I HAVE spent much time in recent days reading, analysing and thinking about Lord Alan Milburn’s report on the needs of young people aged 16-24 who are not in employment, education or training (Neets). They have, in other words, fallen outside the employment market as the UK Government defines it.
This is an English report but the thinking is pure Labour, and the economic issues underpinning it affect Scotland, so it matters.
The framing for this report is that the Government claims we have a Neets crisis. We don’t. If we assume the Government’s data is correct (although the UK Office for National Statistics now produces information so unreliable that it warns us not to do so), the current percentage of Neets among 16- to 24-year-olds is about 12.5%-13%.
There is nothing exceptional about that. In fact, this is a normal percentage that has been observed since at least 2000, with the exception of 2008-16, when the rate was much higher in the aftermath of the global financial crisis, peaking at more than 17%.
As my own data crunching shows – you can read about it on my blog at www.taxresearch.org.uk – the level of Neets among 16- to 24-year-olds appears to vary for two reasons. One, as this data from 2008-16 shows, is the level of economic stress within the economy as a whole. When that is high, so too is the level of Neets.
But this effect appears quite limited overall. The biggest factor in determining the level of Neets is the UK birth rate about 20 years earlier. Why 20 years? The average Neet is about 20 years old. My data shows that the number of Neets rises or falls broadly in proportion to the number of 16- to 24-year-olds in the population as a whole. If there are proportionately more young people, there tend to be more Neets.
That’s not surprising. It also means that as the number of young people in the population drops, so will the Neet problem decline. And this is going to happen. From 2032, the number of Neets in the UK as a whole will fall.
That is not because any government will have created new jobs for them, solved the problems neurodivergent young people face, or tackled the mental health crisis that exists through the provision of often ineffective cognitive behavioural therapy, which usually seems to be little better than a sticking plaster.
Instead, it will simply be because the number of young people in the population will decline and will continue to do so as the UK birth rate steadily falls. And there is no sign that this trend will change because the birth rate is now at the lowest level ever recorded for women of childbearing age.
It took me two or three hours of data crunching to prove this, and you can see my workings on my blog.
Admittedly, AI sped the process up but I would like to know why, if I could do this in that period of time, the Westminster Government has made such a big issue of it, and why so much of the media have reported it as if it is some shocking discovery, when the current level of Neets is both ordinary and not rising in percentage terms.
It is only increasing in absolute numerical terms because of the baby boom nearly 20 years ago, between 2006-16. Come to that, why is no-one asking why this problem is so persistent?
Why are unemployment and alienation from the workplace such persistent problems among young people that they have consistently existed under governments run by Labour, the Conservatives and the Liberal Democrats, when we know that unemployment among young people creates very real economic and, more importantly, social costs?
There are, I suggest, three reasons for this. None are even hinted at by Alan Milburn because all of them make uncomfortable reading for Westminster politicians, as they will do for neoliberal politicians in Scotland.
The first, enormous and entirely unacknowledged reason for this persistent unemployment is that it is created as a consequence of deliberate UK Government policy. How could it be otherwise when it has existed for so long?
The reason is that in 1997 Tony Blair’s government decided to outsource monetary policy, specifically the control of the official base rate of interest charged by the Bank of England, to that Bank, which it declared to be operationally independent of the government.
In other words, it took a major part of economic policy outside apparent democratic control, in direct affront to every concept of good governance and democratic accountability.
At the same time, it insisted the Bank ensure that inflation be kept under control, with no caveats as to what the Bank should take into consideration when setting interest rate policy.
Two things followed. First, as we now know, it was found that interest rate policy does not control inflation. In fact, the Bank of England’s interest rate policy tends to exacerbate inflation by increasing it above levels that it would otherwise reach.
Secondly, we now know that by increasing interest rates, the Bank of England seeks to reduce demand inside the UK economy and the inevitable, but rarely acknowledged, consequence is that unemployment rises by deliberate policy choice.
What is more, because the UK has traditionally set interest rates too high, with the goal of attracting money into the financial operations which are centred in the City of London, we have persistently suffered unemployment rates way above those necessary.
Young people have been paying the price for this for decades, and it is entirely by government choice. Neets are a government policy creation.
Secondly, at the same time as the Bank of England was made independent in 1997, then-chancellor Gordon Brown introduced fiscal rules in this country with the aim of limiting the role of government in the economy by providing an excuse to not address social problems.
Those fiscal rules have always prevented the government from spending on things that are needed, including tackling unemployment, and that is why it has remained persistently high – another direct consequence of government policy.
Thirdly, the current Labour Government in Westminster wants to draw our attention to this issue to effectively blame young people for a problem they did not create.
This is a classic right-wing political technique. When things go wrong, they find someone to blame, especially if the group in question is vulnerable and unlikely to fight back. That is, I think, what Labour are doing here.
Don’t get me wrong. I think there is a problem with employment for young people. They are finding the job market incredibly hard to navigate, whoever they are and however able they are.
But my suggestion is that Labour are fabricating a story that takes out of view the real causes of this problem and, at the same time, are seeking to provide justification for reducing support where it can for the young, those facing mental health challenges, and those who are neurodivergent. That will have knock-on effects in Scotland.
Thank goodness the people of Scotland recently rejected these Labour charlatans. Thank goodness, too, that something better than this might lie ahead. The neoliberal problems of fiscal rules and central bank autonomy can only be overcome by independence. This episode provides another lesson to consider when that issue is discussed.
