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What's the matter with Sunderland?

JamieSW — Tue, 23 Sep 2008 11:16:35 +0000

Ingratitude, if Madeleine Bunting’s apologia for New Labour is any guide, is what is the matter with Sunderland. The city has been ploughed with an avalanche of development cash. A school is to be rebuilt every year for the next fourteen years. Health centres, children’s centres, business parks, new development zones with the marina, fancy apartments and coffee shops… And the locals react by sputtering “you’ve done nothing for me”, slagging off immigrants and voting Tory. There is some weird “disconnect” between Labour’s actually loveable behaviour toward one of its most loyal constituencies and its dismal status in the popular perception. Working class Toryism, in the form of support for a set of sentiments including ‘individual self-reliance’ and ‘community’ and ‘family values’, is on the rise once more, a la 1979. The obvious conclusion is that the left must rally behind the government. Some version of this is likely to be the overall diagnosis of the soft left as Labour loses its so-called heartlands: regardless of all the disappointments and betrayals, despite the warmongering, privatization, pandering to employers and union-bashing, the real problem is the basic inability of the working class to recognise its true allies. The root problem is its affectless indifference and disloyalty, its susceptibility to racism and nationalism, and its gullibility as regards Tory propaganda.

So, what is the truth of the matter? What is the matter with Sunderland? What might Madeleine Bunting have found out had she not been relying upon the word of Chris Mullins MP? One of the most pressing issues facing working class areas in this country, without question, is housing. In Sunderland, as elsewhere, the government has been pressing for the complete privatization of housing stock. Sedgefield Borough Council, for example, having lost a vote in favour of transfer in 2005, has been trying to persuade residents yet again to go with privatization. What is causing the residents to doubt the word of council chiefs is that the company that would take over the houses – Gentoo, formerly the Sunderland Housing Group (eulogised here) – has a track record of failure. The company was awarded an £80m contract in 2002 to regenerate a poor estate called Doxford Park, some six years ago, and it has only recently begun work. Similarly, when thousands of council houses were transferred to the group in 2001, Gentoo/SHG invested millions in new private homes, and neglected to build the rented accomodation it was obliged to build. 6,200 council houses were demolished, sold off or left empty, but the company only built 111 new houses over the next four years. The number of people seeking a home rose from approximately 5,000 to over 19,000. Meanwhile, it did successfully build the private developments, including maritime housing and the Athanaeum – the sort of investment and development that Bunting lauds, albeit with a grudging admission that “critics say” it may not seem of much use to single mothers and those on incapacity benefit.

Bear in mind that Gentoo/SHG is a Registered Social Landlord (RSL), exactly the kind of landlord that the government says we have least to fear from. An RSL is answerable to the Housing Corporation, and supposedly behaves better than other private landlords. If the Housing Corporation doesn’t hold them accountable, then those co-responsible for sealing the deal should. In fact, the behaviour of Gentoo/SHG had been noted before by local Labour councillors Mike Tansey and Brynley Sidaway, and they did try to alert residents and fellow councillors to the problem. Both Sidaway and Tansey rejected stock transfer because the result, where the government had been able to impose its scheme, was a rise in rents and an increase in homelessness. However, by 2006, they had been driven out of the Labour Party for their pains. They became independents, and on the back of a successful campaign against stock transfer a lively local Respect group was built. What they had to say was important, and their actions benefited the people they represented. By contrast, Labour policy at both a local and national level pitted it against its traditional working class supporters. There is a clue right there: those elected Labour Party members who try to represent their constituents effectively have been punished and expelled.

It is important to understand the rationale behind the government’s transfer policy. It wants to fund housing, but it is committed to a taxation structure that cannot raise the necessary funds without hitting the poor harder. So, either local authorities would have to borrow, thus breaking the government’s fiscal rules, or they would have to neglect housing, thus destroying the working class voting base. By transferring homes to private housing groups like Gentoo/SHG, they can allow huge amounts of money to be borrowed for investment, because the costs will be formally borne by the social landlord. If the government were not so committed to a neoliberal policy mix, it could raise taxation on upper income brackets and on corporations, to fund such investment. The ugly side of this neoliberalism is a tendency to blame the poor for their plight. One of the government’s recent proposals, dreamed up by Housing Minister Caroline Flint, was to compel unemployed recipients of council housing to sign degrading “commitment contracts” which compelled them to agree to actively seek work if they wanted to be allowed a council house – thus blaming the unemployed for their situation and forcing them to humiliate themselves in a lifeless labour market at pain of losing their home. Local Labour Party loyalists felt compelled to distance themselves from Flint’s ideas. There is another clue: the government has been complacent about its core working class vote, assuming that they had nowhere else to go, and therefore has scapegoated working class people for its failures.

