Why does Labour bail out bankers, yet deny the young?
Despite unemployment rising and thousands denied university places, the government just sits back
The Observer, Sunday 23 August 2009
The modern conservative, JK Galbraith once observed, “is engaged in one of man’s oldest exercises in moral philosophy: the search for a superior moral justification for selfishness”. If he were still with us, I am sure he would have relished the rationalisation of self-interest offered by Philip Hammond, the Conservative frontbencher, who will soon be in charge of slashing public spending.
When confronted with accusations that he was expecting his interns to live on the loose change in the office petty cash box, he was not remotely shamefaced. “I would regard it as an abuse of taxpayer funding to pay for something that is available for nothing and which other members are obtaining for nothing,” he replied in an indignant email leaked to the admirably bolshie Interns Anonymous website. “I therefore have no intention of changing my present arrangements.”
Now I accept that interns are both exploited and fortunate. Overwhelmingly, they receive the opportunities denied to poorer children because their parents can subsidise them. I agree too that journalists have no right to criticise politicians when the media have led the way in using the intern system to reinforce class privilege and to give the children of journalists and mangers unfair advantages.
Nevertheless, Hammond’s patrician parting shot – “I therefore have no intention of changing my present arrangements” – encapsulates the complacency of a political class which is behaving as if we were still living in the bright, bubbly summer of 2007. If bankers still want million-pound bonuses, by all means pay them, even if they come at public expense. If unemployment explodes, there is no need for emergency measures.
You might argue that, overall, unemployment has still not exploded to emergency levels. But no one should be complacent about youth unemployment which is heading to unprecedented heights, as a blighted generation sees the door to a better future slammed in its face.
Hammond’s miserliness ought to shock because graduates’ chances of finding work too often depend on signing up for one, two – maybe more – internships. As for their less well-qualified contemporaries, the number of young people in England not in education, employment or training rose to 935,000 this month. It is already higher than in the recession of the early 1990s and within months will top the numbers reached in the early 1980s.
David Willetts, the Tories’ thoughtful higher education spokesman, believes that Gordon Brown’s raid on pension schemes and the ever-increasing costs of an ageing population are imposing an unintended penalty on the young. Companies, which would once reduce numbers by offering generous early-retirement packages, can no longer afford to buy off older workers. They are not only freezing the recruitment of (mainly young) job applicants, but also operating a last-in-first-out policy, which again hits the young disproportionately hard.
Older leftish readers should be stunned that the result could be Labour leaving power with higher youth unemployment than in the darkest days of Mrs Thatcher’s administration. The under-25s will not share our surprise because they cannot remember the 1980s.
We are witnessing the eccentric spectacle of the young responding to a failure of financial capitalism by turning rightwards because most have only known a Labour government. Now that they have seen through its vain promise that security would be theirs if “they worked hard and played by the rules”, they must watch on as it denies tens of thousands places at university.
The rejected will either go on the dole or take jobs that others who never thought of going to university might have had. The new unemployed ought to study the 1980s, for they will then learn what happens next. Danny Dorling of Sheffield University summarised the research in the British Medical Journal earlier this year. Whether they are 16, 18 or 21, unemployment hits the young harder than the old. The experience of rejection, the failure to pass from youth to adulthood, leaves them more likely to suffer from ill health, depression and premature death, as they stammer and stumble through life.
It is extraordinary that Labour acts as if it does not know this and sits back while university admissions tutors turn away able and in some cases exceptional candidates. Further education was the best means at its disposal of combating youth unemployment. All it had to do was stick to its target of getting half of 18-year-olds into further education and there would be no problems now.
To be as generous as I can in the circumstances, I should note that David Lammy and Peter Mandelson have found the money to subsidise 10,000 more students , but that still left 140,000 applicants chasing 22,000 places on Friday. Labour’s main concern is to stop the former polytechnics piling working-class students high and selling them a cheap education. They are not thinking about how to pay for a radical adaptation of the system to meet the new demands of hard times.
Two sources of funding cry out for attention. When Gordon Brown came to power, he tried to distance himself from Tony Blair’s unpopular but necessary policy of introducing student loans by increasing taxpayer support for middle-class students.
The civil service then compounded Brown’s folly by messing up the maths and allowing far too many students to receive the new grants. Ministers ought to take the money back and use it to fund additional places. I suspect they won’t because in an election year they do not want to hear “moral justifications for selfishness” from middle-class parents accusing government of cruelly adding to their children’s burdens.
The alternative is to divert money from academic research to the maintenance of a larger student population until the crisis passes. When I suggested doing just that to a leading academic, she said that her colleagues would go “ballistic” and cry that the government was threatening the top universities whose expertise Britain needs if we are to build a new economy.
She had a fair point, but also a selfish one. For someone has to pay the price of economic failure. And she, like far too many others, was happy for state-financed bankers, middle-class students and research fellows to be spared and to leave our doomed youth to pick up the bill.