the time for Labour to talk of the Tax Gap.

And on policy now is the time for Labour to prepare for the spending needed to deliver a Green New Deal. Nothing else will do. What is more, nothing else but job creation will reduce the deficit.

What baffles me is why it is so hard to message that point.