Another of the government’s prominent policy agendas, so dear to its heart that it made this a central plank in the 2001 election despite over 80% public disapporval, is the private finance initiative. I have written enough about its obscene wastefulness here before. Once again, the rationale behind the policy is that it appears to provide something for nothing: money for investment without incurring debts or driving up taxes in the short-run. But the net result is almost invariably a poorer quality of service and a higher cost. For example, in Coventry, two hospitals were replaced by one hospital, with fewer beds and staff overall, and a final cost of £900m, 30 times higher than it would have been to simply renovate the two existing hospitals and keep the beds and staff. In Northumberland, four fire stations were closed and replaced with two under a £10m PFI scheme. One could go on at some length. In Sunderland, as elsewhere, local government functions including in health, education, road-building, street-lighting and waste management have all been outsourced to private companies under expensive PFI and PPP schemes.

Perhaps the most controversial application of the PFI model is in the national health service. Patricia Hewitt announced in 2006 that there would be big cutbacks in public spending on the NHS. She said that the reason was that generous government investment had not been spent on reforms but on salaries for greedy public servants. In fact, as Allyson Pollock pointed out, the government’s market-driven reforms had created the crisis. The costs of this marketisation consumed between 6% and 14% of the NHS national budget, on a conservative estimate. As a result, thousands of NHS staff were shed in hospitals up and down the country. The impact has, predictably, been to alienate Labour’s usual supporters. One of the main campaigners against the government’s NHS cuts in Sunderland has been a well-known local nurse named Kathy Haq, who had been lauded in 1999 for embarking on an unpaid, voluntary mission to improve healthcare in Bangladesh and who had run a support network for victims of a doctor who had raped patients. Haq might have been exactly the sort of person whom New Labour would wish to win over: a devoted public servant and campaigner, who had worked for the NHS for forty years. But she joined Respect when it was launched in the area in 2006, and became the branch secretary. One reason is that City Hospitals Sunderland Foundation Trust ran up debts of over £5m and therefore made plans to shed 10% of its staff, particularly in the Sunderland Royal Hospital. Patients were also angered when local hospitals started to charge for parking, following the lead set by PFI hospitals across the country. Problems within the NHS have been a prominent theme in the local press. In fact, although Bunting refers to the Tory capture for the Ryhope constituency in a bye-election with a low turnout, she does not notice that a surprisingly large component of Labour’s vote, perhaps more than a third, appears to have been redistributed over some years to an independent local campaigner and former journalist known as Patrick Lavelle, who made his name by campaigning on the NHS. Another clue, then: investment isn’t the same thing as provision, and one cannot disaggregate the money supplied from the way it is spent and the policies underpinning it. If working class voters experience a decline in service, the fact that a large amount of money has been spent on producing the decline makes it even worse. The PFI was originally a Tory policy, but by adopting it, the government has handed the Tories one of their main propaganda planks: higher spending equals more bureaucracy and less efficiency.

Sunderland is one of the poorest places in England. Mainly as a result of the destruction of its extraction and manufacturing industries, it has suffered a declining population, particularly among working age males, and this trend is projected to continue at least until 2023. That means a smaller tax base for the city, especially as those who remain are likely to be those with the least resources. More than fifty percent of its children live in low income families, according to the Child Poverty Action Group, which is well above the national average. Even official unemployment is almost double the national average [.pdf] according to the Office for National Statistics, while a total of 31% of the working age population is estimated to be out of work. Large numbers of people are kept on long term incapacity benefit to conceal the real rate of unemployment, albeit incapacity among older males in former mining areas is in fact quite widespread. The government has a number of solutions for the industrial hinterlands, but among them is not a revival of the manufacturing base or of the unions that can maintain decent incomes. One of the few big manufacturers in Sunderland is the Nissan car plant, which was built in 1986. The plant is symbolic of a supposedly ‘new’ high-tech economy vaunted by neoliberals of all stripes. But Nissan has repeatedly threatened to close the plant or slash thousands of jobs, and has repeatedly been bailed out with millions in government grants. And while it does employ thousands of local people, who are unionised, it is hardly a substitute for the massive industries of the past. The government is committed to a City-based growth policy with a strong pound, and as a consequence has seen well over a million manufacturing jobs lost on its watch. As has been widely noticed by now, this is one reason why the UK economy is particularly exposed to the chaos in the financial markets, and why it stands least prepared to withstand a crash.

