The Week, 21 January 2022
As we continue to await Sue Gray’s 'partygate' report, and more importantly, the fallout from it, this week’s labour market statistics and inflation data did little to lift the mood.
Real weekly earnings fell in the month to November, having been stagnant over the quarter; vacancy levels continue to break records; and the inactivity rate continues to rise, driven by younger and older workers. The “missing million” (the number of people who have disappeared from the labour force) helps explain why businesses are experiencing a recruitment crisis, and is bad news for future growth. The jobs recovery has, as labour market guru Tony Wilson put it, “stalled”.
Combined with a cost of living crisis — this week’s data showed CPI hit 5.4% in December — which is set to get a whole lot worse with April’s tax hikes, the Chancellor’s halo looks a little less secure. That might explain why Sunak is said to be exploring options to ease the burden on poorer families, including a potential one-off £500 cash grant.
Illustrating just how devastating these price and tax rises will be, on Tuesday the Joseph Rowntree Foundation published a comprehensive report on UK poverty. The headline figures: 1 in 5 people are living in (relative, after housing costs) poverty, and 1 in 3 children are living in poverty, rising to 1 in 2 children in lone parent households. More than half of families in receipt of UC or an equivalent are in poverty, and a third of those in receipt of Pension Credit are. These poor families are going to get poorer in the coming months.
As I highlight in this Twitter thread, now is the time to have a conversation about benefit uprating. It won’t solve the immediate issue — the basic out of work allowance is just too low — but it would make a big difference in mitigating against further erosion in the value of benefits. Put simply, benefits need to be uprated in line with prices (that’s how you maintain living standards), but CPI is a bad measure. Instead we need a Benefit Uprating Index. If you want to know more you can read our 2015 report on the subject. And for a comprehensive analysis of how the social security system has changed over the past decades, see this report, published Wednesday by the Resolution Foundation, aptly titled Social Insecurity.
Finally, this week saw the publication of Edelman’s annual trust index, in which the UK placed fifth lowest for overall trust. Across all four sectors — government, business, NGOs and media — the UK reports distrust, with media scoring the lowest. Also this week, the UCL Constitution Unit published initial findings from its ‘Citizens' Assembly on Democracy in the UK’, helping to explain the Edelman score for trust in government: “The strongest theme was dissatisfaction and concern over a perceived lack of integrity among elected representatives”. The Assembly concluded its work in mid-December, before ‘partygate’ really took off.
Our recommended reads from the past week...
First up, and slightly unusual for us at Reform, is a foreign policy article. Focused on the Russian threat to Ukraine, this clear and compelling article by the Secretary of State for Defence is a must read. He meticulously takes apart Russia’s justifications for aggression, as well as Putin’s “seven-thousand-word essay that puts ethnonationalism at the heart of his ambitions”. It is a calm, apolitical takedown rooted in historical context. And Ben Wallace has backed his words with action, sending defensive weaponry to Ukraine... bypassing German airspace as this image reveals. Read what you will into that.
Second up is former PM Tony Blair’s speech at Imperial College on ‘The Future of Britain in an Era of the Three Revolutions’. The three revolutions are Brexit, technology and climate change, and to face them, he argues, we need “a vast re-ordering of Government, its priorities, its policies, its personnel and how it is structured.” His depiction of the challenges ahead is compelling, as is his call for radical, courageous thinking. But I'm afraid that if you’re looking for the “plan” he says we need, you'll have to wait for the series of policy papers his Institute will be publishing.