Have things improved for unemployed people during the last 4 years of Labour Government? On the face of it, yes. Since the May 1997 election, two thirds of a million fewer people are unemployed. One and a third million more people are employed. And this has not been a fortuitous accident as the Conservative Opposition likes to think.
Very few jobs are created directly by Government action. But, as the last Government demonstrated vividly during the early 1990s, Government mistakes can easily destroy jobs. Between 1990 and 1993, the number of people in work fell by one and a third million - coincidentally, the exact number of jobs lost then as have been gained since 1997.
What credit can the current Government claim then? Plenty: on the macro and micro levels.
Firstly the economy. In the 4 years since 1997 we did not experience a period of consistent economic growth. By mid 1998, the economy was threatening to overheat - having been stoked up by former Chancellor Ken Clarke's pre-election Budget. This made the Bank of England raise interest rates to choke off the threat of rising inflation, the value of Sterling rose and industry felt the impact hard. This also coincided with meltdown in the Far East and a severe crisis provoked by Russia defaulting on its external debt.
Under other circumstances, these would have been the ingredients for a recession. By late 1998, the rate of GDP growth dipped close to zero and the job loss announcements started to pile-up daily. But three things prevented recession: Government convinced the markets that their tough public spending limits were fireproof; political pressure forced the Bank of England to reduce base rates by almost a third - from 7½ down to 5¼ percent; and the image of a steadfast Government boosted the confidence of financial institutions who might otherwise have panicked in the face of global economic instability.
Since then the economy has been extraordinarily stable - testament to the Government's near obsessive determination to avoid "boom and bust". GDP growth has been a steady 2½ to 3 percent a year; inflation - currently at 2 percent - has been consistently undershooting the Government's target;
As a result, higher than expected tax receipts and lower spending on social security will deliver a very healthy £23 billion surplus. In recent years, the Treasury has mainly earmarked these windfalls for debt redemption - which in turn is making more funds available for spending. The combination of reduced debt payments and lower social security expenditure alone means that the Government has £6 billion of revenue more to spend this year than it calculated it would have a year ago.
Alongside its commitment to managing a stable economy, the Government has implemented a clear and very consistent strategy for employment growth. This recognises that economic growth alone will not help the jobless back to work. After all, the mid 1980s saw great spurts in growth combined with sharp rises in the numbers employed. But unemployment carried on rising relentlessly for nearly 3 years after the recession of the early 1980s finished. What's worse, a sizeable proportion of those who lost their jobs in the 1980s are today still struggling with spells of unemployment broken only by periods of precarious employment. This Government's micro-economic strategies aim to stop that happening again.
From the Chancellor's first Budget in 1997 onwards, the Government has recognised that it needs to:
Between them, these strategies have raised the wages of 1.3 million workers by over 15% (gains that are likely to be doubled again when the Minimum Wage increases to £4.10 in October 2001); tax credits have resulted in a million working families seeing their household income rise on average by £30 extra a week. And from this month (April 2001) the new Children’s Tax Credit will mean an effective tax cut of up to £520 a year for about 5 million families; in addition, about 1 million low- paid workers have to pay no National Insurance contributions whilst the 10% starting rate for PAYE halved the marginal tax rate for over 2 million low paid workers. The Government can now guarantee a minimum income of £225 a week (net of all taxes and deductions) for a family with one child and one adult working 35 hours a week at the minimum wage.
So, with unemployment down by 40% and the highest proportion of the population in work since the early 1970s, small wonder that the electorate is inclined to return Labour to power in just a few weeks time.