Under New Labour, the remaining mining pits in Sunderland were allowed to disappear, with nothing to replace them. Today, the biggest employer in Sunderland is the government, while the services industry is the biggest sector of employment in the city. The council has sought to rejuvenate the economy by gentrifying it, making it into a more tourist-friendly zone, and building up a financial services industry, which is today almost as big as the manufacturing sector. All of these factors make Sunderland particularly susceptible to the toxic situation that we now face: public sector pay cuts, cuts in spending, a crisis in the financial sector, and higher food and energy prices. In addition, while Bunting mentions a disproportionately high rate of single motherhood and incapacity in Sunderland, she does not mention the government’s policies of rolling back single mother benefits and incapacity benefits. These, in addition to a vindictive plan to force the long-term unemployed to do ‘community service’ as if they were criminals, are poison for a local Labour Party seeking to gather votes. Further, in a city with life expectancy well below the national average, the government’s plans to raise the retirement age and privatise the pension system – while demanding that people save money they don’t have to invest in a pension scheme that floats on the oh-so-reliable stock market – is asking for trouble. To that should be added a recent rise in pensioner poverty, when a fifth of pensioners already lived on less than £5,000 a year.

Sunderland is supposedly an example of where the government has genuinely tried to help the poor, yet is losing support from voters who fail to recognise New Labour’s loyalty to them, while imprudently flirting with the Tories. In truth, while New Labour has delivered some very mild reforms, there could hardly be a more dramatic example of its policies failing the working class on the one hand, and punishing them on the other. The story of Sunderland is typical in this respect. There remains one question: will Sunderland go Tory, and if so, will it be for the reasons Bunting suggests? Sunderland still has a majority Labour council, and will probably return a Labour MP even on a relatively low turnout. The worst wipeouts for the government will be in the south-east, while the polls show the Tories making least headway in core Labour areas. Further, there is nothing to support the claim that once heartland Labour constituencies are won over to right-wing sentiments, and Bunting offers no evidence for this assertion. There is certainly nothing comparable to 1979, when Thatcher won on a platform of aggressively right-wing and anti-union policies. David Cameron is successfully appropriating the centrist language and sentiments of New Labour, even positioning themselves to the ‘left’ of the government on some questions. In Wales and Scotland, where there are centre-left and sometimes radical left alternatives, the Tories are not reviving at anywhere near the rate that they have been in England. And while the Tories are likely to be the beneficiaries of government unpopularity in England, the process of party identity breaking down is advancing rapidly for both Labour and Conservative parties. What is the matter with Sunderland is what is the matter with the UK as a whole. The system is failing, the neoliberal solution doesn’t work, parliament is increasingly impervious to our needs, and we’re facing a crisis in which we find elected officials happy to pour money into the City, but extremely reluctant at best to do anything which alters the fundamentally unfair distribution of wealth and power in the society.

'Them and us' economy hits the rocks

tim — Thu, 04 Sep 2008 11:54:24 +0000

“The economic times we are facing are arguably the worst they’ve been in 60 years”, blurted out chancellor Alistair Darling in an unguarded moment on his summer holiday. “And I think it’s going to be more profound and long-lasting than people thought”, he added.

Darling’s words sent a chill through millions of working people as we leave the summer that ‘never was’ and prepare for a long winter. It is working class people who will bear the brunt of the recession that many economists believe has already begun.

It’s not just the chancellor. Bad news has spilled out from the City for over a week. The pound reflected the dire state of the British economy by tumbling to a new low. The normally cautious Nationwide building society said house prices are falling at £150 a day and the CBI, the bosses’ union, reported the biggest annual decline in shopping since records began in 1983.

A member of the Bank of England monetary policy committee has predicted two million people will be unemployed by Christmas. Over a thousand workers at Northern Rock are amongst the first to lose their jobs in this wave of redundancies, because the multi-billion pound rescue of the bank by the government does not include saving their jobs.

But some people don’t have to worry about a cold winter. Energy multinational Centrica’s shares rose in value when it announced its latest price increase for British Gas customers. Having blighted Christmas for these customers, Christmas came early for Centrica’s big shareholders a couple of days later, when it posted a profit of £992 million in six months. Meanwhile Shell oil recorded a profit of £4 billion in just three months – that’s £2 million an hour!

So while the rest of us tighten our belts and count our pennies, the super wealthy are doing very well. On the day that it was announced that pay increases are falling behind the rate of inflation, it was reported that in central London in July, houses priced at over £10 million rose in price by 1%, while the average house price in the same area went down. Many working people cannot afford to buy any house, but the super wealthy are buying more expensive homes than ever before.

In his March budget speech, Darling said: “Britain is better placed than other economies to withstand the slowdown in the global economy”. This is not true. First Margaret Thatcher and the Tories, and then New Labour, encouraged the decline of manufacturing industry and moved the economy onto one based on finance and services, lubricated by a flood of debt. This appeared to work for a period, but as The Socialist warned, would come a cropper in a financial crisis.

Now the mega rich who got us into this mess want working class people to get them out of it – we are expected to pay the price. But faced with this agenda, anger is growing and major struggles are inevitable. This anger and action will be accompanied by people drawing political conclusions, including the vital conclusion that a new workers’ party needs to be built.

The ‘Them and Us’ recession

Them:

* 37% pay increase for FTSE 100 chief executives last year
* £992 million profit for Centrica in first six months of this year
* £26.9 billion pumped into Northern Rock

Us:

* 3.5% average annual pay increases April -June
* 35% increase in prices to Centrica’s British Gas customers
* 2000 jobs to go at Northern Rock

Bring Back the Workhouses

Tim Holmes — Wed, 23 Jul 2008 10:42:21 +0000

As the downward economic spiral ensures that millions more people are likely to be unemployed, the government is devising ways to crackdown on and discipline the workshy gets. Last year it was forcing single mums to take jobs, under plans co-devised by a rich investment banker named David Freud (a fucking nobody in other words). This year, again with the help of Mr Freud, they are planning to abolish incapacity benefit and replace it with a more ‘temporary’ scheme that will compel benefits offices to goad the recipients into seeking work. Meanwhile, those on Jobseekers Allowance who remain unemployed for more than a year will have to “pick up litter” and do similar community service, at first for four weeks and then full-time if they don’t snap out of it. Forgive me, but isn’t community service a form of state penalty dealt out to petty criminals? Is the government now saying that unemployment is a crime?

The first thing to notice about this is that, as with the rollbacks of pension entitlements, all three major parties are backing this policy. The Tories have embraced it as one of their own. The consensus in favour of systematically dismantling protections for the poor, the old and the sick is rock solid in our political elite. The second is that, with wearisome predictability, some supporters of New Labour are working desperately hard to give this process a left gloss. Johann Hari argues that we cannot defend the current system in which millions of people are left to rot on the dole. True enough, but a) that is not a function of the welfare state, but of the capitalist economy which requires and produces a reserve army of labour; and b) what Johann is defending is the most authoritarian version of supply-side economics, which is quackery of a kind that Enlightenment-fetishists ought to be seriously worried about. Hari argues that people should be forced to do menial, generally pointless, labour in order to qualify for miserable benefits. He has an inertia-ridden, spliff-smoking friend named ‘Andy’ whom he thinks would benefit from cleaning graffiti or picking up litter. It would reconnect him with the world of work, force him to exercise his talents, and so on. Otherwise, he will remain listless and idle. And anyway, so the argument goes, if Labour doesn’t do it, the Tories will in a much nastier way.

I am not going to waste time arguing over anecdotes. Let’s start with the real world. As far as incapacity benefits are concerned, as I have pointed out before, there is no serious prospect of meeting the government’s reduction targets even with the most punitive measures. This is because the best research indicates that: a) the recipients are largely genuinely incapacitated, contrary to the claims made by David Freud who has asserted that only a third of recipients are genuine; b) they live in areas where work is scarce and are the component of the labour force that is least attractive to employers, even if they can do a limited range of tasks, so the jobs for them largely don’t exist; c) the theoretical commitment, ie the belief that an added supply of labour will create its own demand in accord with neoclassical economics, is barmy and unsupportable. Now, let’s talk about jobseekers. How many jobseekers are there at any one time, and how many jobs exist for them? At the moment, the ILO estimate of unemployment for the UK is just over 1.6m (and growing). The number of jobs available in the UK economy is just over 650,000 (and contracting). (See the most recent ONS stats here [pdf]). So, even under the best conditions, with vacancies closely matching local skill distributions and educational levels, and with employers willing to accept local populations, there would still be a vast pool of people unemployed through no fault on their own part. And they should be compelled to carry out petty, punitive labour just so that they don’t lose sight of what work really means? This is reactionary drivel.

Why doesn’t Johann call for massive state investment in job creation? Why not offer people dignified, meaningful, public service work, with decent wages? Rather than what turns out to be a coercive system designed to make the receipt of benefits as unpleasant as possible for those concerned? After all, if litter really needs cleaning up and graffiti really needs dealing with, why don’t we have the council services to take care of it? Could it be that councils, particularly in working class areas, have been run down for years and forced to rely increasingly on local levies that can’t make up the shortfall, even as the government obliges them to get involved in extremely costly PFI programmes? If we’re not down with public works programmes and job creation, why not simply make the system more redistributive? In other words, rather than capitulating to the hysteria about slackers on our taxes, why not simply say that those who have benefited most from an economy that keeps millions in unemployment should be obliged to pay the most to secure a decent livelihood for them in the interim of their incapacity or lack of paid employment. As they can hardly be relied upon to do so voluntarily, they will be expected to pay higher taxes on their salaries, bonuses, investments and profits. The poorest, meanwhile, the majority earning less than the mean income, could either have taxes reduced or abolished.

The reason Johann Hari can talk like this is because he accepts a moral fairy tale: benefits are some sort of charity in which nice middle class people part with a portion of their income to support the poor. That much is patently obvious from his opening shot. But the welfare state is not a charity. It is a modestly redistributive model to which everyone in work contributes. Most of those receiving benefits will have paid taxes at some point, or will at some point in the future. They do not need to be ordered around and demeaned by forced labour when at some point in their life they fall on hard times. Even those who have never paid taxes and, for the sake of argument, are conscientious layabouts who avoid the labour market (and who can blame them, given that most people cannot expect the relative security, dignity, fame and financial rewards that a newspaper columnist will receive?), don’t need to be penalised in this way. First of all, even if it could work, it would require a nightmare scenario to do so. To really get to grips with the supposed recalcitrant spliff-heads and daytime-telly addicts (my stock of cliche is rapidly running out), you would have to construct a state bureaucracy so intrusive, and so arrogant and overbearing, that it would inevitably bring large swathes of even the ‘deserving poor’ under its surveillance and constant harrassment. People who have spent their lives contributing to the society would find themselves battered with ‘work-oriented interviews’, phone calls, demands for information, allocations for miserable ‘community service’ work. Constant testing and grading, and in the case of the incapacitated, inspection by GPs pressured with reward-focused targets, would be the motif if such a pointless exercise. Even if you could single out the tiny minority of putative couch potatoes, which of course you cannot, it would save the taxpayer next to nothing and produce no overall benefit. The politicians who are devising these schemes have every reason to know all this. They are not targeting the ‘Andys’ of this world, even if Andy is unfortunate enough to exist and to have a priggish moralist like Hari as a friend. The intention is to, as fully as possible, role back the welfare state – not to replace it with a version that people like Johann Hari can defend in good conscience, but to reduce it to a shell. That requires, as with the attack on the US social security system (scheduled to resume under Obama, I bet you), the contrivance of ‘crises’. Suddenly, we lack the money for all this luxury, suddenly there is a financial gap, a shortfall, and there are all these millions of people using the system when they should be in paid work…

I suspect what really motivates Johann Hari’s defense of the government is the concluding argument, which is that the Tories would impose a much worse scheme. It may indeed be so, but that is no defense of the government’s policy. Of course, there is a great pressure on supporters of New Labour to find a way to defend the government or shut up, so as not to give any quarter to the resurgent Tories. But the idea that one can neutralise certain pressures by giving into them, attempting to co-opt and tame them, is nonsensical. It has never worked, not when the issue is immigrants, asylum seekers, Islam, wheelchair layabouts, crime, or any other hot button topic you can think of. The appetite of big business and investors for lower corporation taxes, more privatisation, more and more opportunities for accumulation with less of what they consider an unconscionable burden, is unquenchable. There is nothing you can give them that will stop them coming back in their media and their lobby groups for much, much more. Moreover, once you tell people that the David Freuds of this world are right, and that there is indeed a problem roughly as they describe it with solutions roughly as they prescribe them, you shift the argument away from social justice and the obvious way in which people are victimised by this economy, and the crying need to reverse the policies of the Thatcher years and shift power and wealth back to working people. You then get an argument about just how authoritarian the government should be, how much benefits should be cut, and under what circumstances, who should be targeted and how, etc etc. And you find yourself complicit in a process that targets and cheats the poorest, while assuring everyone that it is the progressive thing to do.

Jobs are used to justify anything, but the numbers don't add up

JamieSW — Tue, 01 Apr 2008 10:22:06 +0000

There is no nonsense so gross that it cannot be justified by the creation of jobs. The Ministry of Defence has just announced that it’s spending £13bn of our money – via a fantastically complicated private finance scheme – on a fleet of refuelling planes. Do we need them? Only if we intend to attack another defenceless country. But it’s worthwhile, because the new contract will “create up to 600 jobs at AirTanker Ltd, and will safeguard up to 3,000 jobs directly at British sites, with thousands more sustained indirectly.”(1)

John Hutton claims that new nuclear power stations will generate not only the energy we need, but also 100,000 new jobs(2). When and how? Here or in France? Northumberland County Council has revealed that it is spending £3.6 million on one new roundabout, at Haltwhistle. A staggering waste of public money? No, “it will both attract new jobs to the town and secure existing employment.”(3)

It is true that investment creates employment. But jobs are used to justify anything and everything. If recession strikes, the political value of any scheme which boosts them will rise. Projects which in more prosperous times might have been rejected by planners or ministers will suddenly find favour. Anyone who stands in their way – however daft the schemes may be – will be walloped as an anti-social Luddite.

But the big question is asked very rarely in the press: how reliable are these promises? Whenever a new defence contract or superstore or road or airport is announced, the papers and broadcasters repeat the employment figures without questioning them. They rarely return to the story to discover whether the claims were true.

The Guardian’s research service was able to find only two stories which challenged individual claims about job creation. One, from 2003, covered a National Audit Office investigation into the government’s grants to companies in deprived areas(4). The grants cost the taxpayer £1.4bn and were meant to have created or protected 300,000 jobs. But the auditors found that only 45% of these jobs were additional: the rest would have been saved or created if the grants hadn’t existed. Of these, 11% displaced other jobs in the same region, even when the multiplier effect (jobs creating further jobs) was taken into account(5). The schemes had worked, but not as well as the government had claimed.

The other story, in February this year, reported an odd but quite common phenomenom: a private equity boss attacking his own industry. Jon Moulton, the founder of Alchemy Partners, berated his own trade body for using “very dodgy statistics”(6). The British Venture Capital Association had claimed that jobs at private equity firms have risen by 8% a year over the past five years, while in publicly-listed companies jobs have grown by only 0.4% a year(7).

Speaking at the industry’s SuperReturn 2008 conference, Moulton pointed out that the association’s figures excluded the private equity firms that had gone out of business. “If you use an adjusted figure, the number should be more like zero. We’re putting these things out as fact and we shouldn’t.”

Many of the published figures have to be wrong. At the beginning of his nuclear speech, John Hutton praised the efforts of Dougie Rooney, the energy officer for the trade union Unite, for his “unique contribution to nuclear’s renaissance in the UK”. But they can’t get their story straight. Rooney has claimed that the nuclear programme will generate 10,000 new jobs: one tenth of Hutton’s figure(8).

Ten years ago, a research organisation called the National Retail Planning Forum – financed by Sainsbury, Tesco, Marks and Spencer, Boots and John Lewis – published a report on the superstores’ impact on employment. It found that there is “strong evidence that new out-of-centre superstores have a negative net impact on retail employment up to 15 km away.”(9) The 93 stores the forum studied were responsible for the net loss of 25,685 employees: every time a large supermarket opened, 276 people lost their jobs. This is hardly surprising. The New Economics Foundation has calculated that every £50,000 spent in small local shops creates one job. You must spend £250,000 in superstores for the same result(10).

But the press – especially the local papers – reports Eldorado every time a new store opens. In the past few days the Telegraph and Argus claimed that Marks and Spencer will create 2,500 new jobs in Bradford(11); the Halifax Evening Courier announced that the local B&Q will hatch an extra 60 jobs by moving to bigger premises(12); the BBC published a story headlined “Morrisons site creates 1,000 jobs”(13). Seldom is there a word about the employment these schemes will destroy.

To produce a definitive account of the gap between the claims made by companies promoting new schemes and the jobs they really deliver would take years. Instead, I asked a researcher, Nicola Cutcher, to conduct a rough sampling exercise. She took the latest year for which job figures are broken down by the size of employer are available – 2006 – and selected the middle week of each quarter. She then went through all the stories that mentioned the word “jobs” in a press database(14), selecting those which reported new openings or closures by large enterprises (over 250 staff) that were definitely taking place. She ensured that each claim was counted only once. To produce a rough average for the year, she multiplied the four weeks by 13.

The government reports that the number of jobs among large enterprises rose by 189,000 between 2005 and 2006(15). Our rough sample suggests a net gain of 1.4 million, or 7.4 times the official rate. If the same exaggeration applied to the whole economy, there would be 218 million workers in the United Kingdom(16).

This exercise has severe limitations. Job figures tend to be quite lumpy. Some of the posts take several years to create, so they won’t show up in the 2006 figures; though 2006, of course, harvested the jobs announced in previous years. But the gains among large employers this decade have fluctuated between 160,000 and 330,000(17): in no year has anything like 1.4 million net jobs been created.

Should we be surprised by such exaggerations? Of course not. Though the papers are generally good at reporting job cuts, they rely for the good news on companies and government departments that have an interest in talking up the benefits of their schemes. There is also plenty of confusion, often cunningly sown in corporate press releases, about whether the new jobs are being created directly or indirectly. When claiming wider benefits for their schemes, employers use the most generous possible multiplier effects. The indirect employment claimed by one company is the direct employment created by another. As they all declare responsibility for work created elsewhere, new jobs in this wacky world are generated several times over.

We need some reliable research into the reporting of employment claims. We need journalists to start asking questions about the figures they are fed; perhaps to refuse to print them unless they have been independently audited. And we all need to make a simple demand whenever a shiny new scheme promises to solve the community’s problems: prove it.

References:

1. MoD, 27th March 2008. £13 billion deal for new Tanker Aircraft signed. Press release. http://www.mod.uk/DefenceInternet/DefenceNews/EquipmentAndLogistics/13Bi…

2. John Hutton, 26 March 2008. New Nuclear Build: How do we make progress?
http://www.berr.gov.uk/pressroom/Speeches/page45417.html

3. No author, 28th March 2008. £3m road scheme to aid jobs. The Cumberland News.
http://www.cumberland-news.co.uk/news/viewarticle.aspx?id=820414

4. David Hencke, 17th June 2003. £100m jobs subsidy scheme is poor value, say auditors. The Guardian.

5. National Audit Office, 17th June 2003. The Department for Trade and Industry: Regional Grants in England. http://www.nao.org.uk/publications/nao_reports/02-03/0203702.pdf

6. Siobhan Kennedy, 27th February 2008. High-profile buyout chief turns on his peer group. The Times.

7. The British Venture Capital Association, 13th February 2008. The Economic Impact of Private Equity in the UK 2007. http://www.bvca.co.uk/pdf.php?id=842&filename=the_economic_impact_of_pri…

8. No author, 26th March 2008. ‘Thousands of jobs’ in nuclear design licences
The Herald. http://www.theherald.co.uk/news/other/display.var.2145944.0.Thousands_of…

9. Sam Porter, Paul Raistrick, January 1998. The Impact of Out-of-Centre Food Superstores on Local Retail Employment. The National Retail Planning Forum, c/o Corporate Analysis, Boots Company PLC, Nottingham.

10. Emma Hallett, New Economics Foundation, April 1998, pers comm.

11. Jo Winrow, 27th March 2008. D-day looms for massive jobs project. The Telegraph and Argus.
http://www.thetelegraphandargus.co.uk/news/newsindex/display.var.2149091…

12. Carmel Harrison, 28th March 2008. DIY superstore prepares to open. Evening Courier.
http://www.halifaxcourier.co.uk/local-business/DIY-superstore-prepares-t…

13. No author, 19th March 2008. Morrisons site creates 1,000 jobs.
http://news.bbc.co.uk/1/hi/england/kent/7305548.stm

14. UK News.

15. http://stats.berr.gov.uk/ed/sme/smestats2005.xls

and

http://stats.berr.gov.uk/ed/sme/smestats2006.xls

16. The latest total figure is here: http://www.statistics.gov.uk/pdfdir/lmsuk0307.pdf

17. All the tables are here: http://stats.berr.gov.uk/ed/sme/index.htm